Before the enactment of P.L. 95–488, the law provided for a current deduction for actual benefit claims approved or filed during the year.

With enactment, the above provision was amended to allow for current tax deductions to be taken by coal mine operators for funds permanently set aside in a trust described in IRC 501(c)(21) to pay black lung benefits.

These contributions cannot exceed the amount necessary to fund, on a sound actuarial basis, the operator’s remaining unfunded liability for claims expected to be filed.

The Deficit Reduction Act of 1984 (P.L. 98–369) imposes the rules of IRC 501(c)(21) to Nuclear Decommissioning Trust Funds described in IRC 468A(e).

A trust must also be irrevocable, without any right or possibility of reversion of the corpus or income to the coal mine operator or other creator liable for the payment of black lung benefits, except that the creator may recover excess contributions.

Employers liable under state law for claims for black lung disability or death benefits may also establish a trust under IRC 501(c)(21). For example, worker’s compensation laws may impose this liability; however, liability arising under a state statute must be for, or with respect to, a claim for compensation for death or disability due to black lung disease. Black lung disease is defined as a chronic dust disease of the lung arising out of coal mine employment.

A trust established by an insurance company is not described in IRC 501(c)(21) because its liability arises from a contractual obligation rather than the operation of a mine.

Administrative and incidental costs of the trust may be paid out of its assets. Such costs may include any excise tax imposed on a taxable expenditure and reasonable expenses arising in connection with a claim against the trust for liability as a taxable expenditure.

Excise taxes imposed on the trustee or other disqualified person for acts of self-dealing or making excess contributions cannot be covered by the trust.

However, a trust may purchase insurance covering the liability of a trustee for excise taxes to the extent that the cost of the insurance together with any other compensation to the trustee is reasonable. A trust may also indemnify a trustee for reasonable expenses arising from a successful defense in an administrative proceeding involving excise taxes. This indemnification is also subject to reasonable compensation limitations.

A trust may invest its assets but only to the extent that they exceed current year obligations. These investments must be limited to public debt securities of the United States (obligations guaranteed as to principal and interest by the United States), obligations of a state or local government which are not in default as to principal and interest, or time-demand deposits in a bank or an insured credit union in the United States.

If a bank or credit union is a trustee of the trust or a disqualified person, deposits or investments in that bank or credit union would constitute an act of self-dealing under IRC 4951. This differs from the private foundation area, in which Reg. 53.4941(d)—2(c)(4) would allow private foundations to invest its assets in a bank that was a disqualified person.

Schedule A of Form 990–BL must be filed to report any initial excise taxes imposed under IRC 4951 or 4952.

Schedule A is not required if no taxes are due under IRC 4951 or 4952.

The approved application and Forms 990–BL filed by black lung benefit trusts are subject to the public inspection requirements of IRC 6104. However, Part IV of Form 990–BL, identification of contributors, and Schedule A are not open for inspection.

Form 990–BL and Schedule A filed by a trustee or disqualified person are not open for public inspection.