What the Form Is For

Form 990-BL serves a dual purpose for organizations dealing with black lung disease—a serious respiratory condition affecting coal miners. First, it acts as an annual information return that black lung benefit trusts must file to meet federal reporting requirements under Internal Revenue Code Section 6033. Think of it as the IRS's way of keeping tabs on these specialized trusts established by coal mine operators to pay medical benefits to miners suffering from pneumoconiosis (the medical term for black lung disease).

Second, when certain prohibited activities occur, Form 990-BL becomes a tax return used to report initial excise taxes. These taxes apply when trusts, their trustees, or related parties engage in "self-dealing" (using trust money inappropriately) or make "taxable expenditures" (spending money on purposes not allowed by law). The form includes Schedule A, which specifically calculates these penalty taxes under Sections 4951 and 4952 of the tax code.

Black lung benefit trusts gained tax-exempt status under Section 501(c)(21) following the Black Lung Benefits Revenue Act of 1977. This legislation created a framework to ensure coal mine operators fulfill their legal obligations to workers whose health suffered from coal dust exposure. In 2010, these trusts played a vital role in the broader worker compensation system for the coal mining industry.

When You’d Use This Form (Including Late and Amended Returns)

Who Must File

The trustee of any black lung benefit trust exempt under Section 501(c)(21) must file Form 990-BL unless the trust normally receives gross receipts of $50,000 or less annually. Trusts below this threshold can file the simpler Form 990-N electronic postcard instead. However, three special situations require Form 990-BL regardless of size: when a trustee is liable for Section 4951 or 4952 taxes, when a disqualified person faces Section 4951 penalties, or when the trust made taxable expenditures.

Filing Deadlines

For 2010, Form 990-BL was due on the 15th day of the 5th month following the close of the trust's tax year. For a calendar-year trust, that meant May 15, 2011. If that deadline fell on a weekend or legal holiday, the due date shifted to the next business day. Missing this deadline triggered daily penalties of $20 ($105 for large organizations with over $1,067,000 in gross receipts), capped at $10,500 ($53,000 for large trusts) or 5% of gross receipts—whichever was smaller.

Extensions

Trustees could request automatic extensions using Form 8868, which provided additional time to prepare accurate returns without penalty.

Late Returns

If you missed the original deadline, you should still file as soon as possible. The IRS can demand filing through written notice, and failure to comply after that demand costs $10 per day per person responsible, with no cap on total penalties.

Amended Returns

Check the "Amended return" box in Item B of the form's heading when correcting a previously filed return. Amended returns follow the same filing address—the IRS Center in Kansas City, Missouri—and should include explanations for all changes.

Key Rules Specific to 2010

In 2010, several important rules governed Form 990-BL filing. The gross receipts threshold remained at $50,000, meaning trusts with receipts below this amount could opt for the simpler e-postcard (Form 990-N) instead of the full Form 990-BL—provided they had no excise tax liability.

The form's public disclosure requirements were particularly noteworthy. Most of Form 990-BL became publicly available through IRS inspection, protecting transparency while maintaining donor privacy. However, Part IV (Statement With Respect to Contributors) and Schedule A remained confidential to protect sensitive information about contributors and tax matters.

Excise Tax Rates (2010)

• Self-dealing (Section 4951): 10% initial tax on disqualified persons who participated; 2.5% on trustees who knowingly participated. If uncorrected, these escalated to 100% on self-dealers and 50% on trustees who refused to correct the issue.
• Taxable expenditures (Section 4952): 10% initial tax on the trust itself; 2.5% on trustees who knowingly approved improper expenditures. Failure to correct triggered 100% tax on the trust and 50% on non-cooperating trustees.

Permitted Trust Activities

Trusts could only:

• Pay black lung benefit claims
• Purchase insurance covering these liabilities
• Pay administrative expenses (legal, accounting, actuarial, trustee fees)
• Provide accident/health benefits to retired miners and their families
• Invest excess assets in government securities, state/local government bonds (not in default), or bank deposits

Any spending outside these categories risked excise taxes.

Step-by-Step Filing Guide (High Level)

Step 1: Gather Basic Information

Start by collecting the trust's employer identification number (EIN), full legal name, mailing address, and accounting period dates. Determine your filing status: are you filing as the trust itself, as a trustee with tax liability, or as a disqualified person? Check whether you're filing an original return, an amended return, or have an exemption application pending.

Step 2: Complete Part I (Analysis of Revenue and Expenses)

Report all income sources: contributions from the coal mine operator under Section 192, interest from permitted investments, capital gains, and any other revenue. Then detail all expenses: contributions to the Federal Black Lung Disability Trust Fund, insurance premiums, direct benefit payments to miners, trustee compensation, employee salaries, administrative costs, and other allowable deductions. This section functions like a profit-and-loss statement.

Step 3: Complete Part II (Balance Sheets)

Create beginning-of-year and end-of-year balance sheets showing all assets (cash, savings accounts, government securities, other investments) and liabilities (approved claims payable, accrued fees). Remember: don't include contested claims, present values of future claims, or estimated future liabilities—only actual obligations.

Step 4: Complete Part III (Questionnaire)

Answer yes/no questions that help the IRS identify potential violations. These questions cover trust governance, amendments to the trust document, self-dealing transactions, taxable expenditures, and compensation arrangements. Be thorough and honest—these questions flag issues requiring Schedule A.

Step 5: Complete Part IV (Statement With Respect to Contributors)

Note: For tax years ending December 31, 2018, or later, you simply enter "N/A" for contributor names. For 2010, however, you listed names and addresses of persons who contributed $5,000 or more. This section remains confidential and isn't subject to public inspection.

Step 6: Attach Schedule A if Necessary

If Part III revealed self-dealing or taxable expenditures, complete Schedule A to calculate excise taxes. Provide detailed information about each prohibited transaction: parties involved, dates, amounts, tax calculations. Both disqualified persons and trustees may need to file their own returns with Schedule A attached.

Step 7: Sign, Date, and File

The authorized trustee must sign under penalties of perjury. If a paid preparer completed the return, they must also sign and provide their PTIN (Preparer Tax Identification Number). Mail the complete package to: Department of the Treasury, Internal Revenue Service Center, Kansas City, MO 64999. Keep copies of everything filed.

Common Mistakes and How to Avoid Them

Mistake #1: Missing the Filing Threshold Exception

Many trusts with gross receipts under $50,000 incorrectly file Form 990-BL when they could file the simpler Form 990-N. However, remember: if any excise taxes apply, you must file the full Form 990-BL regardless of income level.
Solution: Review gross receipts from the past three years and check whether any self-dealing or taxable expenditures occurred before deciding which form to file.

Mistake #2: Improper Investment Classification

Trusts sometimes invest in prohibited assets like corporate stocks, mutual funds, or foreign government bonds—investments that seem safe but violate the strict rules.
Solution: Limit investments to U.S. Treasury securities, state/local government bonds (not in default), or FDIC-insured bank accounts. Consult the trust instrument and IRS regulations before making any investment.

Mistake #3: Failing to Identify Disqualified Persons

Many trustees don't realize how broadly "disqualified person" is defined. It includes contributors, trustees, anyone owning more than 10% of a contributing business, officers and employees of contributors, and all their family members (spouses, ancestors, descendants).
Solution: Create a comprehensive list of disqualified persons at the start of each tax year and update it as relationships change.

Mistake #4: Inadequate Compensation Documentation

Paying trustees or administrative staff without proper documentation of reasonable and necessary services invites scrutiny.
Solution: Document all compensation arrangements in writing, compare rates to industry standards, and maintain detailed records of services performed. List all compensation on line 26, even if zero.

Mistake #5: Ignoring Schedule A Requirements

When self-dealing or taxable expenditures occur, some filers complete the questionnaire honestly but forget to attach Schedule A calculating the taxes owed.
Solution: If you answer "Yes" to questions 23 or 24 in Part III, immediately prepare Schedule A. Multiple parties may need to file separate returns if both trustees and disqualified persons are liable.

Mistake #6: Missing Public Disclosure Obligations

Trusts must make returns available for public inspection during business hours and provide copies upon request (for a reasonable fee). Some organizations don't realize this applies to them.
Solution: Establish written procedures for handling public inspection requests and train staff on the 30-day deadline for mailed requests. Part IV and Schedule A remain confidential—never disclose these sections.

What Happens After You File

Processing Timeline

The IRS processes Form 990-BL at its Kansas City Service Center. Processing typically takes 8-12 weeks for paper returns. The IRS enters the information into the Exempt Organization Business Master File (EOBMF), creating a permanent record of the trust's activities.

Public Disclosure

Within approximately 30 days of processing, most of your return becomes publicly available. Anyone can request copies through IRS Form 4506-A or directly from your organization. You must provide copies within 30 days of a written request or the same business day for in-person requests (unless unusual circumstances exist). You may charge a reasonable photocopying fee.

Examination Selection

The IRS uses various criteria to select returns for examination (audit). Red flags include: large unusual expenses, questionable investment holdings, significant changes from prior years, and affirmative answers to self-dealing or taxable expenditure questions. The IRS may also audit your trust if Large Business & International Division audits the coal mine operator and questions the trust's exempt status.

Assessment of Taxes

If you filed Schedule A with excise taxes, the IRS assesses those amounts and sends a bill. Payment was due with the return, but if additional taxes are owed after examination, you'll receive a notice with payment instructions and a deadline. Interest accrues on unpaid taxes from the original due date.

Revocation Risk

Serious violations can result in revocation of tax-exempt status. The IRS may revoke exemption if: the trust instrument doesn't properly restrict assets to permitted purposes, the trust consistently makes prohibited expenditures, or the trust engages in significant self-dealing. Before finalizing revocation, the IRS typically issues a proposed adverse determination letter giving you 90 days to respond.

Correction Opportunities

For self-dealing, "correction" means undoing the transaction and placing the trust in a financial position at least as good as if the self-dealer had dealt under the highest fiduciary standards. For taxable expenditures, "correction" means recovering the expenditure when possible, or having contributors make additional contributions to offset the loss. Prompt correction can prevent escalating tax penalties.

FAQs

1. What exactly is a "black lung benefit trust" and do I have one?

A black lung benefit trust is a tax-exempt trust established by coal mine operators to pay medical benefits to current or former employees (or their survivors) suffering from coal workers' pneumoconiosis (black lung disease). If you operate or operated a coal mine and created a formal trust to fund these obligations—rather than paying claims directly—you likely have a Section 501(c)(21) trust requiring Form 990-BL. Insurance companies cannot establish these trusts.

2. Can the trust pay for health benefits unrelated to black lung disease?

Partially yes. The trust can pay accident and health benefits for retired miners, their spouses, and dependents—not just black lung claims. However, these must be retirement benefits, not active employee benefits. The trust cannot pay workers' compensation for mining accidents unrelated to black lung disease. Such payments would constitute taxable expenditures subject to excise taxes.

3. What happens if the coal mine operator contributes more than allowed under Section 192?

Excess contributions trigger a 5% excise tax on the contributor (the mine operator), reported on Form 6069—not Form 990-BL. However, the trust must identify excess contributions on Form 990-BL Part IV, line 2. These excess contributions can cause problems in future years if not addressed. The operator should consult with Large Business & International Division for Section 192 deduction computations.

4. Can a bank that serves as trustee also hold the trust's deposits?

Yes, but carefully. When a bank acts as trustee (or is otherwise a disqualified person) and holds trust deposits, this technically constitutes "lending of money" under self-dealing rules. However, there's an exception: deposits in checking accounts, savings accounts, or certificates of deposit at the trustee bank are not considered self-dealing acts, provided they meet standard banking terms and don't provide special benefits to the bank.

5. What if we discover self-dealing or a taxable expenditure after filing?

File an amended Form 990-BL immediately, checking the "Amended return" box and attaching Schedule A with corrected information. The responsible parties (disqualified persons or trustees) must file their own returns if they haven't already. Prompt self-disclosure and correction demonstrate good faith and may influence penalty abatement requests. Correct the underlying transaction as soon as possible to stop the "taxable period" that increases liability.

6. Do trustees personally pay excise taxes or does the trust pay them?

It depends on the tax. For taxable expenditures (Section 4952), the trust itself pays the initial 10% tax from trust assets. Trustees pay the 2.5% tax personally if they knowingly agreed to the expenditure. For self-dealing (Section 4951), disqualified persons pay the 10% tax personally, and trustees pay the 2.5% tax personally if they knowingly participated. The trust cannot pay these personal excise taxes—doing so would itself be a prohibited act.

7. What records should we keep and for how long?

Maintain all books and records supporting the return for at least three years from the filing date (or longer if the IRS opens an examination). Keep: contribution records from operators, investment statements, benefit payment documentation, trustee meeting minutes, compensation agreements, trust instruments and amendments, insurance policies, and correspondence with the IRS. Since returns are publicly disclosed, also keep copies of all filed returns and documentation of how you handled public inspection requests. The IRS recommends retaining records as long as they may be material to any tax law administration.

This summary provides general information based on 2010 rules and should not substitute for professional tax advice. Consult a qualified tax professional or attorney familiar with coal industry benefits and exempt organizations for guidance specific to your situation.

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