Information and Initial Excise Tax Return for Black Lung Benefit Trusts and Certain Related Persons

If you manage a black lung benefit trust or work for a coal mine operator that established one, Form 990-BL might sound complicated, but this guide will walk you through everything you need to know about the “Information and Initial Excise Tax Return for Black Lung Benefit Trusts and Certain Related Persons” for the 2014 tax year. Whether you're a trustee, administrator, or just trying to understand this specialized form, we'll break it down into plain English. IRS.gov

What the Form Is For

Form 990-BL serves two important purposes for black lung benefit trusts—special funds established under section 501(c)(21) of the Internal Revenue Code to help coal miners affected by black lung disease.

First, it's an information return that reports the trust's financial activities to the IRS. Think of it as an annual check-in showing how much money the trust received, how it was invested, and how it was spent helping miners and their families. The form requires trusts to disclose their revenue sources (primarily contributions from coal mine operators), investment income, administrative expenses, and benefit payments made to eligible miners.

Second, it's an initial excise tax return when certain prohibited activities occur. The IRS imposes taxes on “self-dealing” (improper transactions between the trust and insiders) and “taxable expenditures” (spending money for unauthorized purposes). These taxes are reported on Schedule A attached to Form 990-BL. The purpose is to ensure trusts operate exclusively for their intended charitable purpose—helping coal miners and their families cope with black lung disease—rather than benefiting insiders or being used for other purposes.

Form 990-BL is generally used by black lung benefit trusts to meet the reporting requirements of Internal Revenue Code section 6033. The 2014 version uses the December 2013 revision of Form 990-BL with instructions that remained consistent through this period.

When You’d Use It (Late/Amended Filing)

Regular Filing

For the 2014 tax year, Form 990-BL must be filed by the 15th day of the 5th month following the close of your trust's tax year. For calendar-year trusts, this meant a May 15, 2015 deadline. If your fiscal year ended on a different date, add five months to determine your deadline. When the due date falls on a weekend or federal holiday, the deadline moves to the next business day.

Who Must File

Your trust must file Form 990-BL if it's exempt under section 501(c)(21) and normally receives more than $50,000 in gross receipts annually. Trusts with $50,000 or less can file the simpler Form 990-N electronic postcard instead. You must also file if you have a pending application for tax-exempt status or if any initial excise taxes apply under sections 4951 or 4952.

Extension Requests

Can't make the deadline? You can request an automatic 6-month extension by filing Form 8868 (Application for Automatic Extension of Time To File an Exempt Organization Return) before the original due date. This would extend a May 15, 2015 deadline to November 15, 2015. However, remember that an extension to file is not an extension to pay any taxes owed—those must still be paid by the original deadline to avoid penalties.

Late Filing

If you miss the deadline without filing an extension, expect penalties of $20 per day (or $105 per day for large organizations with gross receipts over $1,067,000) that the failure continues. The maximum penalty caps at the smaller of $10,500 ($53,000 for large organizations) or 5% of the trust's gross receipts for the year.

Amended Returns

If you discover errors after filing, you should file an amended Form 990-BL with “AMENDED RETURN” written across the top. Include a detailed explanation of the changes and why the amendment is necessary.

Key Rules for 2014

Several important rules governed Form 990-BL filing in 2014:

Eligible Trust Requirements

To qualify for tax exemption under section 501(c)(21), your trust must be established by a written trust instrument, funded exclusively by coal mine operator contributions, and created solely to pay black lung benefits and related medical expenses. The trust can only hold approved investments: U.S. government securities, state or local government bonds not in default, and FDIC-insured bank deposits or credit union accounts.

Prohibited Self-Dealing (Section 4951)

The IRS strictly prohibits transactions between the trust and “disqualified persons” (contributors, trustees, their family members, and related entities). This includes selling or leasing property, lending money, providing goods or services, paying excessive compensation, or transferring trust assets for personal benefit. Even innocent-looking transactions can trigger a 10% excise tax on the disqualified person and a 2.5% tax on any trustee who knowingly participated.

Taxable Expenditures (Section 4952)

Money leaving the trust must go toward authorized purposes: paying black lung benefits, covering administrative costs, buying liability insurance, providing permitted benefits to retired miners and dependents, making approved investments, or transferring funds to the Federal Black Lung Disability Trust Fund. Spending on anything else triggers a 10% excise tax on the trust and a 2.5% tax on any trustee who knowingly approved the expenditure.

Public Disclosure

Most of Form 990-BL becomes public record that anyone can request and inspect. However, Part IV (contributor information) and Schedule A (excise tax details) remain confidential to protect privacy.

Step-by-Step (High Level)

Here's how to complete Form 990-BL without getting overwhelmed:

Gather Your Records

Collect all financial documents for the year: contribution records from coal operators, bank and investment statements, receipts for benefit payments, administrative expense records, payroll information for trustees and employees, and insurance policy details.

Complete the Identification Section

Enter your trust's name, address, and employer identification number (EIN). Check the “Trust” box under “Return filed by.” Note whether your address changed and calculate the fair market value of trust assets.

Fill Out Part I — Analysis of Revenue and Expenses

Report contributions received under section 192, investment income from approved securities and bank deposits, and any gains or losses from selling assets. Then list all expenses: benefit payments, insurance premiums, direct payments to miners, trustee compensation, employee salaries, and administrative costs.

Complete Part II — Balance Sheets

Present a snapshot of your trust's financial position at both the beginning and end of the year. List assets (cash, savings accounts, approved securities, office supplies, equipment) and liabilities (unpaid benefit claims, accrued trustee fees).

Answer Part III — Questionnaire

Carefully review each yes/no question about organizational changes, self-dealing activities, and taxable expenditures. These questions determine whether you need to file Schedule A and pay excise taxes.

Complete Part IV — Statement With Respect to Contributors

For the 2014 filing, list contributors who gave $5,000 or more. Indicate whether the trust received any excess contributions.

Prepare Schedule A (If Needed)

If you answered “yes” to any self-dealing or taxable expenditure questions, complete Schedule A (Form 990-BL). This schedule details each prohibited transaction and calculates taxes owed.

Review, Sign, and File

The authorized trustee must sign and date the return. Mail the complete return to: Department of the Treasury, Internal Revenue Service Center, Kansas City, MO 64999.

Common Mistakes and How to Avoid Them

Missing the Filing Deadline

Many trustees forget that the deadline is the 15th day of the 5th month, not the familiar April 15 individual tax deadline. Mark your calendar and consider setting reminders two months before the due date.

Failing to Recognize Self-Dealing

Self-dealing violations often happen inadvertently. For example, a trustee might personally loan money to the trust, or the trust might deposit money in a bank where a trustee works. Both constitute self-dealing.

Incomplete Financial Records

Scrambling to reconstruct financial information at filing time leads to errors and omissions. Maintain organized records throughout the year with clear documentation for every transaction.

Mixing Personal and Trust Expenses

Administrative expenses must be reasonable and necessary for trust operations. Personal expenses cannot be paid directly by the trust.

Ignoring Public Disclosure Rules

Most of Form 990-BL becomes publicly available. Don't include sensitive personal information beyond what's required.

Not Filing Extensions When Needed

If you can't file by the deadline, filing Form 8868 for an extension is mandatory, not optional, to avoid immediate penalties.

Paying Excessive Compensation

Trustee compensation must be reasonable for the services provided. Compare your compensation levels to similar organizations and document how you determined reasonableness.

What Happens After You File

Processing Timeline

After you mail Form 990-BL to the Kansas City Service Center, the IRS typically takes 6-8 weeks to process the return. You won't receive an acknowledgment letter unless there's a problem or you owe additional taxes.

Public Availability

Within a few months of processing, your Form 990-BL (except Part IV and Schedule A) becomes available for public inspection. The IRS may publish it online, and anyone can request copies directly from your trust or through the IRS.

IRS Review and Audits

The IRS may examine your return as part of routine compliance checking or select it for audit. If selected, you'll receive a letter requesting additional documentation. Most examinations focus on self-dealing transactions, benefit payment documentation, and whether expenditures align with exempt purposes.

Correction Requirements

If you discovered and reported self-dealing or taxable expenditures on Schedule A, you must correct the violations. For self-dealing, this means undoing the transaction and restoring the trust's financial position.

Maintaining Exempt Status

Filing Form 990-BL on time helps maintain your tax-exempt status. Failing to file for three consecutive years results in automatic revocation of exemption.

FAQs

Q1: Our trust received less than $50,000 in gross receipts last year. Do we still need to file Form 990-BL?

No, trusts normally receiving $50,000 or less in annual gross receipts can file the simpler Form 990-N electronic notice (e-Postcard) instead. However, if you had any self-dealing or taxable expenditures during the year, you still must file Form 990-BL with Schedule A to report the excise taxes.

Q2: One of our trustees deposited trust funds in their personal bank account. Is this a problem?

Yes, this is a serious problem. Trust funds must never be commingled with personal funds. This constitutes self-dealing and potentially taxable expenditure. Immediately transfer the funds to a proper trust account and consult a tax professional about filing Schedule A to report the self-dealing.

Q3: We paid our trustee $75,000 this year for part-time work. How do we know if this is reasonable?

Compensation must be reasonable for the time, effort, and responsibilities involved. Compare your situation to similar trusts, document your decision-making process, and consider obtaining an independent compensation study. If compensation seems high relative to the trust's size and complexity, you may face self-dealing allegations.

Q4: Can we invest trust assets in corporate stocks or mutual funds to earn better returns?

No. Section 501(c)(21) strictly limits investments to: (1) U.S. government debt securities, (2) state or local government obligations not in default, and (3) time or demand deposits in banks or insured credit unions. Investing in other assets would be a taxable expenditure subject to excise taxes.

Q5: We discovered a self-dealing transaction from two years ago. What should we do?

Act quickly to correct the situation. First, undo the transaction and restore the trust's financial position. Second, file amended returns for all affected years, including Schedule A to report and pay the excise taxes. Third, document your correction efforts thoroughly.

Q6: How long must we keep records after filing Form 990-BL?

The IRS recommends keeping records for at least three years from the filing date or due date, whichever is later. However, keep records supporting asset acquisitions, trust formation documents, and IRS determination letters permanently.

Q7: Our trust instrument was amended this year. What do we report?

Check “Yes” on line 22 of Part III (Questionnaire) and attach a conformed copy of the amendments to your Form 990-BL. A conformed copy is one that matches the original document—if unsigned, include a written declaration from an authorized officer certifying that the copy is complete and accurate.

This guide provides general information about Form 990-BL for the 2014 tax year based on IRS publications and instructions. It is not tax advice. Consult a qualified tax professional for guidance on your specific situation. For current requirements, visit IRS.gov/form990bl.

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