PUBLIC LAW 104-191—AUG. 21, 1996 110 STAT. 2085 "(C) EXCEPTION FOR CHURCH PLANS.— T h is paragraph shall not apply to any failure under a church plan (as defined in section 414(e)). " (c) LIMITATIONS ON AMOUNT OF TAX.— "(1) TAX NOT TO APPLY WHERE FAILURE NOT DISCOVERED EXERCISING REASONABLE DILIGENCE. —N O tax shall be imposed by subsection (a) on any failure during any period for which it is established to the satisfaction of the Secretary that the person otherwise liable for such tax did not know, and exercising reasonable diligence would not have known, that such failure existed. " (2) TAX NOT TO APPLY TO FAILURES CORRECTED WITHIN CERTAIN PERIODS.—No tax shall be imposed by subsection (a) on any failure if— "(A) such failure was due to reasonable cause and not to willful neglect, and "(B)(i) in the case of a plan other than a church plan (as defined in section 414(e)), such failure is corrected during the 30-day period beginning on the first date the person otherwise liable for such tax knew, or exercising reasonable diligence would have known, that such failure existed, and "(ii) in the case of a church plan (as so defined), such failure is corrected before the close of the correction period (determined under the rules of section 414(e)(4)(C)). " (3) OVERALL LIMITATION FOR UNINTENTIONAL FAILURES.— In the case of failures which are due to reasonable cause and not to willful neglect— "(A) SINGLE EMPLOYER PLANS.— "(i) IN GENERAL. —In the case of failures with respect to plans other than specified multiple employer health plans, the tax imposed by subsection (a) for failures during the taxable year of the employer shall not exceed the amount equal to the lesser of— "(I) 10 percent of the aggregate amount paid or incurred by the employer (or predecessor employer) during the preceding taxable year for group health plans, or "(II) $500,000. " (ii) TAXABLE YEARS IN THE CASE OF CERTAIN CON- TROLLED GROUPS.— For purposes of this subparagraph, if not all persons who are treated as a single employer for purposes of this section have the same taxable year, the taxable years taken into account shall be determined under principles similar to the principles of section 1561. "(B) SPECIFIED MULTIPLE EMPLOYER HEALTH PLANS.— "(i) IN GENERAL.—In the case of failures with respect to a specified multiple employer health plan, the tax imposed by subsection (a) for failures during the taxable year of the trust forming part of such plan shall not exceed the amount equal to the lesser of— "(I) 10 percent of the amount paid or incurred by such trust during such taxable year to provide medical care (as defined in section 9805(d)(3))
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