Baizer v. Commissioner of Internal Revenue, 204 F.3d 1231 (9^th Cir. 2000)-This appeal raised the issue of whether the Department of Treasury has the authority to impose tax penalties as a result of "prohibited transactions" with a qualified pension plan when the Department of Labor has entered into a consent judgment concerning the plan.  This court found that the Department of Treasury does in fact possesses such authority under the enforcement provisions. ERISA permits both the DOL and the Department of the Treasury to promulgate regulations dealing with ERISA's provisions, including the prohibited transaction rules at issue.  The enforcement provisions of President Carter's 1978 Reorganization Plan specifically allocated regulatory and enforcement power between the two departments.

Part of the reasoning allowing both departments to pursue "prohibited transactions" violations is that "a prohibited transaction under 29 U.S.C. § 1106(a)(1)(A) is similar to, but not the equivalent of a prohibited transaction under 26 U.S.C. §  4975(c)(1)(A) in that the Internal Revenue Code imposes its penalties in strict fashion, without any inquiry into the subjective state of mind of the taxpayer.  However, ERISA requires that the taxpayer either know or should know that the transaction is taking place."

Regardless of this legal issue, the court concluded, the consent judgment in question did not actually constitute a finding by the DOL that the transfer was not a prohibited transaction.  Furthermore, the Consent Judgment expressly provided that "obligations imposed by this Judgment are not binding on any government agency other than the [DOL].”