4.71.5  Form 5330 Examinations

Manual Transmittal

July 31, 2015

Purpose

(1) This transmits revised IRM 4.71.5, Employee Plans Examination of Returns - Form 5330 Examinations.

Background

IRM 4.71.5 contains procedures for examining, processing and closing Form 5330, Return of Excise Taxes Related to Employee Benefit Plans.

Material Changes

(1) Paragraphs (3) and (13) of IRM 4.71.5.6.4 were revised to provide that Form 5330 exam closing letters are mailed out by the exam group instead of Examinations Special Support and Processing (ESSP).

(2) Paragraphs (9) and (10) of IRM 4.71.5.6.4 were revised to reflect changes in the documents that are required to be in a paper file when an agreed Form 5330 exam is closed.

(3) Effective January 2, 2015, the authority for issuing technical advice (including technical advice memoranda (TAMs)) has been transferred from the Employee Plans office of the Tax Exempt and Government Entities Division (TE/GE) to the TE/GE Office of Associate Chief Counsel (TE/GE Counsel). IRM 4.71.5.13, Requests for Waivers or Exemption from IRC 4971/4975 Excise Taxes, has been revised accordingly.

(4) Other minor editorial changes, including revisions to reflect plain language requirements, were made throughout the document.

Effect on Other Documents

This supersedes IRM 4.71.5 dated March 19, 2014.

Audience

Tax Exempt and Government Entities
Employee Plans

Effective Date

(07-31-2015)

Robert S. Choi
Director, Employee Plans
Tax Exempt and Government Entities

4.71.5.1  (07-31-2015)
Overview of Form 5330 Examinations

  1. This section provides procedures for examining and closing Form 5330, Return of Excise Taxes Related to Employee Benefit Plans.

  2. Examinations of Form 5330 returns may result in the collection of excise taxes and are generally picked up during a Form 5500 series exam (Form 5500, Annual Return/Report of Employee Benefit Plan; Form 5500-SF, Short Form Annual Return/Report of Small Employee Benefit Plan; and Form 5500-EZ, Annual Return of One-Participant (Owners and Their Spouses) Retirement Plan).

  3. A Form 5330 exam case may originate from several sources:

    1. A Form 5500 exam may be expanded to include filed Forms 5330

    2. A delinquent Form 5330 may be secured as the result of a Form 5500 exam

    3. A Form 5330 may be examined or secured as a result of a Department of Labor (DOL) referral

    4. A filed Form 5330 may be assigned without the related Form 5500

    5. A delinquent Form 5330 may be secured through an Employee Plans Compliance Unit (EPCU) compliance check

  4. AIMS processing requirements for agreed Forms 5330 secured as part of the exam process are reflected in IRM 4.71.5.6, Processing Agreed Forms 5330, (and subsections thereunder). An agreed Form 5330 is one where the taxpayer has:

    1. Filed Form 5330 reporting the correct amount of tax, and

    2. In the case of a prohibited transaction (IRC 4975) or minimum funding (IRC 4971), correction has been made.

    Note:

    It is not necessary for excise tax to be paid for a case to be agreed.

  5. AIMS processing requirements for unagreed Forms 5330 secured as part of the exam process are reflected in IRM 4.71.5.9, Unagreed Cases, (and subsections thereunder).

  6. When conducting internal research related to Forms 5330, see IRM 4.71.2, Overview of IDRS and Non-Master File Transcript Requests for a description of different Integrated Data Retrieval System (IDRS) command codes.

4.71.5.2  (07-31-2015)
Form 5330 Filing Requirements

  1. Forms 5330 are most commonly filed to report the following taxes:

    1. Failure to meet minimum funding standards (IRC 4971)

    2. Nondeductible contributions to qualified employer plans (IRC 4972)

    3. Excess contributions to IRC 403(b)(7)(A) custodial accounts (IRC 4973(a)(3))

    4. Prohibited transactions (IRC 4975)

    5. Certain dispositions by employee stock ownership plans (ESOPs) (IRC 4978)

    6. Certain excess contributions (IRC 4979)

    7. Certain prohibited allocation of employer stock in an ESOP that failed to meet the requirements of IRC 409(p) (IRC 4979A)

    8. Certain reversions of plan assets (IRC 4980)

4.71.5.2.1  (07-31-2015)
Form 5330 Due Dates

  1. The Form 5330 is due for the Chapter 43 excise taxes as indicated in the following table:

    Excise Tax Due Date of Form 5330 Examples
    IRC 4971 By the later of:
    • The last day of the 7th month after the end of the employer’s tax year, or

    • 8 1/2 months after the last day of the plan year that ends with or within the employer’s tax year.

    The employer's tax year ends March 31, and the plan is on a calendar year. If the applicable plan year ends 12/31/2013, the corresponding tax year would end 3/31/2014. The Form 5330 would be due on October 31, 2014.
    IRC 4972, IRC 4973(a)(3), IRC 4975,IRC 4976, IRC 4978, and IRC 4979A By the last day of the 7th month after the end of the tax year of the employer or other person who must file the return. If the employer (or other person required to file the return) is on a year tax year of December 31, 2013, the Form 5330 is due on July 31, 2014. If the employer (or other person required to file the return) is on a fiscal tax year ending October 31, 2013, the Form 5330 is due on May 31, 2014.
    IRC 4977 By the last day of the 7th month after the end of the calendar year in which the excess fringe benefits were paid to the employees of the employer.  
    IRC 4979 By the last day of the 15th month after the close of the plan year to which the excess contributions or excess aggregate contributions relate. Excess contributions were made to a plan for the plan year ending December 31, 2013. The Form 5330 for such excess contributions is due by March 31, 2015.
    IRC 4980 No later than the last day of the month following the month in which the reversion occurred. Trust assets reverted back to an employer on May 16, 2014 from a plan having a plan year ending on December 31st. The Form 5330 is due for the reversion on June 30, 2014.
    IRC 4980F By the last day of the month following the month in which the failure occurred.  

4.71.5.3  (07-31-2015)
General Procedures for Form 5330 Exams

  1. Follow basic exam techniques and guidelines as detailed in IRM 4.71.1, Overview of Form 5500 Examination Procedures. This includes:

    1. Securing and reviewing source documents substantiating the applicability of excise tax.

    2. Utilizing Form 5772-EP, EP Workpaper Summary, and Form 5773, EP Workpaper Summary Continuation Sheet, (or its equivalent) and workpapers to reflect documentation of the exam findings regarding potential excise tax and penalty issues.

  2. Provide complete and accurate calculations of excise tax and applicable penalties to the taxpayer and Power of Attorney (POA). See IRM 20.1, Penalty Handbook, and IRM 20.1.8, Employee Plans and Exempt Organizations Miscellaneous Civil Penalties, for guidance related to penalties.

  3. In the case of prohibited transactions, if the taxable period extends into a taxable year for which a Form 5330 is not yet due:

    1. Notify the taxpayer of the requirements to file Form 5330 and pay the tax shown thereon for such taxable year.

    2. If the taxpayer chooses to voluntarily file the return with you, verify the accuracy of the return before forwarding the return to the Ogden Service Campus (formerly Ogden Service Center). If a discrepancy is noted, it may be appropriate to initiate an exam of the voluntarily filed return.

    3. If the return is not filed, prepare Form 5666, TE/GE Referral Information Report, and forward it to EP Classification for future follow-up at:
      IRS EP Classification
      9350 Flair Dr., 4th Floor
      El Monte, CA. 91731–2885

  4. When working a claim filed on a Form 5330, follow the procedures in IRM 4.71.8, EP Claims.

4.71.5.4  (07-31-2015)
Initial Contact with the Taxpayer

  1. In most instances, Form 5330 exams are initiated as a result of issues discovered in a related Form 5500 exam.

  2. Once adequate documentation has been gathered and the determination has been made to pursue an excise tax issue, notify the impacted taxpayer in writing of the Form 5330 exam.

    1. Issue an individually designed letter (i.e., a modified Letter 1346 or Letter 1474) containing pertinent facts, law, government position, and excise tax calculations (also include IRC 6651(a) penalty calculations if applicable).

      Note:

      When the issue involves a prohibited transaction that has not been corrected, the letter should include an explanation of the assertion of IRC 4975(b) tax. Likewise, when the issue involves a funding deficiency that has not been corrected, the letter should include an explanation of the assertion of IRC 4971(b) tax.

    2. Solicit the filing of Forms 5330 for all years in which returns are due.

    3. If additional tax is being assessed on a year when Form 5330 was previously filed, use Form 870-EP, Waiver of Restrictions on Assessment and Collection of Deficiency in Tax and Acceptance of Overassessment, to secure agreement on the additional assessment of tax. See IRM 4.71.5 Exhibit 1 at IRM 4.71 - Employee Plans Examination Exhibits for an example of a completed Form 870-EP.

    4. In the case of prohibited transactions, if the taxable period extends into a taxable year for which a Form 5330 is not yet due, notify the taxpayer of the requirements to file Form 5330 and pay the tax for such taxable year.

    5. Include penalty calculations if penalties are being imposed. IRC 6651(a) penalties are the penalties that are applicable to delinquent Forms 5330.

      Note:

      See IRM 4.71.18.2, Failure to File and Failure to Pay - IRC 6651(a)(1) & (2), for a discussion on IRC 6651(a) penalties.

    6. Solicit payment of excise tax with applicable IRC 6651(a) penalties to stop the accrual of further interest charges.

    7. Send Pub 1, Your Rights as a Taxpayer, with the letter if not previously given to the taxpayer.

    8. Send a copy of the letter to any authorized POA.

4.71.5.5  (07-31-2015)
Overview of Establishing Forms 5330 on RCCMS and AIMS

  1. Forms 5330 will be established on AIMS and RCCMS by EP Classification after filed returns or substitute for returns (SFR) have been processed by the Ogden Service Campus and the return has been posted to the Business Master File (BMF) as evidenced by a transaction code (TC) 150.

  2. Once a delinquent Form 5330 return is received from the taxpayer, process the case per IRM 4.71.5.6.2, Processing Delinquent Forms 5330 Received from the Taxpayer.

  3. Process Forms 5330 received from the taxpayer for years not yet due per IRM 4.71.5.6.3, Securing Forms 5330 Not Yet Due.

  4. Close agreed Forms 5330 that are due or delinquent per IRM 4.71.5.6.4, Closing Agreed 5330 Exams.

  5. At the first indication that a case is unagreed (e.g., the taxpayer refuses to properly file a Form 5330 that is due) process substitute for return(s) (SFR) in accordance with IRM 4.71.5.9, Unagreed Cases.

  6. When examining a Form 5330 return that was previously filed by the taxpayer (i.e., claims and instances where a determination is made that insufficient tax was reported), conduct research on the Integrated Data Retrieval System (IDRS).

    1. Obtain a transcript of the account (BMFOLT and BMFOLR prints) for MFT 76 with the taxpayer’s EIN/SSN for the applicable year to verify the filed status of the return and the amount of tax assessed. The return was processed on Business Master File (BMF) if a TC "150" is present.

    2. Verify the statute date displayed on IDRS is accurate for the return filed, the type of excise tax reported and that the statute established also applies to the type of excise tax being addressed (i.e., the statute date for 4971(a) excise tax does not begin to run until the Form 5330 is filed, but the statute for IRC 4975 begins to run when the related Form 5500 is filed).

    3. In addition to checking BMFOLT, IDRS command code TXMOD should also be used to verify the type of tax reported.

      Note:

      When researching a Form 5330 with an EIN, do not put a file source (no "P" or "N" ) after the EIN.

      Note:

      When researching a Form 5330 with an SSN, use a file source of "V" after the SSN (i.e., 123-45-6789V).

4.71.5.6  (07-31-2015)
Processing Agreed Forms 5330

  1. A delinquent Form 5330 is considered "agreed" when:

    1. Form 5330 is filed, and

    2. Correction is made (if the issue is minimum funding or a prohibited transaction).

      Note:

      For purposes of IRC 4971, a case will also be processed as an agreed case for a specific year if the taxpayer files Form 5330 and reports the correct amount of IRC 4971(a) and IRC 4971(b) tax, even if the funding deficiency has not been corrected.

  2. RCCMS and AIMS establishment of all "agreed" delinquent returns is required when tax is due in the amount of $500 or more in any year. For example, if excise taxes in the amounts of $400 and $600 are due in 201212 and 201312, respectively, delinquent Forms 5330 are required to be established on RCCMS and AIMS for both years.

  3. If excise tax is less than $500 in all years being considered, Forms 5330 should still be solicited, but RCCMS and AIMS establishment is at the group manager's discretion.

  4. Follow the procedures in IRM 4.71.5.9, Unagreed Cases, if excise tax is due on a delinquent Form 5330 and the taxpayer refuses to file or correct the funding deficiency in the case of IRC 4971 or the prohibited transaction in the case of IRC 4975 tax.

  5. Entity Module Verification– The agent is responsible for securing an INOLES print to determine if an entity module is present on the BMF.

    Note:

    The case will not establish on RCCMS and AIMS until an entity module has been established.

    1. When obtaining an INOLES print for an SSN, use a file source of "V" after the SSN (i.e., INOLES123-45-6789V).

    2. When obtaining an INOLES print for an EIN, do not use a file source (i.e., INOLES70-1234567).

    3. If INOLES produces a screen with at least the taxpayer’s name and address, an entity module has been established on the BMF.

    4. If INOLES produces a blank screen, the BMF entity has not been established.

      Note:

      This will be a frequent occurrence with an SSN.

  6. If there is no entity module on the BMF, prepare Form 4442, Inquiry Referral, at the earliest possible time to establish a module.

    1. Fax Form 4442 to Examinations Special Support and Processing (ESSP) at 718-834-6521.

    2. Once the Form 4442 has been processed by ESSP, the agent will be notified by fax or email that the form has been processed.

    3. See IRM 4.71.5.6.1, Preparation of Form 4442, for Form 4442 instructions.

  7. RCCMS and AIMS Establishment– Forms 5330 will be established on RCCMS and AIMS by EP Classification once the Form 5330 has been filed and there is a TC 150 reflecting that the return has posted on BMF.

    Note:

    The case must be fully established on RCCMS and AIMS before the case is closed to ESSP.

  8. Once a delinquent Form 5330 return is received from the taxpayer, process it in accordance with IRM 4.71.5.6.2, Processing Delinquent Forms 5330 Received from the Taxpayer.

  9. Periodically request a BMFOLT print to confirm that the Form 5330 has been processed and has posted. When the return posts, a 150 transaction code (TC 150) will be reflected on the account.

    Note:

    It normally takes four to eight weeks for the Ogden Campus to process a return once it is received.

  10. When the return posts, complete the Related or Subsequent Year Form 5500, 5330 and 990-T Request Form (the Form) and forward it to your manager. See IRM 4.71.5 Exhibit 3 at IRM 4.71 - Employee Plans Examination Exhibits for an example of this form.

  11. The manager will email the approved Form to EP Classification at *TE/GE-EP-Classification.

  12. Once the Form is received, EP Classification will process the request.

    Note:

    The AIMS account and RCCMS activity will be created within a few days in the group’s organization code.

  13. Process Forms 5330 received from the taxpayer for years not yet due per IRM 4.71.5.6.3, Securing Forms 5330 Not Yet Due.

  14. Close agreed Forms 5330 that are due or delinquent per IRM 4.71.5.6.4, Closing Agreed Form 5330 Exams.

4.71.5.6.1  (07-31-2015)
Preparation of Form 4442

  1. Prepare Form 4442 to establish an entity module on the BMF.

  2. The following line items will be completed when preparing Form 4442:

    1. Item 1 (Recipient’s Name): Enter the name of the agent conducting the exam.

    2. Item 2 (ID Number): Enter the agent’s group number and primary business code for the Area. The codes are:

      Primary Business Code (PBC) Area
      401 Northeast
      402 Mid-Atlantic
      403 Great Lakes
      404 Gulf Coast
      406 Pacific Coast
      410 Exam Programs and Review
    3. Item 3 (Received Date): Enter the current date.

    4. Item 8 (Taxpayer’s Name): Enter the taxpayer’s name.

    5. Item 9 (TIN): Enter the taxpayer’s SSN or EIN. If the taxpayer has an SSN, enter a "V" after the SSN.

    6. Item 13 (Current Address): Enter the taxpayer’s address.

    7. Item 15 (Forms): Enter 5330.

    8. Item 18 (Processing Campus): Enter Ogden.

  3. Fax the completed Form 4442 to ESSP at 718-834-6521. Include a contact name and phone number and fax number on the fax cover sheet.

  4. ESSP will call or email the agent or fax Form 4442 back to the agent, providing notification that the request has been completed. See IRM 4.71.5 Exhibit 2 at IRM 4.71 - Employee Plans Examination Exhibits for an example of a completed Form 4442.

4.71.5.6.2  (07-31-2015)
Processing Delinquent Forms 5330 Received from the Taxpayer

  1. Date stamp all delinquent Forms 5330 with the IRS received date as soon as possible after receipt from the taxpayer.

  2. Verify that the Form 5330 received is the most current version of the form.

  3. Verify the accuracy of the entire Form 5330, with specific attention given to the following items:

    1. Ensure that the filer's name is correct and that it matches the name on INOLES for the applicable EIN/SSN.

      Note:

      If the filer's name does not match what is on INOLES, the return will reject at the Ogden Campus.

    2. Ensure that the correct amount of tax is reported on all applicable lines of the return and that supporting schedules are completed.

      Note:

      For example, an entry on line 8a on page one of Form 5330 also requires a corresponding entry on Schedule D lines 1 and 2.

    3. Ensure that the correct tax year is listed.

    4. Ensure that the correct TIN is listed for the filer.

      Note:

      Only one TIN (either an EIN or SSN) should be listed in Item B on page one of the return.

    5. Ensure that the correct plan number is listed.

    6. Ensure that the return is signed by the taxpayer.

  4. Filing of original tax returns via fax will only be allowed as part of a return perfection process (e.g., securing missing schedule or missing signature) initiated by the IRS or in the post-filing/non-filing activities. Tax returns can be received via fax as part of return perfection even if a taxpayer’s signature is required since Chief Counsel has advised that in circumstances where contact with the taxpayer has been made and documented, faxed signatures are legally sufficient.

  5. If a substitute for return was previously sent to Ogden in accordance with IRM 4.71.5.9.2, and the taxpayer is now filing a delinquent return with the agent, process the secured return as an amended return (See IRM 4.71.5.6.6).

    1. Check block "H" at the top of the first page of Form 5330, indicating its an amended return.

    2. Write "AMENDED RETURN SECURED BY TE/GE: EMPLOYEE PLANS" on the top of Form 5330.

  6. If payment is received, process checks in accordance with Government Accountability Office (GAO) recommendations:

    1. Make sure the check is made payable to the United States Treasury. If the payee line is blank or the check is made payable to "IRS" , overstamp the check with the "United States Treasury" stamp.

    2. The check information (date of check, check number, amount, payer, IRS recipient name and date received) must be entered into the logbook required to be maintained by the group.

    3. After preparation of Form 3244-A, Payment Posting Voucher - Examination, and Form 3210, Document Transmittal, a group manager must review the Form 3210, compare it to the Form 3244-A and sign the Form 3210. The person who prepares the Form 3244-A cannot be the same person who signs the Form 3210.

      Note:

      Make sure that the current version of Form 3244-A is used.

    4. Send the check along with the Form 5330 package, express mail (next day) to the Ogden Submission Processing Campus by the end of the next business day after receipt,.

    5. If the check cannot be mailed to Ogden the same day it is received, secure it overnight in a locked file.

    6. Put the check along with the completed Form 3244-A in a separate addressed envelope and put the envelope within the express mail envelope.

    7. If the acknowledgement copy of Form 3210 is not received back from the Ogden Service Campus within 10 days after mailing, contact the Service Campus to follow-up receipt of the check. Document these actions in the group logbook.

  7. If no payment is received, send the Form 5330 package as soon as administratively possible (preferably within three business days) to the Ogden Campus.

  8. Write in bold red letters on the top margin of the original return: "DELINQUENT RETURN SECURED BY TE/GE EMPLOYEE PLANS" .

    Reminder:

    Leave room in the upper right corner for the DLN to be entered by the Service Campus.

  9. The prepared package forwarded to the Service Campus will contain the following:

    1. Form 3210

      Note:

      See IRM 4.71.5 Exhibit 4 at IRM 4.71 - Employee Plans Examination Exhibits for an example of a completed Form 3210.

    2. Any payments received (e.g., check) with Form 3244-A (placed in a separate addressed envelope per paragraph (6) (f) above)

      Note:

      See IRM 4.71.5 Exhibit 6 at IRM 4.71 - Employee Plans Examination Exhibits for an example of a completed Form 3244-A.

    3. Form 3198-A, TE/GE Special Handling Notice (attached to each Form 5330 being processed)

      Note:

      Instructions regarding the assessment or non-assessment or IRC 6651(a)(1) and IRC 6651(a)(2) penalties should be written in the "Other Instructions" section on the bottom of the form. Normally penalties will be assessed by the Ogden Campus unless specific instructions are provided otherwise.

      Note:

      See IRM 4.71.5 Exhibit 5 at IRM 4.71 - Employee Plans Examination Exhibits for an example of a completed Form 3198-A.

    4. Original Delinquent Return

      Note:

      Fasten items b) through d) in corresponding order with the payment on top and the return on the bottom.

  10. Mail delinquent Form 5330 packages without remittance to:

    IRS
    1973 N. Rulon White Blvd.
    Mail Stop 6054
    Ogden, UT 84404

  11. Mail delinquent Form 5330 packages with remittance less than $100,000 to:

    IRS
    Attn: Teller Unit
    1973 N. Rulon White Blvd.
    Mail Stop 1999
    Ogden, UT 84404

  12. If remittance is $100,000 or more, address Form 3210 to the physical address in paragraph (11), but to Mail Stop 2003 instead of Mail Stop 1999.

  13. When addressing the Express Services Routing slip (Form 9814), the recipient name should be "Mail Supervisor" with the recipient phone number of (801) 620-3750. This is the case whether or not payment is remitted.

  14. Before mailing the Form 5330 package, make a copy of the entire package for the case file.

  15. Annotate in bold letters on the top of the retained copy: "DELINQUENT RETURN SECURED BY TE/GE EMPLOYEE PLANS—ORIGINAL RETURN SENT TO OGDEN SC ON 00/00/00" (list the date mailed).

  16. If an entity module was not previously established, generate a Form 4442 and forward it to the Brooklyn Processing Unit per IRM 4.71.5.6.1. Form 4442 can be faxed to the Brooklyn Processing Unit at (718) 834-6521.

  17. Periodically request a BMFOLT print to confirm that the return was processed. When the return posts, a 150 transaction code (TC 150) will be reflected on the account.

    Note:

    It normally takes four to eight weeks for the Ogden Campus to process a return once it is received.

  18. When the return posts, complete the Related or Subsequent Year Form 5500, 5330 and 990-T Request Form (the Form) and forward it to your manager. See IRM 4.71.5 Exhibit 3 at IRM 4.71 - Employee Plans Examination Exhibits for an example of this form.

  19. The manager will send the approved Form to EP Classification via the EP Classification mailbox at *TE/GE-EP-Classification.

  20. Once the Form is received, EP Classification will process the request.

    Note:

    The AIMS account and RCCMS activity will be created within a few days in the group’s organization code.

4.71.5.6.2.1  (07-31-2015)
Delinquent Forms 5330 Package Contents

  1. Complete the Form 3210 as follows:

    1. If the remittance is not received, address the Form 3210 as follows:
      IRS
      1973 N. Rulon White Blvd.,
      Mail Stop 6054
      Ogden, UT 84404

      Note:

      When addressing Form 9814, Request for Mail/Shipping Service, and the Form 3210 the recipient name should be "Mail Supervisor" with the recipient phone number of (801) 620-3750.

    2. If the remittance of less than $100,000 is received, address the Form 3210 as follows:
      IRS
      Attn: Teller Unit
      1973 N. Rulon White Blvd.,
      Mail Stop 1999
      Ogden, UT 84404

      Note:

      When addressing Form 9814 and the Form 3210 the recipient name should be "Mail Supervisor" with the recipient phone number of (801) 620-3750.

  2. If remittance is $100,000 or more, address Form 3210 to the address in paragraph (1) b), but to Mail Stop 2003 instead of Mail Stop 1999.

  3. In the body of the Form 3210, Document Transmittal:

    1. List the forms secured (Form 5330), the taxpayer’s name and identification number (TIN), the applicable plan number, and the tax year(s) being sent.

    2. If payment is received also list the check number and the amount of the check.

    Note:

    See IRM 4.71.5 Exhibit 4 at IRM 4.71 - Employee Plans Examination Exhibits for an example of a completed Form 3210.

  4. Complete Form 3198-A as follows:

    1. List your name, address, ID number, phone number, PBC, and group number in the "Required Entries" section.

    2. List the taxpayer's EIN/SSN, MFT 76, plan number, year of the attached Form 5330, taxpayer's name, and name control in the "Required Entries" section.

    3. List all years for which the taxpayer’s Form(s) 5330 are being processed simultaneously, with the applicable statute date.

    4. In the "Other Instructions" section, provide instructions regarding the assessment or non-assessment of IRC 6651(a) penalties. If penalties are not being assessed, write and highlight: "Do Not Assess Penalties, Reasonable Cause Established" .

      Note:

      IRC 6651(a) penalties will automatically be assessed by the Ogden Campus unless specific instructions are provided to the contrary.

      Note:

      The agent should document in the workpapers the basis for the assessment or non-assessment of IRC 6651(a) penalties.

    Note:

    See IRM 4.71.5 Exhibit 5 at IRM 4.71 - Employee Plans Examination Exhibits for an example of a completed Form 3198-A.

    Note:

    Attach a return specific Form 3198-A to each Form 5330. Penalties will be assessed if the agent fails to attach Form 3198-A.

  5. If payment is received, complete Form 3244-A for each year in which payment is received as follows:

    1. SSN/EIN

    2. Form number/MFT: Enter 5330/76

    3. Tax period

    4. Plan number

    5. Transaction date: Enter the date the payment was received.

    6. Taxpayer name, address and zip code

    7. Transaction Data: List the entire amount received for the year under transaction code 610 (Remittance With Return) and the same amount under "Total payment." Also list $0 next to transaction code 570.

    8. Remarks: List the check number and the amount of the check. If the check represents payments for more than one year, list each year and the amount applied to each year.

    9. Prepared by: Enter the agent’s name and group number.

      Note:

      Forms 3210, 3198-A, and 3244-A are available on RCCMS.

      Note:

      See IRM 4.71.5 Exhibit 6 at IRM 4.71 - Employee Plans Examination Exhibits for an example of a completed Form 3244-A.

4.71.5.6.3  (07-31-2015)
Securing Forms 5330 Not Yet Due

  1. In the case of prohibited transactions, if the taxable period extends into a taxable year for which a Form 5330 is not yet due:

    1. Notify the taxpayer of the requirements to file Form 5330 and pay the tax shown thereon for such taxable year.

    2. If the taxpayer chooses to voluntarily file the Form 5330 return with the agent, check the accuracy of the return, prepare the Form 5330 package, and forward it to the Ogden Submission Processing Campus in accordance with IRM 4.71.5.6.3, with the following exceptions.

      Note:

      Write, "RETURN SECURED BY TE/GE: EMPLOYEE PLANS" at the top of the return. Do not prepare or submit Form 3198-A.

  2. Establish the return on RCCMS and AIMS and examine it at the group manager's discretion.

    Note:

    Since the return is not yet due, the group manager has complete discretion on whether it is established on RCCMS and AIMS. The rules for the establishment of delinquent returns are found in IRM 4.71.5.6 (2) & (3).

  3. If the return is established on RCCMS and AIMS follow the procedures for delinquent secured returns found in IRM 4.71.5.6.2 with these exceptions.

    1. Use disposal code 02 (disposal code 107 on RCCMS).

    2. Do not put an entry in item 37 of Form 5599, TE/GE Examined Closing Record.

    3. Leave item 414 of Form 5599 blank.

  4. If the group manager has determined that the return will not be established on RCCMS and AIMS, list the excise tax for the Form 5330 years not established on line 602 of Form 5650 (if one is prepared) and on the "EP taxes" line of the RCCMS Closing Record of the related Form 5500 exam.

    Note:

    See the note under paragraph (2) of IRM 4.71.5.6.3.

  5. If the Taxpayer does not voluntarily file the Form 5330, prepare Form 5666 and forward to EP Classification for future follow-up at:

    IRS EP Classification
    9350 Flair Dr., 4th Floor
    El Monte, CA 91731–2885

4.71.5.6.4  (07-31-2015)
Closing Agreed Form 5330 Exams

  1. Forms 5330 exams are considered agreed when:

    1. The issue giving rise to excise tax has been corrected, and

    2. Form 5330 is secured from the taxpayer reflecting the correct amount of tax, or

    3. A signed Form 870-EP is secured reflecting an agreed upon change to the tax previously reflected on a filed Form 5330 return, or

    4. The agent determines that no additional tax is due on a previously filed Form 5330 return that he/she examined.

      Note:

      Follow the procedures in IRM 4.71.8, EP Claims, when working a claim.

  2. Prepare Form 5772-EP and Form 5773 (or its equivalent) and workpapers to document exam procedures and findings and save them in the RCCMS Office Documents folder.

  3. Generate a closing letter for issuance covering all Form 5330 years examined.

    1. Use Letter 2085 when the exam results in no change to the tax reported on a filed Form 5330.

      Note:

      Letter 2085 is the normal closing letter used to close a delinquent Form 5330 picked up in conjunction with a Form 5500 exam and is to be mailed from the group.

    2. Use Letter 2086 when the exam results in no change to the tax reported on the filed Form 5330, but additional restorative correction is made.

    3. Use Letter 2087 when a signed Form 870-EP is secured reflecting an agreed upon change to the tax previously reflected on a filed Form 5330 return. The letter can also be used if a delinquent Form 5330 is secured and you have additional comments that he you want to convey to the taxpayer

    4. All Form 5330 closing letters will be mailed out by the exam group.

    5. Save a copy of the closing letter in the RCCMS Office Documents folder. If the group has a scanner, scan the signed and dated closing letter into RCCMS.

  4. The following disposal codes should be used:

    Disposal Codes Conditions
    AIMS 02 (RCCMS = 107) If a previously filed return is examined and there is no change to the tax liability, or a timely filed return is secured and there is no change to the tax liability reported.
    AIMS 03 (RCCMS = 102) The tax has been corrected on a previously filed return and the taxpayer agreed to the changes by signing a Form 870-EP or by amending Form 5330.
    AIMS 06 (RCCMS = 208) A delinquent return was secured.
    AIMS 08 (RCCMS = 206) When the exam discloses an operational or administrative practice that, if continued or enlarged, would have an adverse impact upon the plan in the future.
  5. For disposal code 06 (disposal code 208 in RCCMS), enter excise tax reported on the Form 5330, secured during the exam, on line 414 of Form 5599, TE/GE Examined Closing Record, used to close the Form 5330 exam.

    Note:

    No entry should be made in item 414 for disposal codes other than 06.

  6. The agreed Form 5330 exam case file(s) and any related Form 5500 series returns may be closed to ESSP in Brooklyn when the RCCMS files are received from Classification and the return has fully posted on AIMS.

    Note:

    The case must be fully established on RCCMS and AIMS before the case is closed to ESSP.

    Note:

    An AMDISA print showing full establishment of the case on AIMS must be saved in RCCMS.

  7. RCCMS and AIMS establishment of all agreed delinquent returns is required on original returns if one return has tax of $500 or more.

  8. Prepare Form 5599 in accordance with IRM 4.71.5.6.5, Preparation of Form 5599 for Agreed Form 5330 Exams, and save it in the RCCMS Office Documents folder.

  9. Place the following paper documents in a manila folder for all agreed Form 5330 files with a completed Form 10329, Transmittal Sheet-Related Cases, stapled on front:

    • Form 872, Consent to Extend the Time to Assess Tax

    • Form 870-EP (if applicable)

      Note:

      Form 10329 is not required if there are no other paper files or if there are no related returns.

      Note:

      If the group has access to a scanner, these documents should also be scanned and saved in RCCMS. Make sure that the documents include the date and signature.

  10. If not scanned and saved in RCCMS, the following additional paper documents must be in a manila folder for all agreed Form 5330 files with a completed Form 10329 stapled on front:

    • Form 895-EP, Notice of Statute Expiration, (if required to be prepared in accordance with paragraph 2 of IRM 4.71.9.3, Group Manager Responsibilities and Procedures,

    • Copy of the Form 5330 mailed to the Ogden Campus

    • A copy of the check for payment of tax, penalties or interest

    • Form 2848, Power of Attorney and Declaration of Representative, or Form 8821, Tax Information Authorization, attached to the back of the first page of the return (if there is a valid 2848 or 8821 and it's not scanned into the RCCMS Office Documents folder)

    • Any other paper documents necessary to document the exam trail (that are not saved in the RCCMS Office Documents folder) should also be included in the paper file.

  11. If the case is closed with less than 180 days left on the statute of limitations, place the paper case file (if there is one) in a red folder.

  12. Save all copies of workpapers, forms and letters that you prepared, in the RCCMS Office Documents folder using the RCCMS Naming Convention.

    Note:

    Any documents scanned into RCCMS should be the final version of that document that includes the date and signature, if applicable. For example, if the exam closing letter is scanned into RCCMS, it must be a copy that includes the date the letter was mailed and the signature of the Director, EP Exam.

  13. If the group has a scanner, scan all relevant case related documents received from the taxpayer or POA and save them in RCCMS using the RCCMS Naming Convention.

  14. The applicable closing letter will be mailed out by the group manager (or designee).

    Note:

    Make sure the letter is dated and contains the signature of the Director, EP Exam.

  15. Close the case on RCCMS with the "Update AIMS" box checked. The case will be updated to status 51 by the group manager (or designee) when it is closed from the group.

  16. Close all agreed Forms 5330 on RCCMS and AIMS to:

    Internal Revenue Service
    TE/GE:ESSP
    2 Metrotech Center
    100 Myrtle Avenue
    Sixth Floor
    Brooklyn, NY 11201

4.71.5.6.5  (07-31-2015)
Preparation of Form 5599 for Agreed Form 5330 Exams

  1. Form 5599 is required to be completed (and saved in RCCMS) for all Form 5330 exams. Complete the related fields as appropriate within the RCCMS activity.

  2. Complete the line items as follows:

    1. P7-18: Enter the taxpayer’s TIN.

      Note:

      Use a file source of "V" with an SSN (i.e., 123-45-6789V) and no file source with an EIN (i.e., 70-1234567). Remember, the 'V' will not be used on the RCCMS tabs.

    2. P21-22: The MFT is 76.

    3. P24-29: Enter the tax period.

    4. P31-34: Enter the name control.

    5. C: Enter the name of the taxpayer.

    6. P52-54: Enter the three-digit plan number of the related plan.

    7. Item 12 – Tax Liability Adjustment: Enter a transaction code of 300 and $0 if no additional tax is being assessed above what is reflected on the return secured by the agent. If additional tax is being assessed above what was reported on a previously filed Form 5330 by utilization of Form 870-EP, enter a transaction code of 300 and the additional amount of tax being assessed.

      Note:

      If you previously forwarded an agreed delinquent return that the taxpayer voluntarily filed with you to the Ogden Service Campus, the tax assessment would have been made at the Service Campus when they processed the return you sent them. In that case, do not reflect an additional tax as being due in Item 12 to avoid a double assessment.

    8. Item 12 – Penalties (+): If Form 870-EP is signed by the taxpayer and the agent is assessing IRC 6651 penalties, enter transaction code 160 for IRC 6651(a)(1) penalties, and transaction code 270 for IRC 6651(a)(2) penalties, with the corresponding amount of penalties that are being assessed for each penalty.

      Note:

      If a delinquent Form 5330 is secured and forwarded to Ogden, the Service Campus will assess penalties on the return unless the agent provides instructions to the contrary in the "Other Instructions" section of the Form 3198-A that accompanies the delinquent return when it is mailed to the Service Campus.

    9. Item 12 – Penalties (-): If penalties on a secured return are assessed by mistake by the Service Campus, they can be abated on Form 5599 by entering, on this line, transaction codes 161 and 271 (as applicable) and the dollar amount penalties are to be decreased and by entering transaction code 300 and $0 on the Tax Liability Adjustment line (item 12 - Tax Liability Adjustment).

    10. Item 13: Enter the applicable disposal code as follows:

      Disposal Codes Exam Outcome
      02 (RCCMS = 107) No change
      03 (RCCMS = 102) Agreed tax change
      06 (RCCMS = 208) Delinquent return secured
      34 (RCCMS = 103) Claims allowed in full (surveyed)

      Note:

      See Document 6476, Employee Plans Systems Codes, for definitions. Do not use disposal code 12, Amendment Secured, (RCCMS = 202) or disposal code 15, Closing Agreement, (RCCMS = 106) to close Forms 5330.

    11. Item 14: If the statute of limitations has been extended, enter the statute expiration date. Also enter the statute date anytime the Form 5330 relates to excise tax under IRC 4975 for a prohibited transaction since the statute date for IRC 4975 is governed by the Form 5500 statute date.

    12. Item 15: This item will be left blank if the dollar amount in item 12 is $0. If line 12 contains a dollar amount (i.e., additional tax is being assessed on a previously filed return), then a reference number (manual abstract code) should be listed here with the additional amount of tax being assessed (additional tax being assessed is listed in both items 12 and 15). Examples of reference numbers are:

      Reference Number Condition
      159 Prohibited transaction (IRC 4975(a))
      224 Prohibited transaction (IRC 4975(b))
      161 Nondeductible employer contributions (IRC 4972)
      163 Minimum funding (IRC 4971(a))
      225 Minimum funding (IRC 4971(b))
      164 Excess contributions (IRC 4973)
      203 ESOP prohibited allocations (IRC 4979A)
      204 Reversions (IRC 4980)
    13. Item 28: Enter the agent’s time on the case.

    14. Item 30: Enter the technique code:
      2 – Office/Correspondence Exam (OCEP) - full scope
      4 – Field exam - full scope
      6 – OCEP - limited scope/focused audit
      7 – Field exam - limited scope/focused audit

    15. Item 31: Enter the agent’s grade.

    16. Item 32: Enter the grade of the case in the blocks from left to right as two digits (i.e., Grade 9= 09)

    17. Item 33: Enter the agent’s last name; leave a space and then first initial.

    18. Item 37: Enter the delinquent return code. If there is only one delinquent return, enter a "T" . If there is more than one delinquent return, enter a "T" in the latest year and an "R" in all prior years.

    19. Item 40: Enter the project code if there is one. If not, enter 0000.

    20. Item 42: Enter the ARDI Code, if applicable.

    21. Item 50: Enter the agent’s group code.

    22. Item 414: For disposal code 06, delinquent return secured, (RCCMS 208), enter the amount of tax assessed for the year.

      Note:

      No entry should be made for disposal codes other than 06.

      Note:

      Make sure the box under item 50 on page one of the form is checked if an amount is entered in item 414.

    23. Item 416: Enter a "1" if Form 870-EP was secured via fax. If not, leave blank.

  3. See IRM 4.71.5 Exhibit 7 at IRM 4.71 - Employee Plans Examination Exhibits for an example of a completed Form 5599 for an agreed Form 5330 exam with tax that is paid.

4.71.5.6.6  (07-31-2015)
Amended 5330 Returns

  1. Previously filed Forms 5330 returns can be amended two ways:

    1. Filing an amended Form 5330 and checking block "H" for amended return.

    2. Filing Form 870-EP (See IRM 4.71.5 Exhibit 1 at IRM 4.71 - Employee Plans Examination Exhibits for an example of a completed Form 870-EP).

  2. If an amended Form 5330 return is filed with block "H" selected, process the return as provided in IRM 4.71.5.6.2, Securing Forms 5330 Not Yet Due, with the exception that the agent should write "AMENDED RETURN SECURED BY TE/GE: EMPLOYEE PLANS" on the top of Form 5330.

  3. If an executed Form 870-EP is received:

    1. Keep the original Form 870-EP in the case file.

    2. Do not send a copy to the Service Campus.

    3. Tax is assessed from Form 5599 when the additional tax is listed in item 12 (Tax Liability Adjustment) with a code of 300. Additional penalties should be listed in item 12 (Penalties) with a code of 160.

  4. Forms 870-EP reflecting tax of $250,000 or less can be accepted by fax if taxpayer contact has been made and the case history documents the date of contact and the desire of the taxpayer to submit the consent to assess tax by fax. Consents to assess tax in excess of $250,000 should be secured with original signatures that are delivered in person or by mail.

  5. Process payments received in accordance with IRM 4.71.5.6.2, Processing Delinquent Forms 5330 Received from the Taxpayer.

4.71.5.7  (07-31-2015)
Case File Assembly

  1. Case file assembly instructions are found in IRM 4.71.12, Case File Assembly Guidelines. The RCCMS Office Documents folder should contain electronic versions of all prepared workpapers, forms, letters, etc., using the RCCMS Naming Convention.

  2. The agent is responsible for disposing of any report and/or workpapers that are no longer needed in current operations and to update the file prior to closing the case.

4.71.5.8  (07-31-2015)
Abatement of Penalties

  1. If penalties on a secured return are assessed in error by the Service Campus, and the case is still open, they can be abated on Form 5599 by entering transaction code 161, Abatement of Delinquency Penalty, and 271, Manual Abatement of Failure to Pay Tax Penalty, (as applicable) and the dollar amount penalties are to be decreased on Item 12 (the Penalties (-) line) and by entering transaction code 300 and $0 on the Tax Liability Adjustment line (item 12 - Tax Liability Adjustment).

  2. If penalties on a secured return are assessed in error by the Service Campus, and the case is closed, contact the Manager of ESSP to get them abated.

4.71.5.9  (07-31-2015)
Unagreed Cases

  1. "Unagreed" cases are those cases in which the taxpayer disagrees with the agent’s position, or agrees only in part. The case is unagreed if any, or all, of the following conditions exist:

    1. The amount of initial tax shown on the return is in dispute.

    2. The initial tax is not in dispute but the taxpayer cannot or will not correct the issue giving rise to the excise tax, or the correction or proposed correction is not acceptable to the IRS.

    3. The taxpayer refuses to file a delinquent Form 5330 or sign Form 870-EP.

  2. At the first indication that a case is unagreed, consult your group manager. Note Discussions with your group manager on the Form 5464, Case Chronology Record (CCR).

  3. Use the CCR to clearly reflect case activities and contacts with the taxpayer/representative.

  4. If the taxpayer refuses to file a delinquent Form 5330, prepare a substitute for return package and process it in accordance with IRM 4.71.5.9.2, Substitute for Return Package. Keep a copy of the substitute for return package in the case file.

  5. Establish unagreed Forms 5330 on RCCMS and AIMS in the same manner as agreed returns. See IRM 4.71.5.6, Processing Agreed Forms 5330.

  6. Follow the procedures set forth in paragraphs (5) and (6) of IRM 4.71.5.6, Processing Agreed Forms 5330, to determine if there is an entity module on AIMS. If there is no entity module, prepare and process Form 4442 in accordance with IRM 4.71.5.6.1, Preparation of Form 4442.

  7. When there is an unagreed change to the tax liability and the taxpayer has not made correction, prepare certain portions of the 30-Day Letter package that will only be issued by Mandatory Review. See IRM 4.71.5.9.1, 30-Day Letter Package, for instructions on what to prepare.

    1. Print a hard copy of the agent’s portion of the 30-Day Letter package and include in the case file prior to closing to Mandatory Review.

    2. Save all documents making up the 30-Day Letter package in the RCCMS Office Documents folder for the lead Form 5330 case. This includes the draft Revenue Agent Report (RAR) and all tax computations.

  8. Prior to closing an unagreed case, inform the taxpayer and/or representative of the reasons for the IRS’s position by:

    1. Providing a written explanation of the basis of the proposed adjustments and citing the provisions of the law, regulations, published rulings, United States Tax Court and other court decisions on which the conclusions are based

      Note:

      An effective way to share potential adjustment information is to generate a draft RAR as described below in IRM 4.71.5.9.1.1, Revenue Agent Report (RAR), and mail it to the taxpayer and/or representative utilizing a request for additional information cover letter. Label this preliminary RAR as a "DRAFT RAR" in the top margin of the first page. Include language in your follow-up correspondence such as, "Based on the information provided to date, it appears the issues reflected in the attached draft RAR are present. Please provide any additional information that may help to clarify or resolve a potential issue within xx days."

    2. Verbally explaining the issues either by telephone or through arranged face-to-face meetings

  9. If no agreement is reached:

    1. Inform the taxpayer/representative that the case is being closed unagreed to Mandatory Review.

    2. Explain the appeals process to the taxpayer or POA. See Pub 1020, Appeal Procedures Employee Plans Examinations.

    3. Review the case file for completeness and proper assembly.

    4. Flag the file for Mandatory Review using Form 3198-A which is attached to the outside of the case file.

  10. As is the requirement for all exam cases, prepare Form 5772, Form 5773 (or equivalent) and other relevant workpapers.

  11. When closing a case unagreed, prepare Form 5599 in accordance with IRM 4.71.5.9.3, Preparation of Form 5599 for Unagreed Form 5330 Exams.

  12. Ensure that the statute procedures found in IRM 4.71.9.3, Group Manager Responsibilities and Procedures, and IRM 4.71.9.4, Agent Responsibilities and Procedures, are followed for both Forms 5330 and any related Forms 5500 exams closed to Mandatory Review.

  13. Assemble the case in accordance with IRM 4.71.12, Employee Plans Examination of Returns - Case File Assembly Guidelines.

    Note:

    All unagreed cases require a paper copy of all workpapers, forms, letters, etc.

  14. Name all prepared workpapers, forms, and letters, using the RCCMS Naming Convention and save them in the RCCMS Office Documents folder.

    Note:

    It is no longer necessary to save files on a CD in the case file if files are saved in RCCMS.

  15. Make sure the case is fully established on RCCMS and AIMS before the case is closed to Mandatory Review.

  16. Update the case on RCCMS to disposal code 604 and close the case to your group manager.

  17. The group manager will make sure that:

    1. All files are properly saved in RCCMS

    2. The RCCMS record is properly completed

    3. All forms are properly completed

    4. The paper case file is properly assembled in accordance with IRM 4.71.12.4, Assembly Guidelines for All Unagreed Examinations.

    5. The statute of limitations is properly protected in accordance with IRM 4.71.9.3, Group Manager Responsibilities and Procedures.

  18. The group manager (or designee) will:

    1. Update the case to status 20 on RCCMS and AIMS

    2. Close the case and related Forms 5500 to Mandatory Review at:

      IRS EP Mandatory Review
      801 Broadway
      Room 397, MDP 13
      Nashville, TN 37203

    Note:

    If the case is later returned to the group from Mandatory Review with a Form 5456 Inquiry or Correction Memorandum, the case will be updated to status 13. The case will remain in status 13 until the case is closed from the group.

4.71.5.9.1  (07-31-2015)
30-Day Letter Package

  1. 30-Day Letters are used to furnish taxpayers a copy of the final exam report and advise them of their appeals rights when they do not agree with the results of an exam. Refer to Treas. Reg. 601.105(d) for legal authority and additional explanation.

  2. The 30-Day Letter package consists of the following items, most of which are available within RCCMS:

    1. Letter 2005, which will be prepared by Mandatory Review

      Note:

      See IRM 4.71.5 Exhibit 8 at IRM 4.71 - Employee Plans Examination Exhibits for an example of Letter 2005.

    2. Agent prepared Form 5438, Report of Examination - Excise Taxes on Employee Plans

      Note:

      See IRM 4.71.5 Exhibit 9 at IRM 4.71 - Employee Plans Examination Exhibits for an example of a completed Form 5438 for minimum funding. The format reflected on the exhibit must be used.

      Note:

      Second tier excise taxes for IRC 4975(b) are asserted only in the most recent tax year, but IRC 4971(b) must be asserted for each and every year of the minimum funding deficiency.

    3. Agent prepared schedules reflecting calculations of excise tax and penalties

    4. Agent prepared RAR, which is used to support the assertion of taxes and penalties

      Note:

      See IRM 4.71.5.9.1.1, Revenue Agent Report (RAR), below.

    5. Agent prepared Form 870-EP

      Note:

      See IRM 4.71.5 Exhibit 1 at IRM 4.71 - Employee Plans Examination Exhibits for an example of a completed Form 870-EP. Penalties (when applicable) must be listed using the format on the exhibit.

    6. Pub 1020 (generated by Mandatory Review)

    7. Pub 1 (generated by Mandatory Review)

    8. Pub 594, The IRS Collection Process, (generated by Mandatory Review)

4.71.5.9.1.1  (07-31-2015)
Revenue Agent Report (RAR)

  1. The RAR can be prepared on Form 886-A, Explanation of Items. Form 886-A is available within RCCMS.

  2. The RAR should be organized into the following components:

    1. Issue(s)– The issues should be clearly stated. For example, if the issue is IRC 4971 excise tax, the issue might be stated as follows: "Whether a funding deficiency under Internal Revenue Code (IRC) 412, results in an IRC 4971 excise tax liability for the sponsoring employer’s taxable years ending December 31, 2012, 2013, and 2014?"

    2. Facts– The facts section of the RAR will include a brief history of the plan and provide pertinent details surrounding the issue. This section should also cite any plan provisions relevant to the issues raised.

    3. Law– The law section should contain a summary of Code sections, treasury regulations, revenue rulings, court cases, etc., that relate to the issue(s). Do not cite General Counsel Memos (GCM) or Private Letter Rulings (PLR) as sources of authority in the RAR.

    4. Government's Position– This section should discuss each issue separately and apply the law and the facts relevant to each specific issue. This section should also provide a summary of taxes due and the applicability of penalties.

    5. Taxpayer's Position– This section should reflect the taxpayer's position including any rebuttals the taxpayer has made regarding the Government's position. If the taxpayer has not provided a position on the Issue(s), a simple statement to the effect that the taxpayer has not provided a response is sufficient.

    6. Conclusion– If the taxpayer provides a position on the issue(s), the RAR should contain a rebuttal to the taxpayer’s position. The Government’s position should be restated as a conclusion in all cases.

  3. You may contact Mandatory Review for assistance in writing an RAR.

4.71.5.9.2  (07-31-2015)
Substitute for Return Package

  1. When the taxpayer refuses to file a Form 5330 after receiving a notice that a Form 5330 is due, prepare a substitute for return package before forwarding the case to Mandatory Review for unagreed case processing.

  2. Enter the words "Substitute for Return Prepared by TE/GE: Employee Plans" on the top margin on the face of the return.

  3. Complete only the top portion of the substitute for return. Complete the tax year beginning and end, items A through G.

  4. Leave the dollar amounts on the Form 5330 return blank.

  5. Establish the Substitute for Return Form 5330 on RCCMS and AIMS in the same manner as agreed returns. RCCMS and AIMS establishment will occur at the group level, in accordance with the procedures in IRM 4.71.5.6, Processing Agreed Forms 5330, before the case is closed to Mandatory Review.

  6. Attach Form 3198-A to the Substitute for Return. Include the following notation in the Special Instructions section of Form 3198-A: "Substitute for Return; Please process immediately."

    Note:

    These Forms can be found electronically within RCCMS.

  7. The Substitute for Return should be mailed to the Ogden Service Campus at the following address:

    IRS
    1973 N. Rulon White Blvd.,
    Mail Stop 6054
    Ogden, UT 84404

  8. When addressing the Express Services Routing slip (Form 9814), the recipient name should be "Mail Supervisor" with the recipient phone number of (801) 620-3753.

  9. When Ogden processes the Substitute for Return, a TC "150" with tax of $0 will be reflected on the corresponding BMFOLT print. A TC "150" must be present before tax can be assessed subsequent to the issuance of a statutory notice of deficiency.

  10. As soon as the Substitute for Return is mailed to Ogden and the return is fully established on RCCMS and AIMS, close the case unagreed to Mandatory Review in accordance with the procedures in IRM 4.71.5.9, Unagreed Cases.

4.71.5.9.3  (07-31-2015)
Preparation of Form 5599 for Unagreed Form 5330 Exams

  1. Complete the following line items for unagreed exams going to Mandatory Review:

    1. P7-18: Enter the taxpayer’s TIN.

      Note:

      Use a file source of "V" with an SSN (i.e., 123-45-6789V) and no file source with an EIN (i.e., 70-1234567). Remember, the "V" will not be used on the RCCMS tabs.

    2. P21-22: The MFT is 76.

    3. P24-29: Enter the tax period.

    4. P31-34: Enter the name control.

    5. P52-54: Enter the three-digit plan number of the related plan.

    6. C: Enter the name of the taxpayer.

    7. Item 12: Leave blank.

    8. Item 13: Leave item 13 blank on Form 5599, but use disposal code 604 in RCCMS.

    9. Item 14: If the statute of limitations has been extended, enter the statute expiration date. Also enter the statute date anytime the Form 5330 relates to excise tax under IRC 4975 for a prohibited transaction.

    10. Item 15: Leave blank.

    11. Item 16: Enter 121.

    12. Item 18: Enter the amount of tax and penalties (excluding failure to pay penalties).

    13. Item 28: Enter the agent’s time on the case.

    14. Item 30: Enter the technique code:
      2 – Office/Correspondence exam (OCEP) - full scope
      4 – Field exam - full scope
      6 – OCEP - limited scope/focused audit
      7 – Field exam - limited scope/focused audit

    15. Item 31: Enter the agent’s grade.

    16. Item 32: Enter the grade of the case in the blocks from left to right as two digits (i.e., Grade 9= 09).

    17. Item 33: Enter the agent’s last name; leave a space and then first initial.

    18. Item 37: Leave blank when closing a substitute for return to Mandatory Review. If a delinquent return was secured, enter the delinquent return code. If there is only one delinquent return, enter a "T" . If there is more than one delinquent return, enter a "T" in the latest year and an "R" in all prior years.

    19. Item 40: Enter the project code if there is one. If not enter 0000.

    20. Item 42: Leave blank.

    21. Item 50: Enter the agent’s group code.

    22. Item 414: Leave blank.

  2. See IRM 4.71.5 Exhibit 10 at IRM 4.71 - Employee Plans Examination Exhibits for an example of a completed Form 5599 for an unagreed case.

4.71.5.10  (07-31-2015)
Statute of Limitations for Forms 5330

  1. With the exception of prohibited transactions, the statute of limitations (SOL) for assessment of taxes expires three years from the due date of the Form 5330 return or the date the return is filed, whichever is later (See IRC 6501(a)).

    1. In general, for any excise tax other than IRC 4975, if a Form 5330 is not filed, there is no SOL date.

    2. A return is deemed filed on its due date if filed on or before its due date.

  2. For Forms 5330 filed for IRC 4975 excise tax, the three year statute of limitations for assessment of taxes will commence on the later of the date the related Form 5500 series return is filed or the date due, if the prohibited transaction is sufficiently disclosed (See IRC 6501(l)(1)). See IRM 4.71.5 Exhibit 11, IRC 4975 Statute Control Matrix, at IRM 4.71 - Employee Plans Examination Exhibits for assistance in computing statutes under IRC 4975.

    Note:

    For prohibited transactions under IRC 4975 involving a discrete act (one-time occurrence, such as a sale), even though the taxes are imposed annually, there is only one period of limitations applicable to all the tax attributable to the prohibited transaction. Therefore, the filed or due date to be used in determining the statute of limitations date is limited to that of the initial Form 5500 return filed for the period in which the discrete act occurred.

    Note:

    For a prohibited transaction that is considered a continuing transaction, such as a loan or lease, the situation is different. In addition to the original transaction, a new transaction is deemed to occur on the first day of each subsequent taxable year of the disqualified person. The filing of the Form 5500 return for the year in which the prohibited transaction first occurred starts the running of the statute of limitations for purposes of the tax on the actual transaction occurring in that plan year. The filing of the Form 5500 return for each subsequent plan year starts the running of the statutes for transactions deemed to reoccur in subsequent years.

  3. The statute of limitations for prohibited transactions is extended to six years if the prohibited transaction is not adequately disclosed on the related Form 5500.

  4. Other than prohibited transactions, the statutory period for assessment of tax is six years from the date the return is filed or deemed filed, whichever is later, in cases where there has been an omission of more than 25% of the excise tax due. See IRC section 6501(e)(3).

  5. Consult Area Counsel before a six-year statute of limitations is pursued. Document discussions and responses with Counsel in the case chronology (CCR).

  6. BMF will automatically calculate a statute of limitations date for a Form 5330 established on AIMS; however, the calculated date cannot be relied upon to correctly reflect the normal statute date for prohibited transactions or substitute for returns for all other excise taxes.

    1. At the present time, statute of limitation dates for all Forms 5330 are calculated on BMF as being three years from the later of the date the Form 5330 is filed or due.

    2. BMF currently incorrectly calculates the statute of limitations date for prohibited transactions because the statute of limitations is tied to the Form 5500 in which the prohibited transaction occurred or is deemed to have occurred, and there is no linkage to the Form 5500 series return statute date.

    3. If a single Form 5330 contains both IRC 4975 excise tax and another type of excise tax (e.g., IRC 4971), the statute of limitations date for IRC 4975 should be used since it will expire sooner.

  7. If AIMS and/or RCCMS reflects an incorrect statute date, notify your manager and update the statute of limitations through RCCMS with the "Update AIMS" box checked.

  8. Follow the statute control procedures discussed in IRM 4.71.9, Statute Control Procedures. See IRM 4.71.9.5.2, Statute of Limitations for Form 5330, for a detailed discussion for Form 5330 statutes.

4.71.5.11  (07-31-2015)
Forms 5330 Established on AIMS in Error

  1. There are occasions when Forms 5330 are established on RCCMS and AIMS in error (i.e., it is later determined that excise tax is not due after establishment).

  2. If Form 5330 is established in error on AIMS:

    1. Complete Form 10904, Request for Record Deletion from AIMS, and fax or email it to the EP AIMS Coordinator in ESSP. The fax number is (443) 853-5647.

      Note:

      On Form 10904, make sure the box next to disposal code 33 is checked.

    2. Obtain manager and Area Manager approval through electronic signatures on Form 10904.

    3. See IRM 4.71.5 Exhibit 12 at IRM 4.71 - Employee Plans Examination Exhibits for an example of a completed Form 10904.

    4. Save the electronically signed Form 10904 inside the Office Documents folder in RCCMS for the case being deleted.

    5. Close the RCCMS account to ESSP with disposal code 901 (error account).

    6. The group manager will update the case to status 51 on AIMS and RCCMS when it is closed.

    7. The account will then be deleted by the EP AIMS Coordinator when the RCCMS record is received.

4.71.5.12  (07-31-2015)
Referrals to the Department of Labor

  1. For cases involving uncorrected minimum funding deficiencies or uncorrected prohibited transactions, the agent will prepare a Department of Labor (DOL) referral package and forward it at the earliest possible time in the audit cycle.

  2. Send the following items to EP Classification:

    1. Two copies of Form 6212-B.

      Note:

      Line 12 "Remarks" section of Form 6212-B, must include a concise summary of the issue being referred.

    2. Any relevant information pertaining to the issue being referred, including a copy of the Revenue Agent’s Report (RAR) if there is an unagreed IRC 4971, IRC 4975 issue or a proposed revocation.

      Note:

      All attachments included with Form 6212-B will not be sent to DOL-EBSA but retained by EP Classification. Upon receipt of written request by DOL-EBSA, EP Classification will release relevant information as required by IRC 6103(l)(2).

  3. The group manager or designee will send approved referrals to EP Classification via email or through the regular mail.

    1. If emailed, referrals should be sent to EP Classification's group mailbox: *TE/GE-EP-Classification.

    2. If mailed, referrals should be sent to EP Classification at:
      IRS - EP Classification
      9350 Flair Drive, 4th Floor
      El Monte, CA 91731-2885

  4. See IRM 4.71.6.8, Making Referrals to the Department of Labor.

4.71.5.13  (07-31-2015)
Requests for Waivers or Exemption from IRC 4971/4975 Excise Taxes

  1. During the exam of a Form 5330 or Form 5500 series return involving an accumulated funding deficiency or prohibited transaction, the employer or disqualified person may request or have pending a waiver of the funding deficiency before IRS or an administrative exemption from the prohibited transaction requirements with respect to a given transaction before DOL.

    1. These types of cases may be subject to mandatory technical advice procedures and require coordination with the TE/GE Office of Associate Chief Counsel (TEGE Counsel)) in Washington, D.C.

      Note:

      See IRM 4.71.13.4, Technical Advice Procedures.

    2. Waiver of the liquidity shortfall (as that term is defined in IRC 430(j)(4)) excise tax under IRC 4971(f)(4) may be subject to coordination with EP Rulings and Agreements in Washington, DC.

  2. Requests for waivers of the minimum funding standards will be considered by TE/GE Counsel under the following circumstances:

    1. If the case involves a minimum funding waiver request for a defined contribution plan which is accompanied by a request for a determination letter on the effect of an amendment necessary to satisfy section 3 of Rev. Rul. 78–223, IRB 1978–1 C.B. 125, the case is subject to mandatory technical advice.

    2. If the case involves a minimum funding waiver request for a defined benefit plan, or a request for a waiver ruling for a defined contribution plan which is not accompanied by a request for a determination letter on the effect of an amendment necessary to satisfy section 3 of Rev. Rul. 78–223, the waiver request will be forwarded for consideration by an actuary in EP Technical in Washington, D.C.

  3. Under ERISA section 3002, the Service is authorized to waive part or all of the tax under IRC 4971(b) on failure to meet minimum funding standards. These types of cases require coordination with TE/GE Counsel in Washington, D.C.

  4. Under ERISA section 3003, the Service is authorized to grant waivers of taxes under IRC 4975. For example, a taxpayer may request such a waiver if DOL has negotiated a settlement of a prohibited transaction but the settlement does not constitute correction within the meaning of IRC 4975(i) and the regulations under that section.

  5. All cases involving a taxpayer’s request for the abatement or waiver of taxes under IRC 4975 are subject to mandatory technical advice. See IRM 4.71.13.4, Technical Advice Procedures, for instructions on processing Technical Advice cases.

  6. Cases involving prohibited transaction exemption requests with DOL will be coordinated with DOL via the EP Classification Unit IRS/DOL Coordinator. This includes, for example, cases in which either the conditions of the exemption were not met or the facts were materially misrepresented in obtaining the exemption.

  7. If DOL grants an exemption on a prohibited transaction, taxes may not be imposed under IRC 4975 with respect to that transaction. If a tax was imposed prior to a DOL exemption, the tax must be abated.

  8. Complete the exam to the extent possible and place the case in informal suspense in the group until such waiver or exemption request is approved or denied. See IRM 4.71.1.19, Suspense Procedures, regarding suspense cases.

  9. See the following revenue procedures for additional guidance: Rev. Proc. 2015-1, Rev. Proc. 2015-2, Rev. Proc. 2015-4, Rev. Proc. 2015-6, Rev. Proc. 2000-17, Rev. Proc. 2004-15, and Rev. Proc. 81-44. The first four listed are revised annually, usually in January.


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