4.71.6  Employee Plans Referrals

Manual Transmittal

April 10, 2012

Purpose

(1) This transmits revised IRM 4.71.6, Employee Plans Examination of Returns - Employee Plans Referrals.

Background

IRM 4.71.6 contains the procedures for processing referrals related to the examination of employee plans.

Material Changes

(1) This revision makes minor clarifying corrections to the December 10, 2010 published version of IRM 4.71.6.

(2) Completed Forms are posted as Exhibits on the Mandatory Review section of the Employee Plans web page at Employee Plans IRM Exhibits.

Effect on Other Documents

This supersedes IRM 4.71.6 dated December 10, 2010.

Audience

TE/GE Employee Plans

Effective Date

(04-10-2012)


Robert Choi
Director, EP Exams
Tax Exempt and Government Entities Division

4.71.6.1  (04-10-2012)
Overview Employee Plans Referrals

  1. This section describes the referral procedures between Employee Plans (EP) and:

    1. Employee Benefits Security Administration (EBSA) of the Department of Labor (DOL),

    2. Pension Benefit Guaranty Corporation (PBGC),

    3. Exempt Organizations (EO),

    4. Governmental Entities (GE),

      Note:

      GE referrals can come from Indian Tribal Governments (ITG) or Federal, State of Local Governments (FSLG),

    5. Large Business and International (LB&I), Small Business/Self-Employed (SB/SE), or Wage and Investment (W&I), which are collectively referred to as Exam Functional Units (EFUs), and

    6. Office of Professional Responsibility (OPR).

  2. When dealing with referrals, this section covers the responsibilities of:

    1. EP Classification,

    2. EP exam agents, and

    3. EP exam group managers.

  3. EP Classification is responsible for the control and processing of referrals that are either initiated by EP or made to EP.

  4. All referrals should normally be sent to:
    IRS - EP Classification
    9350 Flair Drive, 2nd Floor
    El Monte, CA 91731-2885

  5. If a direct referral is made (e.g., the referral is made directly to an SB/SE agent doing a concurrent exam), a full copy of the referral must also be sent to Classification.

  6. Referrals made by EBSA to EP are received on Form 6212-A, Examination Referral Checksheet A.

  7. Referrals received from one of the EFUs are normally received on Form 4632, Employee Plans Referral (with Form 4632-A, Employee Plans Referral Checksheet) or Form 5346, Examination Information Report.

  8. Referrals received from EO are normally received on Form 4632 (with Form 4632-B, Employee Plans Referral Checksheet - IRC 403(b) Plan).

  9. Referrals received from GE (other than those listed in paragraph (10)) are normally received on Form 5666, TE/GE Referral Information Report.

  10. Referrals received from FSLG related to IRC 403(b) or IRC 457 arrangements are normally received on Form 4632 (with Form 4632-C, Employee Plans Referral Checksheet-For FSLG-IRC403(b)/457 and Social Security Alternative Plans).

  11. Referrals made from EP to EBSA are prepared on Form 6212-B, Examination Referral Checksheet B. See IRM 4.71.6 Exhibit 2 at Employee Plans IRM Exhibits for an example of a completed Form 6212-B.

  12. Referrals made from EP to one of the EFUs, EO, GE or EP (for a future year or to other functions within EP) will be prepared on Form 5666. See IRM 4.71.6 Exhibit 1 at Employee Plans IRM Exhibits for an example of a completed Form 5666.

  13. Referrals made from EP to one of the EFUs when a coordinated exam is needed will be prepared on Form 6229, Collateral Examination. See IRM 4.71.6 Exhibit 6 at Employee Plans IRM Exhibits for an example of a completed Form 6229, .

  14. Referrals to PBGC will be prepared on Form 6533, Examination Referral Checksheet. See IRM 4.71.6 Exhibit 3 at Employee Plans IRM Exhibits for an example Form 6533.

  15. Referrals to OPR are made on Form 8484, Report of Suspected Practitioner Misconduct, when a complaint is being made about an attorney, CPA, enrolled agent, enrolled actuary or an enrolled retirement plan agent.

  16. Referrals are made on Form 5666 to SB/SE Area Planning and Special Programs Office when a complaint is being made due to the conduct of an unenrolled return preparer.

  17. When assistance is needed from a specialist within the IRS but outside of EP, the Specialist Referral System (SRS) should be utilized (See IRM 4.71.6.11).

4.71.6.2  (04-10-2012)
EP Classification Procedures

  1. EP Classification is responsible for the control and processing of referrals that are either initiated by EP or made to EP.

  2. The Referral Specialist (RS) in Classification will:

    1. Promptly review the referral;

    2. Complete the Integrated Data Retrieval System (IDRS) research necessary to make a determination on examination potential and to determine if there is a related EP examination or determination case open;

    3. Enter all referral information onto a database containing items such as taxpayer name, EIN, type of referral, tax period(s), date received, disposition and date of disposition;

    4. Forward all referrals made to EBSA on Form 6212-B to the appropriate EBSA Regional Director no later than the last workday of the week in which the referral is received in Classification; and

    5. Forward Form 6229 with all relevant attachments to the appropriate SB/SE PSP Territory Manager within 5 days of receipt.

  3. If the RS determines that an examination is warranted:

    1. The year to be examined will be determined;

    2. AIMS control will be initiated for the year to be examined;

    3. A RICS return will be obtained (if applicable);

    4. The exam will be assigned and forwarded to an EP group;

    5. If the referral is a Form 5666 or Form 4632 (with checksheet 4632-B) referral, the originator will be contacted by the RS, when appropriate, within 30 workdays of the date that the Form 5666 was sent to Classification. A copy of the referral will be returned to the originator noting the action taken;

    6. If the referral was received from DOL (EBSA), the originator will be contacted by the RS within 30 workdays of the date Form 6212-A was sent to Classification. The "Action Taken" block on Form 6212-A will be completed and Part Two of the form returned to EBSA;

    7. Upon closure of an examination initiated as the result of a referral from EBSA, a copy of Form 6212-A will be forwarded to the EBSA Regional Director by the RS with comments in the "Remarks" section briefly stating the results of the exam. If excise tax under IRC 4971 or IRC 4975 is being assessed, the amount of tax should be listed. If the IRS does not propose or assess excise taxes, then the reasons should be entered in the "Remarks" section of Form 6212-A; and

    8. If the referral was received on Form 4632 (with checksheet 4632-A) or 5346 from an EFU, the originator will be contacted by the RS within 30 workdays of the date the referral was sent to Classification. A copy of the referral will be returned to the originator, annotated with the action taken.

    9. If the referral was received on Form 4632 (with checksheet 4632-C) from FSLG, the referral will be logged in by the RS and forwarded immediately to the analyst in EPP responsible for IRC 403(b) and IRC 457 arrangements.

  4. If the RS determines that an examination is warranted but the referral is for a future year or resources are not available to conduct the examination, the referral will be placed in suspense. Future year referrals held in suspense will be reviewed periodically to ensure that the exam is done as soon as possible.

  5. If the RS determines that an examination is not warranted, the referral will be disposed of as follows:

    1. A copy of Form 5666, annotated with the action taken, will be returned to the originator by the RS within 30 workdays of the date the referral was sent to Classification. The original Form 5666 referral will be maintained in Classification for three years in a system of records. The record keeping system will include an explanation of the reason the referred case was not selected for exam.

    2. A Form 6212-A not selected for exam will be annotated with the reason for nonexamination. The originator will be notified by the RS within 30 workdays of the date the referral was sent to Classification. The appropriate "Action Taken" block on Form 6212-A will be selected and Part Two of the form will be returned to EBSA. Part One will be maintained for three years in a system of records that permits the retrieval of the Form 6212-A.

    3. Form 4632 (with checksheets 4632-A, 4632-B, or 4632-C, as applicable) or Form 5346 not selected for exam will be annotated accordingly and a copy returned to the applicable EFU within 30 workdays of the date the referral was sent to Classification. The referral will be maintained for three years in a system of records.

4.71.6.3  (04-10-2012)
Group Procedures – Referrals Received From EP Classification

  1. Upon receipt of a referral in the group, the manager should immediately assign the referral to an agent.

  2. The agent will contact the EFU agent, EO agent, GE agent, FSLG agent, ITG agent or EBSA investigator within 30 workdays of receipt by the group of Form 4632 (with checksheet 4632-A, 4632-B, or 4632-C, as applicable), Form 5346, or Form 6212-A if the related case is being held open in the EFU or in EBSA. The agent should periodically provide an update to the related examiner or investigator of the status and results of the EP exam.

  3. In instances where a related examination is open in EO, GE, FSLG, EBSA, or an EFU, generally every issue should be resolved within 90 days of receipt in the group. If the case is not closed within 90 days, the EP group manager should contact the group manager of the referring group to update them on the status of the exam.

  4. Once the EP agent resolves the referral:

    1. A brief exam report should be prepared regarding the findings related to the referred issue. This report should be done on Form 886-A, Explanation of Items, or in a memo.

    2. If a referring agent or investigator has a related exam open and is anticipating an update, the exam report and a copy of the referral (Form 4632 or Form 6212-A) should be sent by the EP agent directly to the agent/investigator.

    3. The Form 5464, Case Chronology Record, should be documented.

    4. A copy of the exam report and referral package should be saved in the Reporting Compliance Case Management System (RCCMS) Office Documents folder using the RCCMS Naming Convention.

  5. When surveying a return that was established as a result of a referral from another governmental entity or another division within IRS, a written explanation should be included on the referral form or attached to it. The referral form should be forwarded to EP Classification in El Monte at the address listed in IRM 4.71.6.1(4).

    Note:

    See IRM 4.71.7 for case survey procedures.

4.71.6.4  (04-10-2012)
EP Group Procedures – Referrals from Other Sources

  1. Occasionally EP groups will receive referrals directly from other agencies (e.g., DOL), other TEGE operating divisions (e.g., EO or FSLG), individual taxpayers, or agents from an EFU. All such referrals should be sent directly to EP Classification at the address in IRM 4.71.6.1(4).

  2. If the applicable referral form was not prepared by the referring entity or individual, the receiving group should prepare the applicable referral form and forward it to EP Classification. For example, if a referral is received from an individual taxpayer, the agent or group receiving the referral should prepare Form 5666 and forward the referral to EP Classification.

  3. If the receiving group has made a decision to conduct an examination based on the referral that is received directly by the group from an entity or individual, it should be noted on the referral form when it is forwarded to EP Classification.

  4. All such referrals should be sent directly to EP Classification.

  5. A manager or agent should not begin any compliance activity regarding a referral unless the referral has been received from EP Classification (or approval has been given by EP Classification).

4.71.6.5  (04-10-2012)
EP Group Procedures – Making Referrals Within EP

  1. EP agents or tax law specialists generating referrals to groups within EP should complete Form 5666 and submit it to the group manager for approval. The issue(s) should be fully explained and the Code section(s) violated should be specified.

  2. Make sure the group manager signs item M on Form 5666. See IRM 4.71.6 Exhibit 1 at Employee Plans IRM Exhibits for an example of a completed Form 5666.

  3. Form 5666 referrals should be sent to:
    IRS – EP Classification
    9350 Flair Drive – 2nd Floor
    El Monte, CA 91731-2885

4.71.6.5.1  (04-10-2012)
Emerging Issue Referrals

  1. EP has created an Emerging Issue Compliance Planning Group (CPG) to evaluate leads involving potential emerging issues where a qualified plan is involved. These issues may involve abusive transactions or other non-compliance.

  2. Referrals involving emerging issues should be made to the CPG.

    1. Referrals to the CPG are made on-line via the Employee Plans intranet home page.

    2. Go to the "Emerging Issues/Abusive Tax Transactions (ATATs)" section of the home page.

    3. In the "Emerging Issues" area, select "Report an Emerging Issue" and open the form.

    4. Complete the form by entering the date, your contact information and the description of the issue.

    5. Select "Submit by Email."

      Note:

      Microsoft Outlook opens a new message to the TE/GE-EP-Emerging Issues mailbox with the form data attached.

    6. Click "Send" to send the email.

      Note:

      Check your Outlook to make sure the email was sent.

4.71.6.6  (04-10-2012)
Promoter Referrals

  1. When agents or managers become aware of a practitioner who may be promoting an abusive transaction, they should make a referral on the LDC Referral Form to the Lead Development Center (LDC).

  2. The LDC Referral Form is located in RCCMS Documents Folder and in the "Emerging Issues/Abusive Tax Transactions (ATATs)" section of the Employee Plans intranet home page. See IRM 4.71.6 Exhibit 5 at Employee Plans IRM Exhibits for an example of the LDC Referral Form.

  3. Completed LDC Referral Forms can be emailed, mailed or faxed to the LDC.

    1. The email address for the LDC is *ldc.

    2. The mailing address for the LDC is:
      LDC
      24000 Avila Road
      Mail Stop 5040
      Laguna Niguel, CA 92677

    3. The fax number for the LDC is (949) 389-5083

  4. Agents should notify their manager and their Area Emerging Issues Coordinator when a referral has been made to the LDC.

    Note:

    The "Emerging Issues" area of the Employee Plans intranet home page contains a link entitled "Emerging Issues Area Contacts" . Select the link to obtain contact information for the Area Emerging Issues Coordinators.

4.71.6.7  (04-10-2012)
EP Group Procedures – Making Referrals to Exam Functional Units

  1. Income tax issues not within the scope of Form 1040/1120 Discrepancy Adjustments will be referred to an EFU on Form 5666. See IRM 4.71.6 Exhibit 1 at Employee Plans IRM Exhibits for an example of a completed Form 5666.

    Note:

    See IRM 4.71.4.2 for a list of issues that do not fall within the scope of Form 1040/1120 Discrepancy Adjustments).

  2. When preparing the referral on Form 5666, include:

    1. A clear description of the issue along with the amount of unreported income and/or tax consequences.

    2. The name of the referring agent, legibly printed on item "L" .

    3. The group manager's signature on item "M" , with the date included.

    4. An attached copy of the applicable RTVUE or BRTVU print and any other relevant IDRS research.

  3. Income tax issues on Forms 1041 resulting from a proposed plan revocation or disqualification will be referred to an EFU on Form 5666.

  4. If there is an urgent need to have SB/SE or LB&I conduct a coordinated examination of a related Form 1120, Form 1065 or Form 1040, then Form 6229, Request for Collateral Examination, should be prepared. See IRM 4.71.6 Exhibit 6 at Employee Plans IRM Exhibits for an example of a completed Form 6229.

    1. A description of the issues should be written in the "Narrative" section of the form. A Revenue Agent Report may also be prepared and attached.

    2. The EP agent will forward the Form 6229 (and attachments, if any) to his or her group manager (in either electronic media or hard copy) for approval.

    3. Once approved, the group manager will forward Form 6229 (and attachments, if any) to the Area Manager for review and approval.

    4. The Area Manager will sign the upper right-hand side of the paper version of Form 6229 in the box containing "From TEGE Territory/Area________Manager. "

  5. Form 5666 and Form 6229 will be forwarded to EP Classification in El Monte, California, unless the agent is working directly with another agent in the EFU. If the agent is working directly with the EFU, the referral should be given directly to the EFU and a copy sent to Classification. See IRM 4.71.6.1(4) for the Classification address in El Monte, CA.

  6. A copy of the Form 5666 or Form 6229 will be placed in the related EP case file.

  7. The case is required to be held open until the earliest of 20 workdays, or until the EP agent receives feedback from the EFU.

4.71.6.8  (04-10-2012)
EP Group Procedures – Making Referrals to the Department of Labor (DOL)

  1. Form 6212-B should be completed by the agent for all EP exams involving plans under DOL jurisdiction. See IRM 4.71.6 Exhibit 2 at Employee Plans IRM Exhibits for an example of a completed Form 6212-B.

    Note:

    DOL does not have jurisdiction of plans that only provide benefits to owners and their spouses. However, if it is determined that a plan covering only one participant (or participant and spouse) should cover additional people, a referral should be made.

  2. A referral must be made to EBSA when a question on Form 6212-B is answered in the right hand column or when plan revocation/non-qualification is being proposed. When a referral to EBSA is required, the following items should be sent to EP Classification in El Monte, CA to the address listed in IRM 4.71.6.1(4):

    1. Two copies of Form 6212-B;

    2. A copy of any applicable Form 5500;

    3. 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 or IRC 4975 issue or a proposed revocation; and

    4. The "DOL Participation Requested" block on Form 6212-B should be selected for all unagreed cases involving IRC 4971 or IRC 4975 tax.

  3. Any examination for which Form 6212-B is referred must remain open until the earlier of 20 days from the date sent to EP Classification, or the date a response is received.

  4. A copy of the Form 6212-B should be saved in the RCCMS Office Documents folder using the RCCMS Naming Convention.

  5. An entry must be made in the Case Chronology Record (CCR) stating whether or not a referral was made to EBSA.

  6. IRS will defer action in a case when, as a result of a referral of a checksheet between the agencies, the EBSA Regional Office advises the Manager, EP Classification, in writing that the case has been referred to the DOL National Office.

    1. IRS will not take further action in the case until the date when EBSA notifies the EP Classification Unit of EBSA's final action in the case, unless collection of a tax is in jeopardy, the running of the statute of limitations is imminent, or plan assets or the interests of plan participants must be protected.

    2. In such a case, the IRS will immediately notify DOL of the action by telephone and confirm the notification in writing within five workdays.

4.71.6.9  (04-10-2012)
EP Group Procedures – Making Referrals to Pension Benefit Guaranty Corporation (PBGC)

  1. Form 6533 should be completed for all EP examinations of plans that are subject to PBGC jurisdiction. See IRM 4.71.6 Exhibit 3 at Employee Plans IRM Exhibits for an example of a completed Form 6533.

  2. Most defined benefit pension plans are covered by PBGC insurance. ERISA section 4021(b) lists plans that are not covered. Defined benefit plans that are not covered include:

    1. Plans offered by professional service employers (i.e., doctors and lawyers) that have never had more than 25 active participants,

    2. Plans outside the United States for nonresident aliens,

    3. Plans established exclusively for one or more substantial owners,

    4. Church plans, as defined by IRC 414(e), unless the plan has made an election under IRC 410(d) to be covered and has notified PBGC that it wishes to be covered, and

    5. Plans sponsored by federal, state and local governments.

  3. When a referral to the PBGC is warranted per Form 6533, the Form should be sent to:
    Pension Benefit Guaranty Corporation - Chief Negotiating Actuary
    Corporate Finance and Negotiations Department
    1200 K Street, NW, Suite 270
    Washington, DC 20005-4026

  4. When a referral is made, a courtesy copy of the Form 6533 should be forwarded to EP Classification in El Monte, CA (See IRM 4.71.6.1(4), above, for the address) with a note stating when the original referral was forwarded to PBGC.

  5. There is no need for the examining group to hold the case for any length of time after a referral is made.

  6. A copy of Form 6533 should be maintained in the case file. " File Copy" should be written on the top of the form.

4.71.6.10  (04-10-2012)
EP Group Procedures - Art Appraisal Services

  1. A referral must be made to Art Appraisal Services when a return selected for audit includes art or cultural property valued at $50,000 or more. A referral should be made as soon as practicable during the examination but no later than 30 days after identification of the issue.

  2. A referral to Art Appraisal Services can now be made through the Specialist Referral System (SRS). See IRM 4.71.6.11.

  3. At the discretion of the examining agent, a request for assistance in valuing items of art valued under $50,000 may also be requested. Refer to IRM 4.48.2.3.1(12), for information on obtaining values on items valued at less than $50,000.

4.71.6.11  (04-10-2012)
EP Group Procedures – Specialist Referral System

  1. The Specialist Referral System (SRS) is to be used by EP personnel to request specialized assistance on EP exams.

  2. Through SRS, agents can generate a referral request for assistance online, which will automatically notify the appropriate Specialist Manager (in LB&I, SBSE, W&I, CAS, EO, or GE) of the request.

    1. The Specialist Manager may then accept or reject that request.

    2. If accepted, the manager will assign a specialist to assist the agent on the case.

  3. Using the SRS, the EP agent can generate a referral request for a Computer Audit Specialist (CAS); Economist; Employment Tax (LB&I); Employment Tax (SB/SE); Employment Tax (TE/GE); Engineering; Exempt Organizations; Federal, State & Local Government; Financial Products; Indian Tribal Government; International; and Tax-Exempt Bonds.

  4. The intranet address for the SRS home page is: https://srs.web.irs.gov.

  5. The SRS home page contains the following links:

    1. Create Referral Link– Used to request the services of a specialist, and will allow a specialist to be assigned to your case;

    2. Create Consultation Link– Used to submit a question to a specialist, and will be an informal means of answering questions, and;

    3. F.A.Q. Link– Used to find other resources or research sites for a specific specialty. For example, a link to the employment tax home page or a specific bulletin board forum for the specialty in which you are interested.

4.71.6.12  (04-10-2012)
Referrals to Correct Master, Prototype and Volume Submitter Plan Language

  1. When errors are discovered in the language of a pre-approved Volume Submitter, or Master or Prototype plan, Form 3558, Technical Coordination Report, should be completed in accordance with paragraphs (2) and (3) below. See IRM 4.71.6 Exhibit 4 at Employee Plans IRM Exhibits for an example Form 3558.

    1. The error should be clearly explained and the impacted plan sections should be listed.

    2. The name of the referring agent should be legible.

    3. A copy of the opinion letter or advisory letter should be attached.

    4. The impacted plan sections should be copied and attached.

  2. Form 3558 referrals involving Master or Prototype Plans should be forwarded to:
    IRS
    SET:EP:RA:ICU, Room 253
    1111 Constitution Ave. NW
    Washington, DC 20224

  3. Form 3558 referrals involving Volume Submitter Plans forwarded to:
    IRS
    Volume Submitter Coordinator
    P.O. Box 2508, Room 5106
    Cincinnati, OH 45201

4.71.6.13  (04-10-2012)
Referrals to Recommend Revisions in Published Guidance

  1. Guidance impacting EP Examinations is issued in various ways. This section sets forth procedures for recommending changes to published guidance.

  2. Form 3558 can be utilized to recommend changes to formal published guidance such as the Internal Revenue Code, regulations, revenue procedures, revenue rulings, etc. See IRM 4.71.6 Exhibit 4 at Employee Plans IRM Exhibits for an example Form 3558.

    1. The problematic portions of the guidance should be listed and the issue should be clearly explained.

    2. The name of the referring agent with a contact phone number should be included.

    3. The referral should be sent to:
      IRS
      Director, Employee Plans Rulings and Agreements
      SE:T:EP:RA
      1111 Constitution Ave. NW
      Washington, DC 20224

  3. Referrals for changes to the IRM should be made to the IRM Coordinator in EP Mandatory Review. This can be done informally by phone or by sending an email to *TE/GE-EP-Mandatory Review.


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