4.71.6  Employee Plans Referrals

Manual Transmittal

May 07, 2014

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 IRM has been revised to update the procedures for correcting Master, Prototype and Volume Submitter Plan language.

(2) This revision makes other minor clarifying corrections to the April 9, 2012 published version of IRM 4.71.6.

(3) The links to the IRM Exhibits have been updated. The Exhibits are now posted on TE/GE Connect under the JOB tab at IRM 4.71 - Employee Plans Examination Exhibits.

Effect on Other Documents

This supersedes IRM 4.71.6 dated April 9, 2012.

Audience

TE/GE Employee Plans

Effective Date

(05-07-2014)


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

4.71.6.1  (05-07-2014)
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. EP Determinations (EPD)

    5. Governmental Entities (GE)

      Note:

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

    6. 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)

    7. Office of Professional Responsibility (OPR).

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

    1. EP Classification

    2. EP exam agents

    3. EP exam group managers.

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

  4. Unless stated otherwise in this IRM, 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: tege.ep.classification@irs.gov.

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

  5. If a direct referral is made (for example, 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 EP 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 IRM 4.71 - Employee Plans Examination Exhibits for an example of a completed Form 6212-B.

  12. Referrals made from EP to one of the EFUs, EPD, EO, GE or EP (for a future year or to other functions within EP) are prepared on Form 5666. See IRM 4.71.6 Exhibit 1 at IRM 4.71 - Employee Plans Examination 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 are prepared on Form 6229, Collateral Examination. See IRM 4.71.6 Exhibit 6 at IRM 4.71 - Employee Plans Examination Exhibits for an example of a completed Form 6229.

  14. Referrals made from EP to PBGC are prepared on Form 6533, Examination Referral Checksheet. See IRM 4.71.6 Exhibit 3 at IRM 4.71 - Employee Plans Examination Exhibits for an example Form 6533.

  15. Referrals made from EP to OPR are prepared 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 an agent needs assistance from an IRS specialist outside of EP, use the Specialist Referral System (SRS) (See IRM 4.71.6.11).

4.71.6.2  (05-07-2014)
EP Classification Procedures

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

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

    1. Promptly review the referral.

    2. Complete the Integrated Data Retrieval System (IDRS) research necessary to determine examination potential and 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 EP Classification.

    5. Forward Form 6229 with all relevant attachments to the appropriate SB/SE Planning and Special Programs (PSP) Territory Manager within 5 days of receipt.

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

    1. Determine the year to be examined.

    2. Initiate Audit Information Management System (AIMS) control.

    3. Obtain a Return Integrity and Correspondence Services (RICS) return.

    4. Assign and forward the exam to an EP group.

  4. If the referral is a Form 5666 or Form 4632 (with checksheet 4632-B) referral, the RS will:

    1. Contact the originator, when appropriate, within 30 workdays of the date that the Form 5666 was sent to EP Classification.

    2. Return a copy of the referral to the originator noting the action taken.

  5. If the referral was received from DOL (EBSA), the RS will contact the originator within 30 workdays of the date Form 6212-A was sent to EP Classification. The RS will complete the "Action Taken" block on Form 6212-A and will return Part Two of the form to EBSA.

  6. Upon closure of an examination initiated as the result of a referral from EBSA, the RS will forward a copy of Form 6212-A to the EBSA Regional Director with comments in the "Remarks" section briefly stating the results of the exam.

    1. If excise tax under IRC 4971 or IRC 4975 is being assessed, the RS will list the amount of tax.

    2. If the IRS does not propose or assess excise taxes, then the RS will list the reasons in the "Remarks" section of Form 6212-A.

  7. If the referral was received on Form 4632 (with checksheet 4632-A) or 5346 from an EFU, the RS will contact the originator within 30 workdays of the date the referral was sent to EP Classification. The RS will return a copy of the referral to the originator with the action taken, annotated on the form.

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

  9. 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 RS will place the referral in suspense.

    Note:

    Future year referrals held in suspense will be reviewed periodically to ensure that the exam is done as soon as possible.

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

    1. The RS will return a copy of Form 5666, annotated with the action taken, to the originator within 30 workdays of the date the referral was sent to EP Classification. The original Form 5666 referral will be maintained in EP 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. The RS will annotate a Form 6212-A not selected for exam with the reason for nonexamination and will notify the originator within 30 workdays of the date the referral was sent to EP Classification. The RS will select the appropriate "Action Taken" block on Form 6212-A and return 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. The RS will annotate Form 4632 (with checksheets 4632-A, 4632-B, or 4632-C, as applicable) or Form 5346 not selected for exam accordingly and return a copy to the applicable EFU within 30 workdays of the date the referral was sent to EP Classification. The referral will be maintained for three years in a system of records.

4.71.6.3  (05-07-2014)
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, EP Determination Specialist, EO agent, GE agent, FSLG agent, ITG agent or EBSA investigator within 30 workdays of the group's receipt of Form 4632 (with checksheet 4632-A, 4632-B, or 4632-C, as applicable), Form 5346, Form 5666 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, or a related determination is open in EP Determinations, every attempt should made to resolve every issue 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, he or she should:

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

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

    3. Notify the EP Determination Specialist of the issue(s)’ resolution, if an EP Determination Specialist has a related open determination case and is expecting an update

    4. Document Form 5464, Case Chronology Record.

    5. Save a copy of the exam report and referral package 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, the agent should write an explanation on the referral form or attach one to it. The agent should forward the referral form 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  (05-07-2014)
EP Group Procedures – Referrals from Other Sources

  1. Occasionally EP groups will receive referrals directly from other agencies (e.g., DOL), other TEGE functional units ( EO or FSLG), individual taxpayers, or agents from an EFU. The group should send these referrals 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 for a referral unless the referral has been received from EP Classification (or approval has been given by EP Classification).

4.71.6.5  (05-07-2014)
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 related Code section(s) should be specified.

  2. Make sure the group manager signs item M on Form 5666. See IRM 4.71.6 Exhibit 1 at IRM 4.71 - Employee Plans Examination Exhibits for an example of a completed Form 5666.

  3. The group manager or designee will send approved Form 5666 referrals to EP Classification via email or through the regular mail.

    1. If emailed, send referrals to EP Classification's group mailbox: tege.ep.classification@irs.gov.

    2. If mailed, send referrals to EP Classification at the following address:
      IRS - EP Classification
      9350 Flair Drive, 4th Floor
      El Monte, CA 91731-2885

4.71.6.5.1  (05-07-2014)
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. Make referrals involving emerging issues to the CPG.

    1. Make referrals to the CPG on-line via the Employee Plans intranet home page.

    2. Go to the Employee Plans Abusive Tax Avoidance Transactions section of the TEGE 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."

      Note:

      Check your Outlook to make sure the email was sent.

4.71.6.6  (05-07-2014)
Promoter Referrals

  1. When agents or managers become aware of a practitioner who may be promoting an abusive transaction, they should make a referral to the Lead Development Center (LDC) on Form 14242, Report Suspected Abusive Tax Promotions or Preparers. See IRM 4.71.6 Exhibit 5 at IRM 4.71 - Employee Plans Examination Exhibits for an example of Form 14242.

  2. Send completed LDC Referral Forms through encrypted email, regular mail or fax 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 877 477 9135.

  3. 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 TEGE 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  (05-07-2014)
EP Group Procedures – Making Referrals to Exam Functional Units

  1. The EP agent will refer income tax issues not within the scope of Form 1040/1120 Discrepancy Adjustments to an EFU on Form 5666. See IRM 4.71.6 Exhibit 1 at IRM 4.71 - Employee Plans Examination 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 and date on item M.

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

  3. The EP agent will refer income tax issues on Forms 1041 resulting from a proposed plan revocation or disqualification 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 prepare Form 6229, Request for Collateral Examination. See IRM 4.71.6 Exhibit 6 at IRM 4.71 - Employee Plans Examination Exhibits for an example of a completed Form 6229.

    1. Write a description of the issues should be written in the "Narrative" section of the form.

      Note:

      A Revenue Agent Report may also be prepared and attached.

    2. Explain the extent to which SB/SE or LB&I involvement is being requested in the "Narrative" section of the form.

    3. 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.

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

    5. 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. Forward Form 5666 and Form 6229 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 EP Classification. See IRM 4.71.6.1(4) for the EP Classification address in El Monte, CA.

  6. Save a copy of the Form 5666 or Form 6229 in the RCCMS Office Documents folder using the RCCMS Naming Convention.

  7. After making the referral, hold the case open until the earliest of 20 workdays, or until the EP agent receives feedback from the EFU, before closing the case.

4.71.6.8  (05-07-2014)
EP Group Procedures – Making Referrals to the Department of Labor (DOL)

  1. EP agents must complete Form 6212-B for all full scope and focused EP exams involving plans under DOL jurisdiction. See IRM 4.71.6 Exhibit 2 at IRM 4.71 - Employee Plans Examination 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. When performing a full scope EP exam or a focused EP exam including trust assets as an identified issue, agents must complete the Form 6212-B based upon their:

    1. Review of financial information included on the Forms 5500 or 5500-SF, related schedules and attachments with the RICS return and information provided by the taxpayer.

    2. Identification of large, unusual and questionable items.

    3. Examination of a plan’s books and records.

  3. When performing a focused EP exam not including trust assets as an identified issue, agents must complete the Form 6212-B based upon their:

    1. Pre-audit review of the financial information included on the Forms 5500 or 5500-SF, related schedules and attachments with the RICS return; and

    2. Identification of large, unusual and questionable items.

      Note:

      This limited review may not provide sufficient evidence to initiate a further inquiry that results in trust assets being included as an additional focused exam issue. In such case, "NA" is an appropriate response. However, a "Yes" or "No" response is warranted when evidence allows for such a determination.

  4. Make a referral 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.

  5. When a referral to EBSA is required, send the following items to EP Classification at the address listed in IRM 4.71.6.1(4):

    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).

  6. ) Select the "DOL Participation Requested" block on Form 6212-B only when joint participation with DOL-EBSA is needed and for all unagreed cases involving IRC 4971 or IRC 4975 excise tax.

  7. Hold any examination for which Form 6212-B is referred open until the earlier of 30 days from the date sent to EP Classification, or the date a response is received.

  8. Save a copy of the Form 6212-B in the RCCMS Office Documents folder using the RCCMS Naming Convention.

  9. Make an entry in the Case Chronology Record (CCR) stating whether or not a referral was made to EBSA.

  10. 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  (05-07-2014)
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 IRM 4.71 - Employee Plans Examination 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.

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

  3. When a referral to the PBGC is warranted as specified by Form 6533, send the referral 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, forward a courtesy copy of the Form 6533 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. Save a copy of Form 6533 in the RCCMS Office Documents folder using the RCCMS Naming Convention.

4.71.6.10  (05-07-2014)
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. Make a referral to Art Appraisal Services 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  (05-07-2014)
EP Group Procedures – Specialist Referral System (SRS)

  1. The 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).

    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

    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  (05-07-2014)
Referrals to Correct Master, Prototype and Volume Submitter Plan Language

  1. When an agent determines that a pre-approved Master & Prototype or Volume Submitter plan has erroneous language, he or she should not request an amendment, but should accept the language as previously approved.

  2. The agent will make a referral to the Pre-Approved Plan Coordinator. See IRM 4.71.6 Exhibit 4 at IRM 4.71 - Employee Plans Examination Exhibits for an example of the Pre-Approved Plan Referral Form.

  3. Submit the following items with the referral:

    1. A copy of the plan sections in question

    2. A copy of the opinion letter or advisory letter

  4. Mail the referral to:
    Internal Revenue Service
    Pre-Approved Plan Coordinator
    P.O. Box 2508, Room 5106
    Group 7521
    Cincinnati, OH 45201

  5. The Pre-Approved Plan Coordinator will review the information and determine further action, if necessary.

    Note:

    See QAB 2008-2 (Revised), Correcting Pre-Approved Master, Prototype and Volume Submitter Plan Language, for more information.


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