4.71.3 Unagreed Form 5500 Examinations and EP Examinations Closing Agreements

Manual Transmittal

December 17, 2020

Purpose

(1) This transmits revised IRM 4.71.3, Employee Plans Examination of Returns, Unagreed Form 5500 Examination Procedures and EP Examinations Closing Agreements.

Material Changes

(1) Revised IRM 4.71.3.5 to accommodate the changes in the Employee Plans Compliance Resolution System (EPCRS) process effective November 23, 2020.

(2) Changed the name and content of IRM 4.71.3.1.3 from Contact Information for Business Units to Related Resources. Placed contact Information in IRM 4.71.1 Exhibit 13 at IRM 4.71 - Employee Plans Examination Exhibits. The renamed section contains a link to the Exhibit. Also added other references.

(3) Revised IRM 4.71.3 to incorporate the provisions of the July 28, 2020 Interim Guidance Memo (IGM) TEGE-04-0720-0014 with the subject line, Interim Guidance on Fully Electronic (100% Paperless) Cases, from the Director, EP Examinations.

(4) Revised IRM 4.71.3 to incorporate the provisions of the July 31, 2020 Interim Guidance Memo (IGM) TEGE-04-0720-0018 with the subject line, Elimination of Requirement to Use Paper Form 895/895-EP, from the Deputy Commissioner, TEGE.

(5) Revised IRM 4.71.3, to incorporate the provisions of the September 22, 2020, IGM, TEGE-04-0920-0021, Interim Guidance on Reporting Compliance Case Management (RCCMS) Electronic Case Policy, from the Deputy Commissioner, TEGE.

(6) Revised IRM 4.71.3 to incorporate the provisions of the September 28, 2020, Interim Guidance Memo (IGM) TEGE-04-0920-0024 with the subject line, Revision to Activity, Disposal, Source and Status Codes, from the Deputy Commissioner, TEGE.

(7) Rewrote IRM 4.71.3.5, EPCRS and Closing Agreements, and the subsections thereunder, to implement recent changes in EP Examinations to eliminate closing agreement coordinators and give group mangers greater responsibility for resolving cases through SCP and closing agreements.

(8) Revised the IRM to eliminate the requirement to prepare Form 5650 as directed in IGM TEGE -04-0720-0014.

(9) Added IRM 4.71.3.7, Case Closing, and relocated closing instructions found in IRM 4.71.3.6.

(10) Added IRM 4.71.3.7.1, Completion of RCCMS Tabs, providing more detailed instructions to complete the RCCMS tabs.

(11) Added IRM 4.71.3.7.2, Disposal Codes.

(12) Revised IRM 4.71.3 throughout replacing the terms "agent" and "agents" with "examiner" and "examiners" , and replacing the terms "audit," "auditing" and "audited" with "examination," "examining." and "examined," where appropriate. Generally, official titles and designations do not reflect this change.

(13) Made other minor editorial changes throughout this IRM for:

  • Updating organizational terms, titles, and acronyms. Updating or correcting references and citations, added links to references.

  • Updating for changes in disposal codes and letter renumbering.

  • Updating for broken links.

Effect on Other Documents

This supersedes IRM 4.71.3 dated October 30, 2019.

Audience

Tax Exempt and Government Entities
Employee Plans

Effective Date

(12-17-2020)

Eric D. Slack
Director, Employee Plans
Tax Exempt and Government Entities

Program Scope and Objectives

  1. The Employee Plans (EP) examination program was established to ensure compliance with the provisions of Internal Revenue Code (IRC) 401(a).

  2. Purpose: IRM 4.71.3, Employee Plans Examination of Returns, Unagreed Form 5500 Examination Procedures and EP Exam Closing Agreements, provides the basic examination procedures that will enable Employee Plans (EP) agents and their managers to properly process EP case files when they discover an issue during a Form 5500 series examination that could potentially disqualify the plan.

  3. Audience: This IRM provides procedures for agents, managers, and support staff in EP Exam.

  4. Program Owner: Director, EP Examinations.

  5. Program Authority: EP Examinations derives its authority to conduct examinations, resolve issues and determine tax liability from Title 26, Internal Revenue Code, Subtitle F – Procedure and Administration, which includes but is not limited to:

    1. IRC section 7602 - Examination of books and witnesses, which falls under Chapter 78 - Discovery of Liability and Enforcement of Title.

      Note:

      IRC 7602 provides agents with the authority to:
      * Examine any books, papers, records or other data necessary to complete an examination.
      * Take testimony under oath to secure additional information needed.
      * Issue summons for information necessary to complete an examination.
      * Ask about any offense connected to the administering or enforcing of the Internal Revenue laws.

    2. IRC section 6201- Assessment authority, which falls under Chapter 63 - Assessment.

      Note:

      EP Examinations derives its authority to resolve issues from its authority to make determinations of tax liability under IRC 6201.

  6. This IRM section is authored by EP Mandatory Review. For questions, information or suggestions, contact the manager of EP Mandatory Review

Program Controls

  1. To ensure examinations are conducted according to technical, procedural and administrative requirements, EP Examinations established:

    • Mandatory Review - See IRM 4.71.14, Employee Plans Examination of Returns, EP Mandatory Review

    • Special Review - See IRM 4.70.7, Special Review (SR) and Tax Exempt Quality Measurement System (TEQMS) Procedures

  2. EP Examinations uses the Tax Exempt Quality Measurement System (TEQMS) quality control system used to oversee the examination program. For more information on TEQMS, see IRM 4.70.7.1.3, Program Overview.

  3. All examinations are done according to the Taxpayer Bill of Rights as listed in IRC 7803(a)(3). Find additional information on the IRS.gov website at Taxpayer Bill of Rights

  4. The IRS is fully committed to protecting the privacy rights of taxpayers and employees.

    1. Privacy laws are included in the IRC, the Privacy Act of 1974, the Freedom of Information Act, and IRS policies and practices.

    2. For more information about these laws, visit the IRS Electronic Freedom of Information Act Reading Room.

    3. For questions on privacy, send an email to *Privacy.

    4. For question on disclosure, send an email to *Disclosure.

Acronyms, Forms, and Publications

  1. This manual uses the following acronyms and references the following forms.

    Acronyms

    Acronym Definition
    AIMS Audit Information Management System
    BMF Business Master File
    CAP Closing Agreement Program
    CCR Case Chronology Record
    CECA Checksheet for Employee Plans Compliance Activities
    DO 8-3 Delegation Order 8-3
    DOL Department of Labor
    EEFax Enterprise Electronic Facsimile
    EIN Employer Identification Number
    EP Employee Plans
    ERISA Employee Retirement Income Security Act of 1974
    EPCRS Employee Plans Compliance Resolution System
    FAC Functional Assignment Coordinator
    FICA Federal Insurance Contributions Act
    HCE Highly Compensated Employee
    IDR Information Document Request (Form 4564)
    IDRS Integrated Data Retrieval System
    IMF Individual Master File
    IRA Individual Retirement Account
    IRC Internal Revenue Code
    IRM Internal Revenue Manual
    LB&I Large Business and International
    MFT Master File Tax
    MPA Maximum Payment Amount
    NHCE Non-highly Compensated Employee
    PBGC Pension Benefit Guaranty Corporation
    POA Power of Attorney
    POD Post of Duty
    RAR Revenue Agent Report
    RCCMS Reporting Compliance Case Management System
    SARSEP Salary Reduction Simplified Employee Pension
    SB/SE Small Business/Self-Employed
    SCP Self-Correction Program
    SEP Simplified Employee Pension
    SIMPLE IRA Savings Incentive Match Plan for Employees
    TEQMS Tax Exempt Quality Measurement System
    VCP Voluntary Correction Program
    W&I Wage and Investment
     

    Forms and Pubs

    Form Name
    Form 872-H Consent to Extend the Time to Assess Tax on a Trust
    Form 990-T Exempt Organization Business Income Tax Return
    Form 1040 U.S. Individual Income Tax Return
    Form 1041 U.S. Income Tax Return for Estates and Trusts
    Form 1120 U.S. Corporation Income Tax Return
    Form 2363 Master File Entity Change
    Form 2848 Power of Attorney and Declaration of Representative
    Form 3198-A TE/GE Special Handling Notice
    Form 3210 Document Transmittal
    Form 3244-A Payment Posting Voucher - Examination
    Form 4442 Inquiry Referral
    Form 4549-E Income Tax Discrepancy Adjustments
    Form 4564 Information Document Request (IDR)
    Form 5330 Return of Excise Taxes Related to Employee Benefit Plans
    Form 5456 Reviewer’s Memorandum - EP/EO
    Form 5464 Case Chronology Record
    Form 5500 Annual Return/Report of Employee Benefit Plan
    Form 5500-EZ Annual Return of One-Participant (Owners and Their Spouses) Retirement Plan
    Form 5500-SF Short Form Annual Return/Report of Small Employee Benefit Plan
    Form 5650 EP Examined Closing Record
    Form 5666 TE/GE Referral Information Report
    Form 5734 Non-Master File Assessment Voucher
    Form 5772-A Employee Plans (EP) Workpaper
    Form 5773-A Employee Plans (EP) Workpaper Summary Continuation
    Form 6212-B Examination Referral Checksheet B
    Form 6533 Examination Referral Worksheet
    Form 9814 Request for Mail/Shipping Service
    Form 13133 Expedite Processing Cycle
    Form SS-4 Application for Employer Identification Number
    Pub 1 Your Rights as a Taxpayer
    Pub 594 The IRS Collection Process
    Pub 1020 Appeal Procedures EP Examinations
     

Related Resources

  1. IRM 4.71.1 Exhibit 13, Important Contact Information for Individuals and Business Units, at IRM 4.71 - Employee Plans Examination Exhibits.

  2. Contact information for Program Coordinators can be found on the Centralized Contact page on TEGE Connect.

  3. EPCRS Knowledge Management site.

  4. IRM 4.70.3, TE/GE Examinations, Promoter Investigations.

Overview of Unagreed Form 5500 Examinations and EP Examinations Closing Agreements

  1. Unless specifically stated otherwise, this IRM is written to provide specific instructions to EP agents who discover an issue during a Form 5500 series examination that could potentially disqualify the plan.

  2. Plan qualification issues (IRC 401(a) failures) discovered through a Form 5500 examination can be resolved through:

    1. EPCRS

    2. A DO 8-3 closing agreement

    3. The unagreed case process

  3. Most qualification issues discovered on EP examinations are resolved under EPCRS. EPCRS guidelines are covered in IRM 4.71.3.5.2, EPCRS Closing Agreements, and Rev. Proc. 2019-19.

  4. When qualification issues can’t be resolved through EPCRS, they are either:

    1. Resolved through a DO 8-3 closing agreement, or

    2. Processed as an unagreed case.

  5. Determine if the issue is an issue requiring Mandatory Technical Advice. Certain issues such as violations of the exclusive benefit rule under IRC 401(a)(2) (for plans that fall under Title I of ERISA) require mandatory technical advice.

    Note:

    See Rev. Proc. 2020-2 (as updated annually) and IRM 4.71.13.4.1, Mandatory Technical Advice, for a complete list of issues requiring mandatory technical advice.

  6. When examining a Form 5500 series return, follow the guidelines and procedures in IRM 4.71.1, Overview of Form 5500 Examination Procedures, up to the point the issues in the case become unagreed. This IRM covers procedures to process a case from the time it becomes unagreed until it’s closed to EP Mandatory Review.

    Note:

    See IRM 4.71.3.1.5, Definitions, for the definition of an unagreed case.

  7. This IRM also has procedures for:

    1. Closing agreements - See IRM 4.71.3.5.2, EPCRS Closing Agreements.

    2. Agreed revocation and non-qualification cases resolved through DO 8-3 closing agreements. See IRM 4.71.3.5.3, DO 8-3 Closing Agreements.

Definitions

  1. An unagreed Form 5500 examination is one that involves a qualification issue that we can’t resolve via EPCRS or a DO 8-3 closing agreement.

  2. The term "revocation" refers to the proposed disqualification of a plan that has a prior determination letter issued in the plan's name.

  3. The term "non-qualification" refers to the proposed disqualification of a plan that has no prior determination letter.

  4. Any reference to Form 5500 in this IRM also includes Form 5500-EZ and Form 5500-SF.

Safeguarding Personally Identifiable Information (PII)

  1. When possible, mask the first five digits of a taxpayer’s SSN on letters, forms, notices, workpapers and emails.

    Example:

    XXX-XX-9999

Addressing Issues that Effect Plan Qualification

  1. When you discover an issue during an examination of a plan that could potentially result in a plan revocation or non-qualification, discuss the issue with your group manager before formally advising the taxpayer that the IRS is proposing disqualification of the plan.

    1. The purpose of this discussion with your group manager is to confirm that you’re properly analyzing the facts, to determine which issues you should pursue and to determine whether we can resolve the issues through EPCRS. See IRM 4.71.3.5., EPCRS and Closing Agreements.

    2. You shouldn’t proceed with the proposed revocation/non-qualification until you and your group manager have determined that the issue can’t be resolved through EPCRS.

    3. Audit CAP is available to correct egregious failures.

  2. When you determine a qualification issue exists, in most cases, you should expand the examination to include additional years.

    Additional Years Defined
    Subsequent year Review the subsequent year unless it hasn’t been filed. Pursue a substitute for return when Forms 5500 series return is due but not yet filed.
    Prior years Establish prior years if you review them. It is possible to have change closure in one year and no change closure in another year.
    Affected Years Establish all years affected on AIMS/RCCMS. The group manager must make sure additional years are established if correction is secured in those years or if the EP examiner reviewed records to verify compliance. Sometimes, this may lead to an 02 closure in a prior year.

    Caution:

    If you review records, you must issue a closing letter.

    Note:

    See IRM 4.71.1.14.1, Prior Year, Subsequent Year and Related Returns, for procedures to open an examination of a related Form 5500 that has been filed.

    Note:

    If a Form 5500 return is due but hasn’t been filed, solicit a delinquent return from the plan sponsor. See IRM 4.71.1.21, Amended, Substitute and Secured Forms 5500, for delinquent and substitute Form 5500 procedures.

  3. Document managerial involvement and guidance on Form 5464 (CCR).

  4. Use the CCR (or similar document) to record in clear, legible form, a factual accounting of all conferences and/or telephone conversations you had with the taxpayer or taxpayer's representative (representative).

    1. Since the administrative record in declaratory judgment cases (which includes proposed revocation/non-qualification cases) consists only of the documentation that was submitted in writing and exchanged between the parties, it is vital that you formally document all discussions and conferences for the record and share them with the taxpayer/representative.

    2. If you want pertinent portions of the CCR or similar documentation included in the administrative record, you must send them to the taxpayer/representative in letter format. The pertinent portions should include, but are not limited to, any discussions you had with the taxpayer or representative that are relevant to the examination scope, affirmation of tax liability or the plan’s qualified status.

  5. After you fully develop the relevant issues, present proposals for resolution to the taxpayer/representative in light of the information provided to date.

    1. This allows the taxpayer/representative an opportunity to agree with your proposals, make changes to resolve the issues, present additional facts for consideration, and/or present his/her position.

    2. Make every effort to resolve the issues at the lowest possible level.

    3. Advise the taxpayer/representative that their additional facts won’t be considered a part of the administrative record, unless they submit them to the IRS in writing.

  6. If the plan qualification issue can be resolved through EPCRS or through a DO 8-3 closing agreement, offer the taxpayer the opportunity to enter into negotiations for a closing agreement.

    • See Rev. Proc. 2019-19 for EPCRS.

    • See IRM 4.71.3.5.1, EPCRS-SCP.

    • See IRM 4.71.3.5.2, EPCRS Closing Agreements.

    • See IRM 4.71.3.5.3, DO 8-3 Closing Agreements.

  7. When you have a qualification issue, you must clearly explain the qualification issues to the taxpayer in writing by issuing a preliminary Revenue Agent’s Report (RAR).

    Note:

    Address Letter 1756 to the plan sponsor (Dear ABC, Inc.). Do not use an individual’s name. You may include an individual name in the letter’s address line.

    Example:


    ABC, Inc.
    c/o John Doe
    12 Main Street
    City, State Zip

    1. Note that the preliminary RAR should satisfy parts "a" through "d" of the final RAR, but should be clearly notated as a "Draft" or "Preliminary" copy. See IRM 4.71.3.6.3, Revenue Agent Report.

    2. Realize that the preliminary RAR is important for two reasons:


      1) It’s written documentation that the IRS clearly discussed (and cited adequate authority) specific issues with the taxpayer.
      2) It places the document in the administrative record for declaratory judgment purposes.

    3. Mail the preliminary RAR with an individually designed cover letter to the taxpayer and give them sufficient time to provide a response before you close the case unagreed to Mandatory Review.

      Note:

      Mandatory Review will mail the final RAR with the 30-Day Letter (Letter 1756). See IRM 4.71.3.6.2, 30-Day Letter Package.

  8. If the qualification issues can’t be resolved, propose plan revocation/non-qualification and process the case unagreed, following the procedures in IRM 4.71.3.6, Unagreed Form 5500 Procedures.

Tax Effect of Plan Revocation/Non-Qualification

  1. Disqualification of a plan in any given year causes the plan to be disqualified in that year and in all subsequent years.

    1. In general, once a plan is disqualified, it remains non-qualified until the qualification issues is corrected and the plan is re-qualified through a closing agreement.

    2. A plan may be disqualified in a year for which the Form 5500/1041 statute has already expired. Although IRS can’t assess tax in a barred year, the consequences of disqualification continue for all subsequent years and IRS can assess tax in subsequent years for which the statute is still open.

    3. The IRS's ability to pursue a qualification issue in any year is not impacted by the Form 1041 statute of limitations. The expiration of the statute of limitations for Form 1041 for any given year doesn’t prevent the IRS from pursuing a qualification issue in that year (see Yarish Consulting, Inc. v. Commissioner, T.C. Memo 2010-174).

  2. The tax effect of revocation/non-qualification includes the following:

    1. Trust assets’ realized earnings are taxable each year the plan is not qualified (if the assessment of tax is not barred by statute). Trust earnings must be reported on Form 1041, which the trustee must file annually, on a calendar year basis.

    2. HCE income tax - if the plan is disqualified for failure to meet IRC 401(a)(26) (participation failure) or 410(b) (coverage failure), each highly compensated employee (HCE) must include in income his/her entire vested accrued benefit (or account balance) not yet included in income per IRC 402(b)(4).

    3. Nonforfeitable contributions are taxable - If the plan is disqualified for any reason, plan contributions allocated in a given year to any plan participant (HCE or NHCE) in a defined contribution plan, (in a defined benefit plan the increase in the present value of the accrued benefit) are taxable on the plan participant’s Form 1040 to the extent to the extent they become nonforfeitable in that year per IRC 402(b)(1).

      Reminder:

      Normally, discrepancy adjustments are limited to only the HCEs. However, you and your group manager may determine that an NHCE discrepancy adjustment is appropriate.

      Note:

      If a participant is not fully vested, amounts that become vested in a subsequent year will be taxable in the subsequent year to the extent they become vested.

    4. Forfeitable contributions are non-deductible - In a defined contribution plan, contributions allocated to participant accounts aren’t deductible on the plan sponsor’s tax return (for example, Form 1120) to the extent they are forfeitable by the participant.

    5. Contributions are non-deductible - In a defined benefit plan, in most cases, none of the contributions made are deductible on the plan sponsor’s tax return (for example, Form 1120), because separate accounts are not maintained in a defined benefit plan. If there’s only one participant, the employer can deduct the contribution to the extent the participant includes the contribution into income.

      Note:

      The employer can deduct the amount of the employer’s contribution in the non-qualified year to the extent that the amount is includible in the employees participating in the plan gross income, only if separate accounts are maintained for each employee where there is more than one employee (IRC 404(a)(5) and 26 CFR 1.404(a)-12).

    6. Ineligible rollover distributions - distributions made from the plan are ineligible for rollover to another qualified plan or to an IRA, and therefore, are taxable to the individual on his/her Form 1040 in the year of the distribution per IRC 402(b)(2).

    7. Excise tax on ineligible rollovers - Any funds rolled into an IRA from a plan determined to be not qualified under IRC 401(a) are subject to excise tax on excess contributions under IRC 4973.

      Note:

      IRC 4973 excise tax is due each year until the excess contributions are distributed from the IRA.

    8. Rollovers from non-qualified to qualified plan taints the qualified plan - Any funds rolled from a non-qualified plan to a qualified plan can potentially cause the recipient plan to be non-qualified.

    9. FICA taxes due - Employer contributions allocated to each participant’s account in a defined contribution plan become subject to FICA taxes.

  3. Compute the tax effect of the revocation/non-qualification for all open years, beginning with the year under examination and going forward and include a copy of the tax calculations in the case file with the RAR when you close the case to Mandatory Review.

    Note:

    With your manager’s approval, you may also consider prior years in your calculations.

EPCRS and Closing Agreements

  1. You may resolve qualification issues discovered on examination via the Self-Correction Program (SCP) or closing agreements according to the Employee Plans Compliance Resolution System (EPCRS).

  2. SCP is designed to allow the plan to retain its qualified status for:

    1. Insignificant issues found on examination.

    2. If the operational failures is significant, SCP is available only if the correction is completed or substantially completed by the date the plan or the sponsor is notified of a pending examination. Substantially completed generally means that: the correction is completed for 65% of all participants affected before the sponsor is notified of your exam, and is completed thereafter in a diligent manner or during the correction period the failure is identified, correction initiated and completed within 120 days after the last day of the correction period.

    3. SCP is only available if the taxpayer has practices and procedures in place to promote compliance.

      Note:

      See Rev. Proc. 2019-19 Part IV for a description of SCP.

  3. Qualification issues may be resolved through different types of closing agreements:

    1. Audit Closing Agreement Program (Audit CAP) Closing Agreements – Designed to allow the plan to retain it’s qualified status and developed under the EPCRS principles outlined in Rev. Proc. 2019-19. Audit CAP is available for plans under IRC section 401(a), 403(b), SEPs, SARSEPs and SIMPLE IRAs, for correction of all qualification failures found on examination that haven’t been corrected under SCP or VCP. See Rev. Proc. 2019-19.

    2. DO 8-3 Closing Agreements – Designed to resolve issues that do not fall under EPCRS. In most cases, the taxpayer(s) and the Commissioner formally agree that the plan under examination is not qualified, officially making the proposed revocation or proposed non-qualification an "agreed revocation" or "agreed non-qualification." These closing agreements often include income tax, penalties and interest as part of the sanction, and in some limited instances, can be used to resolve excise tax matters.

  4. If the plan qualification issue can’t be resolved through SCP, offer the taxpayer the opportunity to enter into negotiations for a closing agreement. See IRM 4.71.3.5.2, EPCRS Closing Agreements, and IRM 4.71.3.5.3, DO 8-3 Closing Agreements.

    Note:

    Find additional information on the EPCRS Knowledge Management site or contact your group manager for help.

EPCRS - SCP

  1. The EPCRS SCP allows a plan sponsor to correct plan errors without contacting the IRS or paying a fee.

  2. Find important resources on SCP on the Knowledge Management (K-Net) site:

    • Rev. Proc. 2019-19

    • EPCRS Self-Correction Program

    • Self-Correction Program (SCP) Desk Guide

    • SCP Checksheet

  3. To be eligible for SCP, the plan sponsor or administrator must have established practices and procedures (formal or informal) reasonably designed to promote and facilitate overall compliance with the law.

    Note:

    Having a plan document alone doesn’t constitute evidence of established procedures.

  4. Plan sponsors may fix certain operational failures and plan document failures through SCP as described in Part IV of Rev. Proc. 2019-19. Plan sponsors satisfy the SCP requirements for an:

    1. Operational Failure if the plan sponsor of a qualified plan (an IRC 401(a) plan), a 403(b) Plan, a SEP, or a SIMPLE IRA Plan satisfies the requirements of Rev. Proc. 2019-19 Section 7.02, and either section 8 (for insignificant Operational Failures) or section 9 (for significant Operational Failures).

    2. Eligible Plan Document Failure if the plan sponsor of a qualified plan or a 403(b) Plan satisfies the requirements of section 7.03 and section 9.

  5. As soon as you discover operational failures that affects the plan qualification, you must fully develop the facts surrounding the failures before discussing the case with your group manager.

  6. After you develop the facts, review and become familiar with the requirements of SCP. The SCP Desk Guide is a great resource for understanding SCP procedures. If you determine that:

    1. SCP is appropriate to resolve the failures, before the operational failures are corrected, prepare the SCP Checksheet for review and approval by your group manager.

    2. The failure is ineligible to be corrected under SCP, contact your group manager to determine whether the failures can be resolved under the Audit CAP procedures.

  7. A key factor in SCP is the method of correction of the failure.

    1. Determine whether or not correction of the failure is in accordance with Appendix A or B of Rev. Proc. 2019-19.

    2. Follow the procedures in IRM 4.71.3.5.1 (8) and IRM 4.71.3.5.1 (9) below as applicable.

  8. Correction method in accordance with Appendix A or Appendix B of Rev. Proc. 2019-19.

    1. Group manager: If the case is otherwise eligible for SCP, and the plan sponsor is using a proposed correction methods strictly in accordance with Appendix A or Appendix B of Rev. Proc. 2019-19, you may approve the correction method for the case being closed under SCP.

      Example:

      For example, if the plan’s eligible operational failure is that the plan sponsor didn’t follow the plan document and correction of this failure is to retroactively follow the plan document and put the participants in the exact position they would be had no violation had occurred, you may approve the case for SCP and do not need the Manager, EP Mandatory Review’s approval.

    2. Group manager: confirm that all years affected were established on AIMS and RCCMS. This means all years the examiner reviewed are established per IRM 4.71.1.14.1 paragraphs (6) & (8).

    3. Group manager: approve the SCP proposal by signing the EP examiner prepared SCP Checksheet, return a copy to the EP examiner and forward a copy the Area Manager within five business days of receipt.

      Note:

      You can’t close the case until after five days from when you sent the checksheet to the Area Manager.

    4. Examiner: If there are no other issues outstanding, verify that the agreed correction has been fully completed, record in the CCR (Form 5464) that correction has been verified, and close the case.

    5. Examiner: When you close the case, issue the appropriate closing letter (Letter 1744, Letter 1744A or Letter 1744B as applicable) containing a statement specifically indicating the operational failure was resolved under SCP.

    6. Examiner: When closing the case, use disposal code 404 in RCCMS (SCP - Self Correction), and follow the closing procedures in IRM 4.71.1.22, Report Writing and Closing Procedures.

  9. Correction method not in Appendix A or Appendix B of Rev. Proc. 2019-19.

    1. Group manager: If the plan sponsor is using a proposed correction method that isn’t strictly according to Appendix A or B of Rev. Proc. 2019-19, sign the SCP Checksheet within five business days of receiving it from the EP examiner, and secure email to the Manager, EP Mandatory Review for approval.

      Exception:

      You do not have to send an SCP checksheet to Mandatory Review and can approve the SCP if the correction of the operational failure is to follow the plan document and put the participants in the exact position they would’ve been, had no violation occurred.

      Example:

      The plan sponsor has an eligible operational failure of not following the plan document and corrects it by retroactively following the plan document and putting the participants in the exact position they would be had no violation occurred. You, the group manager have the authority to approve the case for SCP and doesn’t need the Manager, EP Mandatory Review’s approval.

    2. Mandatory Review: respond to the group manager/examiner within seven business days of receiving the checksheet with a recommendation of an acceptable correction method or that the examiner resolve the issues through Audit CAP.

      Note:

      In certain cases, Mandatory Review may determine, after discussions with the group manager/examiner, and in order to achieve consistency, that the case is inappropriate for SCP and recommend resolving the failures under the Audit CAP procedures.

      Note:

      The area manager resolves any disagreement between the group manager/examiner and Mandatory Review on the correction methods or the appropriateness of SCP.

    3. Examiner: If you determine SCP is appropriate, present the correction methods to the plan sponsor and/or POA within seven days of when you receive the approved checksheet as agreed to by your manager.

    4. Examiner/manager: If the plan sponsor and/or POA do not agree with the recommended correction method, notify your manager, who will help you as needed, to reach an agreement on an acceptable correction method. If you still do not agree on the correction method, the group manager will discuss the issue with the area manager with case jurisdiction.

    5. Examiner: If the issues can’t be resolved through SCP under this section, an Audit CAP closing agreement under IRM 4.71.3.5.2, EPCRS Closing Agreements, a DO 8-3 closing agreement under IRM 4.71.3.5.3, DO 8-3 Closing Agreements, close the case unagreed per IRM 4.71.3.6, Unagreed Form 5500 Procedures.

    6. Examiner: When all issues are resolved under SCP, verify that the agreed correction has been fully completed, record in the CCR (Form 5464) that you verified correction, and prepare the case for closing.

    7. Group manager: When closing the case under SCP, send a copy of the SCP Checksheet to the area manager for their review. Hold the case five business days before closing the case.

    8. Examiner: When you close the case under SCP, issue the appropriate closing letter (Letter 1744, Letter 1744A or Letter 1744B as applicable) with a statement specifically indicating the plan sponsor resolved the operational failures under SCP.

    9. Examiner: When you close the case under SCP, use disposal code 404 in RCCMS (SCP - Self Correction), and follow the closing procedures in IRM 4.71.1.22, Report Writing and Closing Procedures.

EPCRS Closing Agreements

  1. Audit CAP closing agreements are available to:

    1. plans under IRC 401(a), IRC 403(b), SEPs, SARSEPs and SIMPLE IRAs, for correction of all qualification failures examiners find on examination that haven’t been corrected under SCP or VCP.

      Caution:

      IRC 457 plans are not eligible for correction using an EPCRS Audit Cap closing agreement. A DO-83 closing agreement must be used to correct IRC 457 plan failures per IRM 4.71.3.5.3

    2. correct egregious failures.

      Caution:

      Audit CAP may not be available to correct abusive transactions.

    Note:

    See Rev. Proc. 2019-19 Part VI, sections 13 and 14.

  2. Find important resources on Audit CAP on the Knowledge Management (K-Net) site:

    • Rev. Proc. 2019-19

    • Audit CAP Desk Guide

    • Audit CAP Checksheet

  3. Discuss all potential EPCRS resolutions with your group manager before you discuss them with the taxpayer.

  4. Follow these Audit CAP processing procedures:

    1. Fully develop the issues before you discuss the facts with your group manager.

    2. Prepare the Audit CAP Checksheet listing case information.

    3. Spell out correction methods in writing, including any proposing retroactive amendments.

      Note:

      This may involve directing the plan sponsor to amend the plan retroactively.

    4. Determine the Maximum Payment Amount (MPA). See the Audit CAP MPA Worksheet.

  5. Send the completed Audit CAP Checksheet, Audit CAP MPA Worksheet, and any relevant work papers to your group manager.

  6. Group manager: follow these procedures:

    1. Rev. Proc. 2019-19 Appendix A & B Failures: Within five business days from receiving the Audit CAP Checksheet, contact the examiner to discuss the issues for the failures, proposed correction methods, and the sanction. Prepare the CAP Sanction Memo (See Exhibit 4 of the Audit CAP Desk Guide) and return it to the examiner (with a copy to the area manager) with the approved Audit CAP Checksheet within five business days of receipt.

    2. Rev. Proc. 2019-19 Non-Appendix A & B Failures: Within five business days from receiving the Audit CAP Checksheet, forward the checksheet to the Manager, EP Mandatory Review. Mandatory Review will return the checksheet to the group manager within seven business days outlining the proposed correction methods. Return the CAP Sanction Memo and correction methods to the examiner within three business days of when you received it from Mandatory Review (with a copy to the area manager). The area manager with jurisdiction will resolve any disagreements between Mandatory Review and the group on the recommended sanction and/or the correction method(s).

    3. Plan Document Failures: You may approve prototype late or non-amenders and do not have to send them to Mandatory Review. Also, you do not have to send non-amender cases coordinated with or approved by EP Determinations to Mandatory Review.

    4. For Operational Failures for not following the terms of the plan document and related corrections made by retroactively following the terms of the plan document, putting the participants in the exact position they would be had no violation occurred, you do not have to send to Mandatory Review.

  7. EP examiner:

    1. Follow the procedures in the Audit CAP Desk Guide.

    2. Discuss the qualification failures discovered and the option of resolving the failures with the taxpayer/POA.

      Note:

      If the taxpayer doesn’t agree on both the corrections and sanction, document the case chronology record and the workpapers with the reason an agreement was not reached and close the case unagreed per IRM 4.71.3.6, Unagreed Form 5500 Procedures.

    3. Prepare a draft closing agreement and send it to your manager.

      Note:

      The group manager will help prepare the closing agreement.

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  9. Examiner: When you receive approval from your manager and/or Mandatory Review, send to the taxpayer/POA, the following:

    1. Letter 1595

    2. One copy of the draft closing agreement

    3. Closing Agreement instructions

      Note:

      See Exhibit 7 of the Audit CAP Desk Guide.

    4. Form 3244-A pay.gov instructions

      Note:

      See IRM 4.71.3 Exhibit 9 at IRM 4.71 - Employee Plans Examination Exhibits for a copy of the on-line Form 3244-A pay.gov.

  10. If the taxpayer/POA requests changes to the closing agreement language, get the group manager’s approval.

    Note:

    Area Counsel is available to review and approve any changes to the agreement’s standard language.

  11. Secure documentation that the plan sponsor has corrected the qualification issues before you send the final closing agreement to the taxpayer/POA.

  12. Send one copy of the final closing agreement to the taxpayer/POA using Letter 1595-A along with execution and payment instructions (if appropriate).

  13. You may receive the signed closing agreement from the taxpayer in hard copy (via mail) or electronic via EEFax or secured email (if sanction is $250,000 or less).

    Note:

    You can accept them by EEFax if you have contacted the taxpayer by phone or in-person and documented the case chronology record with the contact date and noted that the taxpayer wishes to send the closing agreement by EEFax.

  14. Tax Examiner: Follow these steps only for electronic payments made through pay.gov.

    1. When payments are submitted through pay.gov, use pay.gov/agency to access data/documents needed to process the sanction payment.

    2. You’ll receive an email when payments are received with the pay.gov tracking ID number.

    3. Take necessary steps to ensure that the payment has been validated and give the EP examiner/group manager the deposit ticket number that they must insert on the Form 3210 to the Kansas City Submissions Processing Center in place of a check number.

    4. Send the following items to the EP Examiner working the case:

      • Form 3244-A pay.gov that was completed by the taxpayer

      • Detailed record entitled "ACH Transaction Detail"

  15. EP Examiner/group manager: When you receive the executed closing agreement and sanction (in the form of a cashier’s check, certified check made payable to the U.S. Treasury or ACH payment) from the plan sponsor, inspect both for errors.

    Note:

    If the representative signs the closing agreement, there must be a valid Form 2848 specifically authorizing him/her to do so.

    1. If you discover any errors, return the documents and the monetary sanction to the plan sponsor for correction.

    2. If there are no errors with the documents or the sanction payment, scan and EEFax or email the executed closing agreement, the check and completed Letter 1595-C to the area manager for signature.

      Note:

      The plan years listed on Letter 1595-C are the plan years covered by the closing agreement.

  16. Area manager/designee: Within five business days:

    1. Sign the closing agreement and Letter 1595-C

    2. Secure email the signed closing agreement and Letter 1595-C to the EP examiner and group manager.

  17. Group manager/examiner: Process the check within one business day of receiving the signed agreement from the area manager.

    1. Follow your group’s procedures for payments and remittances via overnight delivery, including using the log book.

    2. Prepare the following package:

      • Form 3210 with package contents listed

      • Cover memorandum

      • A fully executed copy of the closing agreement

      • Form 5734

      • Form 3244-A (if a physical check was received) or Form 3244-A pay.gov (if electronic payment was received)

      • Remittance (check or ACH Transaction Detail)

      Note:

      Examples of the items listed above can be found at Audit CAP Resources

    3. Send the package listed above to the Manual Deposit Unit located at the Kansas City Submissions Processing Center:

      If the payment was made using: Then send package using:
      a physical check next day, express mail
      an electronic payment encrypted email

      Note:

      See IRM 4.71.1 Exhibit 13 at IRM 4.71 - Employee Plans Examination Exhibits for the physical address and email address to use.

  18. Examiner: Within three business days of receiving the fully executed closing agreement from the area manager, send a fully executed copy of the closing agreement to the plan sponsor/POA with Letter 1595-C.

  19. Save all documents forms and letters in the RCCMS Office Documents folder using the RCCMS Naming Convention.

  20. Prepare the examination for closing. Include the following entries on the RCCMS Closing Record:

    • General Tab - Disposal Code - Enter 106 – Closing Agreement.

    • Details Tab – Closing Agreement Result - Enter the amount of the closing agreement monetary sanction.

      Note:

      If more than one year is on RCCMS, enter the amount of the sanction on the earliest year and for each of the subsequent years enter $1.

    • General Tab - ARDI Code - Enter 1- Fully Paid.

  21. Prepare and mail the applicable closing letter per IRM 4.71.1.22.1(6), Closing Procedures for Agreed Form 5500 Examinations.

  22. Close the case as an agreed case per IRM 4.71.1.22, Report Writing and Closing Procedures, and its subsections.

DO 8-3 Closing Agreements

  1. TE/GE Directors are delegated the authority "to enter into and approve a written agreement with any person relating to the Internal Revenue tax liability of such person (or of the person or estate for whom he or she acts) for a taxable period or periods ended prior to the date of agreement and related specific items affecting other taxable periods." (Delegation Order 8-3).

  2. DO 8-3 closing agreements are used to resolve issues that aren’t permitted through EPCRS.

  3. In most DO 8-3 closing agreements, the taxpayers and the Commissioner formally agree that the plan under examination is not qualified, officially making the proposed revocation or proposed non-qualification an "agreed revocation" or "agreed non-qualification."

    1. The taxpayer is legally forgoing their right to an Appeals hearing and their right to petition the Tax Court.

    2. When a DO 8-3 closing agreement is fully executed by the taxpayer and the IRS, the case becomes an agreed case in every respect, just like a case resolved under EPCRS.

    Note:

    In very limited situations, excise tax and/or unrelated business income (UBI) issues may be resolved through a DO 8-3 closing agreement; however, you must obtain pre-approval from the Director, EP Examinations.

  4. As with EPCRS closing agreements, you must closely coordinate DO 8-3 closing agreements with the group manager.

  5. When doing a DO 8-3 closing agreement, follow EPCRS closing agreement procedures in IRM 4.71.3.5.2, EPCRS Closing Agreements, with these exceptions:

    1. The Director, EP Examinations signs the closing agreement for the IRS.

    2. You must get approval from your group manager, area manager, and the Director, EP Examinations before you propose a DO 8-3 agreement.

      Note:

      Do not offer or discuss resolution using a DO 8-3 closing agreement with the taxpayers until steps 3 through 5 are completed.

    3. Return a fully executed closing agreement with Letter 1595-D instead of Letter 1595-C.

    4. When closing agreements are fully executed, use closing Letter 1745 or Letter 1745-A, as applicable.

  6. Contact the group manager to discuss resolution of the case under DO 8-3.

  7. Group Manager: Within five business days of discussing the case with the examiner, contact your area manager to discuss the facts of the case. If the area manager disagrees with the processing of the case under a DO 8-3 closing agreement, contact the examiner to inform him or her that a DO 8-3 closing agreement is not an option.

  8. EP Examiner: When the area manager determines that a DO 8-3 closing agreement is appropriate:

    1. Prepare a calculation of all applicable taxes, penalties and interest (including Form 4549-E).

    2. Draft the DO 8-3 Transmittal Checksheet. See Exhibit 20 of the Audit CAP Desk Guide.

    3. Prepare an Executive Summary (Includes: background, facts, issues, resolution and must address penalties (especially if not assessing).

    4. Prepare the draft DO 8-3 closing agreement. Include appropriate plan sections and Code sections. Include all responsible parties in the draft.

      Note:

      Ask your group manager for sample DO 8-3 closing agreements or find an example on the EPCRS Knowledge Management site.

    5. Secure email items a – d to your group manager for approval.

  9. Group manager: If the DO 8-3 closing agreement is for an IRC 457(b) plan, as early in the process as possible, contact the EO-FSL Review function for comment if there is an open, concurrent examination of the sponsor or if any proposed changes will affect employment taxes.

  10. Group manager: If you agree that the case should be resolved through a DO 8-3 closing agreement, within five business days of receiving the documents listed in IRM 4.71.3.5.3 (8) from the examiner, sign the transmittal and secure email all of the documents to your area manager with your recommendation.

  11. Area manager: If you agree with the recommendation, sign the transmittal and forward all documents you received from the group manager to the functional assignment coordinator (FAC) and the Director, EP Examinations.

  12. The Director, EP Examinations or the FAC either signs and return the Transmittal Check Sheet indicating acceptance of the draft closing agreement or responds to the area manager with any questions or concerns.

  13. Use these letters in the DO 8-3 process:

    1. Letter 1595 - to mail draft closing agreements to the taxpayer/representative.

    2. Letter 1595-A - to mail closing agreements to the taxpayer/representative to formally sign the closing agreement.

    3. Letter 1595-D - to mail fully executed DO 8-3 closing agreements back to the taxpayer/representative.

    4. Letter 1745 - as the closing letter for the 5500 examination when a DO 8-3 closing agreement is secured and IRS determined the plan is disqualified from inception and remains disqualified.

      Note:

      Use Letter 1745-A when you’re coordinating the examination with SB/SE or LB&I.

  14. You may accept the signed closing agreements from the taxpayer in hard copy or by EEFax (sanctions $250,000 or less).

    Note:

    You can accept them by EEFax, if you have contacted the taxpayer by phone or in-person and documented the case chronology record with the contact date and noted that the taxpayer wishes to send the closing agreement by EEFax.

  15. Group manager: When the taxpayer/POA returns the signed closing agreement to the examiner:

    1. Notify the FAC and the Director, EP Examinations that you’re forwarding a closing agreement to be countersigned.

    2. Secure email closing agreement, the cover memorandum and the Transmittal Checksheet to the Director, EP Examinations and the FAC.

  16. The Director, EP Examinations or the FAC will return the fully executed closing agreement within five business days to the group manager via secure email.

  17. Group manager: secure email the fully executed closing agreement to the examiner.

  18. Group manager/examiner: Process the check within one business days of receiving the signed agreement from the area manager.

    1. Follow your group’s procedures for payments and remittances via overnight delivery, including the use of the log book.

    2. Follow your group’s procedures for payments and remittances via overnight delivery, including using the log book.

    3. Prepare and forward a closing agreement package per IRM 4.71.3.5.2 (17)

      Note:

      See IRM 4.71.1 Exhibit 13 at IRM 4.71 - Employee Plans Examination Exhibits for the physical address and email address to use.

  19. EP examiner: mail the following to the taxpayer/representative:

    • Letter 1595-D

    • Copy of the fully executed closing agreement

    • If the DO 8-3 agreement is secured and the plan is determined to be disqualified from inception and remains disqualified, Letter 1745 or Letter 1745-A, as applicable.

Electronic Payments of Closing Agreement Sanctions

  1. Taxpayers may now pay the sanction electronically in lieu of a check on pay.gov.

    1. Go to www.pay.gov.

    2. Select "Make a Payment."

    3. Search "Form 3244-A." Use the "IRS TEGE EP Closing Agreement Payment Posting Voucher" (for audit closing agreements), not "Form 3244 IRS TEGE VC Closing Agreement Payment Posting Voucher" (for voluntary compliance agreements).

    4. Complete the highlighted portions of the on-line Form 3244-A.

      Note:

      Give the taxpayer the specific instructions in IRM 4.71.3.5.4 (2) below to complete Form 3244-A.

    5. Submit the payment.

  2. The taxpayer must complete the highlighted portions of the online Form 3244-A as follows:

    1. "Taxpayer Information," "EIN" and "Amount" must be the same as the closing agreement.

    2. Use the 3 digit plan number in the closing agreement. If there is no plan number, use "999."

    3. "Tax Period" (current year and month) and "Transaction Date" should be the payment date.

    Note:

    See IRM 4.71.3 Exhibit 9 at IRM 4.71 - Employee Plans Examination Exhibits for a copy of the online Form 3244-A pay.gov.

  3. The taxpayer receives a tracking number when they complete the submission process. They must record the tracking number and provide this number to the EP examiner with the executed closing agreement.

  4. EP examiner: include the tracking number in lieu of the check when you send the closing agreement package to your group manager per IRM 4.71.3.5.2, EPCRS Closing Agreements.

Unagreed Form 5500 Procedures

  1. If the qualification issue is not resolved through EPCRS or a DO 8-3 closing agreement, follow the procedures in this subsection.

  2. Solicit Forms 1041 from the trustee. See IRM 4.71.3.6.1, Solicitation of Form 1041.

  3. Pick up prior and subsequent year Forms 5500 for examination (at your group manager’s discretion, and in some cases, the area manager’s or the Director, EP Examinations’ discretion). See IRM 4.71.1.14.1, Prior Year, Subsequent Year and Related Returns.

    1. In general, expand the examination to include subsequent year Forms 5500 that are due.

    2. If you do not include the subsequent year returns in the examination, the group manager prepares a written statement in the case chronology, memo, or email to include in the workpapers, giving the reasons the subsequent years are not included.

    3. You may need to open an examination of a year in which the normal statute of limitations has expired. This happens when the IRS has determined that an operational issue has occurred that retroactively disqualifies the plan.

    4. The IRS's ability to pursue a qualification issue in any year is not impacted by the Form 1041 statute of limitations. The Form 1041 statute of limitations expiration for any given year doesn’t prevent the IRS from pursuing a qualification issue in that year (see Yarish Consulting, Inc. v. Commissioner, T.C. Memo 2010-174).

    5. If you solicit plan or trust records for a given plan year, that year is considered to be under examination and you must establish the Form 5500 on AIMS and RCCMS even if the Form 5500/1041 statute has expired. If the statute of limitations has already expired, update the statute to alpha code "PP" per IRM 4.71.9.10, Use of Alpha Codes.

    6. Document your decision to examine (or not) related years in the case chronology.

    7. Include your group manager's agreement to examine prior years via a confirmation email or by signing the case chronology.

    8. See IRM 4.71.1.14.1, Prior Year, Subsequent Year and Related Returns, for procedures to open an examination of a related Form 5500 that has been filed and IRM 4.71.1.21, Amended, Substitute and Secured Forms 5500, for delinquent and substitute Form 5500 procedures.

  4. Begin (at your manager’s discretion) Form 1040 discrepancy adjustments (when there is a taxable event) on all or some plan participants or at a minimum, those individuals with substantial tax impact, depending on workload considerations. See the discrepancy adjustment procedures in IRM 4.71.4, Employee Plans Examination of Returns, Discrepancy Adjustments.

    Note:

    Before starting a discrepancy adjustment, secure an AMDISA print to determine if a Form 1040 examination is already in process.

    Note:

    If you do not do a discrepancy adjustment, explain why on the CCR.

  5. Begin (at your manager’s discretion) a Form 1120 discrepancy adjustment on the plan sponsor per the discrepancy adjustment procedures in IRM 4.71.4, Employee Plans Examination of Returns, Discrepancy Adjustments.

    Note:

    Before starting a discrepancy adjustment, secure an AMDISA print to determine if a Form 1120 examination is already in process.

    Note:

    You may need to ask SB/SE for help to generate the income tax adjustment on Form 4549-E.

    Note:

    Normally, the EP examiner mails the 30-Day Letter (Letter 3605) for Forms 1040/1120 discrepancy adjustments (See IRM 4.71.4.4.5, Preparation of the Discrepancy Adjustment Package). However, when you do a discrepancy adjustment with (or because of) a proposed revocation/non-qualification, you prepare the adjustment (Form 4549-E) and all reports, but Mandatory Review mails Letter 3605 with Form 4549-E and attachments to the taxpayer. The EP examiner works the discrepancy adjustment files with the proposed revocation/non-qualification. The discrepancy adjustment file continues to be part of the proposed revocation/non-qualification package and is closed with the case to Mandatory Review.

    Note:

    If you do not pursue a discrepancy adjustment, explain why on the CCR.

  6. Make timely referrals to the applicable EFU (LB&I SB/SE, and W&I) on Form 5666, if either:

    1. The trustee does not file the solicited Forms 1041.

    2. You do not do Forms 1040 or 1120 discrepancy adjustments.

      Note:

      See IRM 4.71.6.7, EP Group Procedures – Making Referrals to Examination Functional Units, for referral procedures.

  7. Make a referral to DOL on Form 6212-B through the FAC/EP DOL Coordinator. See IRM 4.71.3.1.3, Contact Information for Business Units.

    Note:

    If applicable, also refer to PBGC on Form 6533. See IRM 4.71.6.9, EP Group Procedures – Making Referrals to Pension Benefit Guaranty Corporation (PBGC), for referral procedures.

  8. Prepare the 30-Day Letter package for the unagreed Form 5500 examination per IRM 4.71.3.6.2, 30-Day Letter Package.

  9. Prepare a final RAR per IRM 4.71.3.6.3, Revenue Agent Report. Update the preliminary RAR that you mailed to the taxpayer (as discussed in IRM 4.71.3.3, Addressing Issues that Effect Plan Qualification) for:

    1. Any necessary clarification to parts "a" through "d" (Issue, Facts, Law, or Government's Position)

    2. The taxpayer's response (if one is received) and

    3. The IRS’s rebuttal of the taxpayer’s response (if one was received).

      Note:

      Add a Taxpayer’s Position section to the RAR after the Government’s Position section. Add an IRS Rebuttal section to the RAR after the Taxpayer’s Position section addressing each point the taxpayer raised.

  10. Prepare the administrative record per IRM 4.71.3.6.4, Administrative Record.

    Note:

    All cases subject to declaratory judgment (which includes unagreed Form 5500 examinations) require you to prepare an administrative record and index to the administrative record.

  11. Complete the Unagreed Plan Disqualification Checksheet before you close the case to Mandatory Review. See IRM 4.71.3 Exhibit 1 at IRM 4.71 - Employee Plans Examination Exhibits for an example of the Unagreed Plan Disqualification Sheet.

  12. Prepare Form 5772-A and Form 5773-A (or its equivalent) to document examination procedures and findings and save them in the RCCMS Office Documents folder using the RCCMS Naming Convention. See IRM 4.71.3 Exhibit 2 at IRM 4.71 - Employee Plans Examination Exhibits for the RCCMS Naming Convention.

  13. Include current copies of IDRS prints in the case file and in the RCCMS Office Documents folder of:

    • AMDISA prints for all cases under examination

    • EMFOLT prints for all Forms 5500 examined

    • IMFOLT prints for any Forms 1040 picked up as a result of the revocation.

      Note:

      See IRM 4.71.3.6, Unagreed Form 5500 Procedures.

    • BMFOLT prints for any Forms 1120 picked up as a result of the revocation

      Note:

      See IRM 4.71.3.6, Unagreed Form 5500 Procedures

  14. Follow the closing instructions outlined in IRM 4.71.3.7, Closing Case.

Solicitation of Form 1041

  1. If your examination results in the proposed revocation/non-qualification of a trust’s tax exempt status and the issue couldn’t be resolved under Audit CAP or a DO 8-3 closing agreement (per IRM 4.71.3.5.3, DO 8-3 Closing Agreements), the trust becomes taxable and the trustee must file Form 1041 for all open years.

    1. Forms 1041 are filed on a calendar year basis per IRC 644(a).

    2. The statute of limitations on the trust year runs with the filing of the Form 5500 for the plan year in which the trust year ends.

      Note:

      See IRM 4.71.9.6.1, Securing Consents for Forms 5500/1041, for a detailed explanation.

    3. Use Form 4564 to solicit Forms 1041 for all open trust years that correspond with the plan years being disqualified.

    4. Sometimes, these years may be short years.

      Example:

      You’re examining plan year ending June 30, 2018, and disqualifying the plan for the plan year ending June 30, 2018, and all subsequent years. The effective date of disqualification is July 1, 2017. On November 1, 2020, you solicit Forms 1041. You should solicit Forms 1041 for the trust tax year beginning July 1, 2017 and ending December 31, 2017; the trust tax year beginning January 1, 2018 and ending December 31, 2018; and the trust tax year beginning January 1, 2019 and ending December 31, 2019.

    5. See IRC 443(b) for the required computation of taxable income for a taxable entity that is required to file a tax return for a short tax year.

    6. The plan sponsor can’t use its EIN to file Form 1041. The trust must obtain its own EIN. See IRM 4.71.3.6.1.1, Obtaining a Trust EIN, for instructions on how to get an EIN for the trust.

  2. Do not establish Forms 1041 on AIMS or RCCMS whether or not received from the taxpayer because EP does not have jurisdiction over Forms 1041. Apply time spent on the examination to Forms 5500 examined, or if you’re doing discrepancy adjustments, apply time to those cases.

  3. If you receive solicited Forms 1041:

    1. Enter on the top margin in bold face print "FORM 5500 CONVERTED TO FORM 1041 BY TEGE:EP."

    2. Date stamp Form 1041 to establish the date actually received.

    3. Attach Form 3198-A with the following items completed:

      • List your name, ID number, phone number, POD and group number in the "Required Entries" section.

      • List the trust EIN, return MFT (05), year of the attached Form 1041, taxpayer's name and name control in the "Required Entries" section.

      • List all years for the same taxpayer that are being processed simultaneously, with the applicable statute date.

      • Recommend the assessment or non-assessment of failure to pay and failure to file penalties in the "Other Instructions" section. Highlight your instructions for penalties on the form.

    4. Attach Form 13133 with the following completed:

      • List your name, phone number and mail code.

      • Check "Delinquent Return."

      • Check "See attached Form 3198-A."

      • If penalties should not be assessed, check "Penalties" and insert "Do not assess penalties" in the space provided.

    5. If you receive payment, prepare Form 3244-A for each Form 1041 received. Complete these items with comments as noted:

      • EIN

      • Form number/MFT: Enter 1041/05

      • Tax period

      • Plan number

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

      • Taxpayer name, date, address and zip code

      • Transaction Data: List the entire amount received for the year under transaction code 610 (Remittance With Return) and the same amount under "Total payment."

      • Remarks: List the check number and the amount of the check. If the payment is to be broken out over more than one year, list each year and the amount applied to each year.

      • Prepared by: Enter the EP examiner’s name, group number and phone number.

    6. Make a copy of the Form 1041, Form 3198-A, Form 13133, the check and Form 3244-A (if applicable) for the case file.

    7. Prepare Form 3210

      • List all Forms 1041 being forwarded.

      • If you received payment, list all check numbers and the amounts.

    8. Mail Form 1041 packages without remittance to:

      IRS
      1973 N. Rulon White Blvd.,
      Mail Stop 6052
      Ogden, UT 84404

    9. Mail Form 1041 packages with remittance less than $100,000 to:

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

      Note:

      If you receive remittance of $100,000 or more, mail the Form 1041 package to Mail Stop 2003 instead of Mail Stop 1999.

    10. When you address Form 9814, type "Mail Supervisor" for the recipient and (801) 620-3750​ for recipient phone number, whether or not you receive payment.

  4. Your receipt of a Form 1041 from the taxpayer doesn’t make the case agreed. You must continue to:

    1. Close the case to Mandatory Review.

    2. Give the taxpayer Appeal rights and the right to petition Tax Court.

    3. Process the case as an unagreed revocation/non-qualification (except you do not have to make a Form 1041 referral to SB/SE or LB&I).

    4. Prepare the 30-Day package (including the RAR) and the administrative record.

  5. If the trustee doesn’t agree to complete and sign Form 1041, prepare Form 5666 for Form 1041 to send to SB/SE or LB&I (as applicable), since EP does not have examination jurisdiction over Forms 1041. Unless the trust has it’s own EIN, prepare the referral using the plan sponsor's EIN.

    1. Send the referral to Classification at tege-cpc-classification@irs.gov. If SB/SE or LB&I is directly involved in the case, send the referral to SB/SE (or LB&I). If you send the referral to SB/SE (or LB&I), send a copy of it to Classification.

    2. Attach a copy of the RAR to the Form 5666 along with a rough calculation of Form 1041 tax due.

    3. Make copies of all referral packages (Form 5666, the RAR and tax calculations) for the paper case file and include as part of the workpapers.

      Reminder:

      Also make similar referrals for Forms 1040 and 1120, if you do not do discrepancy adjustments. Include a copy of the RAR and an estimate of tax due with these referrals.

Obtaining a Trust EIN
  1. When you solicit a Form 1041 for a plan that is being disqualified, request the trust EIN from the plan sponsor.

    Note:

    If the trust doesn’t have an EIN, request the plan sponsor to complete Form SS-4, and email or EEFax it to the appropriate IRS office listed on the Form SS-4 instructions.

  2. If the plan sponsor agrees to file a Form 1041 and provides a trust EIN, get a BMFOLI print to make sure the EIN isn’t being used to file non-trust returns.

    Note:

    The Ogden Campus won’t process a Form 1041 with an EIN used for any purpose other than for filing a trust Form 1041 or Form 990-T; the return will reject and a new trust EIN will be assigned.

  3. When a plan sponsor voluntarily files a Form 1041, but uses an erroneous EIN (such as the plan sponsor’s EIN), obtain an EIN for the trust by EEFaxing Form 4442 to the EO Entity Unit at Ogden Campus. The EEFax number is 855-306-0953​. See IRM 4.71.3 Exhibit 10 at IRM 4.71 - Employee Plans Examination Exhibits for an example of a completed Form 4442. Give the taxpayer the trust’s newly assigned EIN.

    Note:

    Obtaining a new EIN for the trust will automatically establish an entity module. You do not need to prepare Form 2363 or Form 4442 to establish the entity.

  4. When a plan sponsor refuses to file a Form 1041, there is no need to request a trust EIN. It is up to the Business Unit receiving the referral to obtain the EIN.

30-Day Letter Package

  1. The 30-Day Letter package for a proposed revocation/non-qualification consists of:

    1. Letter 1756 (for proposed revocation or proposed non-qualification)

    2. Pub 1, generated by Mandatory Review

    3. Pub 594, generated by Mandatory Review

    4. Pub 1020, generated by Mandatory Review

    5. Revenue Agent Report

    6. Return envelope

  2. EP examiner: prepare the applicable 30-Day Letter (Letter 1756 leaving the contact information in the upper right of the letter blank; Mandatory Review mails them after they review the case.)

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

Revenue Agent Report

  1. Fully explain the qualification issues in the RAR. Include only items that are relevant to the issues in the RAR. Organize the RAR into the following sections:

    1. Issues– Clearly state and number each separate issue.

      Example:

      During an examination of the plan year ending December 31, 2018, you determined that the plan didn’t comply with the top-heavy minimum contributions requirements and didn’t make distributions to participants who separated from service under the top-heavy vesting schedule. Issue One would be: "Whether minimum contributions per IRC 416(c)(2) were made for a top-heavy plan for the plan year ending December 31, 2018." Issue Two would be: "Whether the accelerated vesting provisions under IRC 416(b) were applied to all plan participants or former participants who received distributions during the plan year ending December 31, 2018."

    2. Facts– Include in the RAR facts section a brief history of the plan and provide pertinent details surrounding the qualification issues. Cite any plan provisions relevant to the issues raised. For the top-heavy issues stated above, you’d describe the plan sections dealing with top-heavy contributions and accelerated vesting. Examples of information that would be included (as applicable to the issues) are:

       
      • The plan years under examination

      • Type of business of the plan sponsor

      • Date business started/incorporated

      • Ownership of business sponsoring the plan

      • Type of tax return filed by the plan sponsor and the tax year end

      • Effective date of plan

      • Type of plan

      • Latest determination letter

      • Number of plan participants

      • Plan participants affected

      • Contributions made to the plan for the years under examination

      • Specific applicable plan sections and

      • Other relevant case specific details.

       

    3. Law– In the law section, cite the authority for the qualification issues. You can cite the following sources that relate to the issues raised as authority for the government’s position: the Internal Revenue Code (IRC), Temporary and Final Regulations, Revenue Rulings, Revenue Procedures, Court Decisions and Congressional Committee Reports.

      Note:

      You can reference Proposed Regulations for interpretive purposes, but can’t cite them as authority. Do not cite General Counsel Memos (GCMs), Private Letter Rulings (PLRs), or the Internal Revenue Manual (IRM) as sources of authority in the RAR.

    4. Government's Position– Discuss in this section each issue separately and apply the law and the facts relevant to each specific issue. Also list in this section, the date on which the plan failed to qualify and explain why EPCRS was not used. Conclude this section by clearly stating the government’s position.

    5. Taxpayer's Position– In this section, reflect the taxpayer's position including any rebuttals the taxpayer has made on the government's position. If the taxpayer hasn’t provided a position on the issues, write a simple statement to the effect that the taxpayer has not provided a response.

    6. Rebuttal/Conclusion– Include a rebuttal if the taxpayer provides a position on the issues during the examination or in response to the draft RAR. Restate the government’s position as a conclusion in all cases.

  2. In general, do not includeForm 1040, Form 1120, or Form 5330 information in the RAR for the revocation/non-qualification, because they involve separate legal entities. If you open a:

    1. Discrepancy adjustment of a related Form 1040 and/or 1120 discrepancy adjustment, prepare a separate RAR(s) and a separate examination files.

    2. Form 5330 examination, prepare a separate RAR and a separate examination file.

      Note:

      Do not include the above information in the administrative record.

      Note:

      See IRM 4.71.4.6, Unagreed Case Procedures, for unagreed Form 1040/1120 discrepancy adjustments, and IRM 4.71.5.9, Unagreed Cases, for unagreed Form 5330 procedures.

  3. See IRM 4.71.3 Exhibit 3 at IRM 4.71 - Employee Plans Examination Exhibits for an example of a detailed RAR covering several possible qualification issues.

  4. Name the RAR using the RCCMS Naming Convention and save it in the RCCMS Office Documents folder.

Administrative Record

  1. The administrative record is the written record of the administrative proceedings between the IRS and the taxpayer in connection with a determination or examination.

    1. The administrative record will be used in Tax Court if the taxpayer files a petition to go to court (in response to the 90-Day Letter Mandatory Review issues).

    2. Generally, the Court decides a declaratory judgment solely on the basis of the administrative record.

  2. Prepare an administrative record for all unagreed Form 5500 examination cases before you close the case to Mandatory Review.

  3. Include all information obtained or exchanged during the examination in the administrative record.

  4. Information must be exchanged between the taxpayer and the IRS (or vice versa) before it can be included in the administrative record.

  5. If you have any doubt that a document has been exchanged, mail it to the taxpayer with an individually designed cover letter.

  6. Organize the documents included in the administrative record in a separate folder in this order:

    1. Place the EP Administrative Record Index first. See IRM 4.71.3 Exhibit 4 at IRM 4.71 - Employee Plans Examination Exhibits for the proper format of the EP Administrative Record Index.

    2. Fully describe the "Description of Document" portion of the EP Administrative Record Index. Do not just list a form number or letter number.

    3. Prepare the EP Administrative Record Index so the subsequent reviewer may readily find any document, return, or correspondence contained in the file.

    4. Assemble all items that make up the administrative record in chronological order with the oldest item on top as number 1.

      Note:

      To list letter dates in the Administrative Record Index, use the date that appears on the letter. To list documents you received with a letter in the Administrative Record Index, use the date that appears on the associated letter. To list documents you received in person in the Administrative Record Index, list the date you received them in person.

    5. Affix tabs in the administrative record to a blank cover sheet corresponding to the items in the Administrative Record Index. Do not attach tabs so they’re permanently affixed to the original documents.

    6. Include a separate hard copy administrative file case folder with the examination case file for all proposed unagreed and proposed agreed revocations/non-qualification cases.

    7. Include a copy of the plan and trust agreement for the period under examination and copies of all prior determination letters (if any), copies of any plan amendments adopted after the period under examination, and copies of any written correspondence (with attached documents) between the EP examiner and the taxpayer/representative.

    8. In general, do not include internal documents, such as interoffice memos, reviewer's memos, your workpapers, the Case Chronology Record, or summaries of telephone conferences. Only incorporate these internal documents into the administrative record where the content/issue is specifically pertinent and has been shared in writing between the IRS and the taxpayer.

  7. Do not deface documents you received from the taxpayer/representative in any way (writing, highlighting, noting, punching holes in, or scribbling, etc.). If you need to write information on a document, make a copy for that purpose.

  8. Note when you receive documents from the taxpayer. You can note dates in the administrative record index.

  9. Include pertinent information that you discussed orally with the plan sponsor or representative in the administrative record only if you reduced the information to writing and exchanged it with the plan sponsor or the representative.

  10. Make sure you include all attachments you referred to in your correspondence with the taxpayer, in the administrative record and associate them with the related document. This includes publications, notices, etc., that you attached to your letters.

  11. Clarify incorrect computations, misinterpretations of law (IRC, Regulations, Revenue Rulings, etc.) or incorrect conclusions you made in writing to the taxpayer in subsequent correspondence.

    1. Any information you provided to the taxpayer becomes a part of the administrative record; therefore, include incorrect information that you put in writing and sent to the taxpayer/representative in the administrative record.

    2. To correct a mistake, do not remove the document from the administrative record. Rather, admit your mistake and submit a corrected statement or revised calculation to the taxpayer/representative in writing.

  12. Scan all administrative record items including paper documents, letters (including envelopes) and forms you exchanged with the taxpayer or representative into the RCCMS Office Documents folder using the RCCMS Naming Convention.

    Note:

    The RCCMS Naming Convention now includes section 4.XX for administrative record items to list in order of the administrative record index.

  13. Keep all records you upload into RCCMS until resolution of the unagreed process.

  14. Close all cases fully electronically to increase efficiency and reduce the need to mail paper case files. Consult your group manager on cases with unique circumstances that might justify closing with a paper case file.

Examples of Documents Included in the Administrative Record
  1. See the list below for examples of documents you must include in the administrative record:

    • Copies of all pertinent information returns and tax returns.

      Note:

      If you secured these internally, make sure you mail them to the taxpayer with an individually designed letter so that they can be included in the administrative record.

    • All letters, documents and attachments you exchanged with the plan sponsor relating to the examination.

    • All letters and attachments you received by mail from the plan sponsor/representative, maintained intact.

    • A copy of the plan document, the trust document, plan amendments and determination letters issued on the plan.

    • A copy of Form 2848 or Form 8821, if applicable.

    • Copies of employer records the plan sponsor provided to you.

      Example:

      Payroll records may relate to the qualified status of the plan if for example, an IRC 415 limit issue is in an examination.

    • Copies of bank statements and cancelled checks the plan sponsor gave you during the examination.

    • If, in response to your questions about qualification issues, the plan sponsor's written reply contains erroneous information, you should refute the misstatement in a formal, written response. Include both letters in the administrative record, because the parties exchanged them and they affect a major qualification issue.

    • Taxpayer’s request for technical advice, if applicable.

    • Letters to the taxpayer from Associate Chief Counsel regarding technical advice and all responses from the taxpayer, if applicable.

    • The technical advice letter issued by Associate Chief Counsel, if applicable.

    • All Information Document Requests (IDRs) and responses to IDRs issued by EEFax or mail or exchanged at the examination site.

Statute Considerations

  1. The normal statute of limitations date expires three years from the later of the due date of the Form 5500 series return or the date the Form 5500 series return was filed.

  2. Complete and place the Statute Expiration Chart in the Form 5500 RCCMS Office Documents folder. See IRM 4.71.3 Exhibit 5 at IRM 4.71 - Employee Plans Examination Exhibits for the Form 1041 Statute Expiration Chart.

  3. Solicit a Form 872-H if there is less than 12 months remaining on the statute of limitations on the Form 5500/1041.

  4. See IRM 4.71.9, Statute Control Procedures, for Form 5500 statute of limitations procedures.

Case Closing

  1. Close all cases fully electronic. See the July 28, 2020 Interim Guidance Memo (IGM) TEGE-04-0720-0014 with the subject line, Interim Guidance on Fully Electronic (100% Paperless) Cases, from the Director, EP Examinations,

  2. Save all workpapers, returns, forms, letters, etc., in the RCCMS Office Documents folder using the RCCMS Naming Convention. See IRM 4.71.1 Exhibit 2 at RM 4.71 - Employee Plans Examination Exhibits for the RCCMS Naming Convention.

  3. Make sure you scan and save all relevant case related documents you received from the taxpayer/POA in the RCCMS Office Documents folder using the RCCMS Naming Convention.

  4. Make sure you save any other document necessary to document the examination trail in the RCCMS Office Documents folder.

  5. Keep all records you upload into RCCMS or determine are no longer relevant to the case file per normal record retention requirements in IRM 1.15.2.

  6. Fully document electronically all unagreed cases in the RCCMS Office Documents Folder.

  7. You do not have to complete Form 5650 for any EP Examination case. Use the relevant RCCMS tabs for closing in lieu of Form 5650. See IRM 4.71.3.7.1.

  8. Save the 30-Day Letter package, Closing Agreement documentation and fully executed agreement, all IDRS research and all forms and letters you prepared during the examination in the RCCMS Office Documents folder (for the Lead examination File) using the RCCMS Naming Convention.

  9. Complete the CECA checksheet per IRM 4.71.1.22.5, Checksheet for Employee Plans Compliance Activities (CECA Checksheets).

    1. The group manager should not email an "electronic copy" of the checksheet to the CECA mailbox.

    2. Save the CECA checksheet in the RCCMS Office Documents folder.

    3. The group manager notes on the Case Chronology Record (which the examiner saved in RCCMS) that he/she reviewed the EP examiner-completed CECA checksheet in RCCMS.

      Note:

      EP Mandatory Review emails the CECA checksheet to the CECA mailbox for all unagreed cases.

  10. Complete all required fields in RCCMS per IRM 4.71.3.7.1 before you close the case from the group. When you select "Validate for: Close" in RCCMS, complete all required fields highlighted in red font with the correct information.

    Note:

    These fields correspond to the items that were required items on the optional Form 5650.

  11. Make sure the statute of limitations shown in the RCCMS Compliance Activity, General tab (1 of 2), is completed and correct.

  12. When the statute date is less than or equal to 270 days, complete the RCCMS Statute Validation Process:

    1. Check the "Statute Valid" check box in the RCCMS Compliance Activity, General tab (1 of 2).

    2. Select "Actions," "Request Statute Validation," complete the "Comment" box and submit the request for your group manager’s approval.

  13. 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.

  14. Complete the following before you proceed to close a case:

    • Scan all administrative record items including paper documents, letters (including envelopes) and forms you exchanged with the taxpayer or representative into the RCCMS Office Documents folder using the RCCMS Naming Convention.

      Note:

      The RCCMS Naming Convention now includes section 4.XX for administrative record items to be listed in order of the administrative record index.

    • Keep all records you upload into RCCMS until resolution of the unagreed process.

  15. Close all cases fully electronically to increase efficiency and reduce the need to mail paper case files. Consult your group manager on cases with unique circumstances that might justify closing with a paper case file.

  16. Update the case to status 20 on AIMS and RCCMS and close the case to Mandatory Review.

  17. If you/your group receive correspondence after you close the case, send it immediately to Mandatory Review to associate with the case file.

Completion of the RCCMS Closing Record

  1. You no longer complete Form 5650 for Examination cases. We use the relevant RCCMS tabs for closing in lieu of Form 5650. Use the concepts for completing the optional Form 5650 in IRM 4.5.2 to complete RCCMS tab to address relevant IDRS fields at closing. When you validate a case for closure in RCCMS, you must complete any field that appears in red and other relevant tabs depending on the type of disposal code you used.

  2. Validate the RCCMS Compliance and Closing Record for "Close."

    1. You must complete any field that appears in red and other relevant tabs depending on the type of disposal code being used.

    2. Select the "Update AIMS" box, if applicable.

  3. Complete the following fields on the RCCMS Closing Record "General tab"

    1. The "Disposal code" field should be completed per IRM 4.71.3.7.2, Disposal Codes.

    2. The "Closing with" field requires one of the following items to be selected, as applicable:

      Option Reason for selection
      1- Original Return This is a rare selection for EP examination. Only select 1 if you’re closing an activity with an original return that has not been accepted, filed, or processed by any other function
      2- Taxpayer Return Select this option when the return for the activity is a copy of a return you received from the taxpayer. Select 2 if you get a delinquent Form 5500/5330 and submit a copy of return with your examination (the original was processed through DOL or Classification or the Service Center).
      3- Electronic Prints Select this option if the return you used for the examination was the RCCMS return and you’re closing the examination with a paper file (or a partial paper file).
      4- Paperless Examined Select this option if the return you used for the examination was the RCCMS return and you are closing the examination fully electronic. Select 4 for NRU closures that are paperless.
      5 - No Return Select this option when there is no return for the activity, such as a non-filer substitute for return (SFR), an error closure (Form 10904), or a Non-Return Unit (NRU) examination with a paper file (or partial paper file)
      7- Paperless Non Examined Select this option for an all electronic case that is NOT examined, such as an all-electronic survey.

    3. Complete these additional fields on the "General Tab" that are not highlighted if they apply:

      Field Required Action
      "ARDI code" Select the appropriate code from the pull down menu, if a closing agreement was secured.
      "Fax Indicator" Check if a closing agreement was secured via EEFax. If not, leave blank.

  4. Complete the following fields on the RCCMS Closing Record, "Details tab" for all closures regardless of disposal code:

    Note:

    These fields are highlighted in red.

    1. "Deductions Claimed" - enter deductions claimed for contributions to the specific plan and year to which the RCCMS record relates. Do not include salary deferrals. If "deductions" is not a selected issue, enter the employer contribution amount listed on line 2a(1) of Form 5500 Schedule I or Schedule H (as applicable). If the amount deducted is $0 or $1, enter $1.

      Note:

      If you’re working an EP Large Case Support Examination coordinated with LB&I or EO and only one return is established on RCCMS and AIMS, enter the total deduction taken for all corporate tax years and for all deferred compensation arrangements qualified or otherwise.

    2. "Total Trust Assets" - enter total trust assets as of the end of the plan year. Must be at least $1.

    3. "Number of Participants Affected" - enter the number of participants that were directly affected by the examination (for example, a change in account balance or vesting percentage). Must enter 0 if none are directly affected (cannot be left blank)

      Note:

      A participant is not considered directly affected merely because the plan could have been disqualified.

    4. "Examiner’s Time" - enter the examiner’s time on the case.

    5. "Technique Code" - select the technique code from the pull down menu.

    6. "Examiner’s Name" - select the examiner’s name from the pull down menu.

  5. Close the RCCMS Case file record to the MR Manager

    1. Select the activity(s) you want to closed for the list view.

    2. Select “Actions” from the top line menu

    3. Select “Request Closure”

    4. Type comments in “request closure” dialog box, if necessary

Disposal Codes

  1. The disposal code indicates the examination's outcome to be reflected in the RCCMS closing record. Refer to Document 6476 for a list of disposal codes, disposal code reporting priority and the AIMS/RCCMS disposal code crosswalk.

  2. Carefully select the correct disposal code to ensure that—

    1. The accomplishments of the examination program are accurately reported for monitoring and reporting purposes and

    2. Returns with examination potential are identified for examination.

  3. If the case is:

    1. unagreed, closed the case disposal code 604 = "Unagreed - Without Protest."

    2. resolved through a closing agreement, close the case disposal code 106 = "Closing Agreement."

    3. resolved through SCP, close the case disposal code 404 = "SCP - Self Correction."