The Employee Plans (EP) examination program was established to ensure that plan sponsors and taxpayers:

Purpose: IRM 4.71.5, Employee Plans Examination of Returns, Form 5330 Examination Procedures, provides the basic examination procedures that will enable EP examiners and their managers to properly process Form 5330.

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

Program Owner: Director, EP Examinations sets the program for the EP examination program.

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

Forms 5330 are filed to report excise tax under Chapter 43. The most common taxes are:

See IRM 4.71.1, Overview of Form 5500 Examination Procedures, for exam techniques and guidelines that apply to all types of cases. A few basics include -

Provide complete and accurate excise tax and penalty calculations to the taxpayer and POA, see IRM 20.1.8, Penalty Handbook, Employee Plans and Exempt Organization Miscellaneous Civil Penalties for guidance.

For a Form 5330 not yet due and is related to a prohibited transaction, the examiner must:

For claims filed on a Form 5330, follow the procedures in IRM 4.71.8, EP Claims.

In most instances, Form 5330 exams are initiated based on information discovered during a related Form 5500 exam.

Once the examiner and group manager agree that the information discovered warrants a Form 5330 exam, the Form 5330 taxpayer must be notified in writing of that decision.

The examiner must call the taxpayer (and POA) to discuss the opening of the examination and the issue(s) raised. The call should take place -

Forms 5330 are established on AIMS and RCCMS by Classification after a filed return or SFR is processed by the OSC and the "Form 5500, 5330 and 990-T Request Form" (the Form) is submitted to Classification. Detailed steps for establishment are contained in the applicable IRM sections, see IRM 4.71.5 Exhibit 3, for the Form to be completed and sent to Classification.

Delinquent Forms 5330 received from the taxpayer are processed in accordance with IRM 4.71.5.6.3, Processing Delinquent Forms 5330 Received from the Taxpayer.

Forms 5330 received from the taxpayer for years not yet due are processed in accordance with IRM 4.71.5.6.4, Securing Forms 5330 Not Yet Due.

Agreed Forms 5330 are processed in accordance with IRM 4.71.5.6.5, Closing Agreed 5330 Exams.

Establish a Substitute for Return (SFR) as soon as the examiner and manager believe the taxpayer will not voluntarily file the return(s) due. Follow the procedures in IRM 4.71.5.9.2, Substitute for Return Package.

When examining a Form 5330 return previously filed by the taxpayer (such as a claim or when the tax reported is erroneous), conduct IDRS research.

A delinquent Form 5330 is considered "agreed" when:

RCCMS and AIMS establishment of all "agreed" delinquent returns is required when tax is due in the amount of $500 or more in any one year.

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

Follow the procedures in IRM 4.71.5.9, Unagreed Cases, if excise tax is due but the taxpayer refuses to:

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

If there is no entity module on the BMF, prepare Form 4442 as soon as possible to establish a module.

Once a delinquent Form 5330 return is received from the taxpayer, process it in accordance with IRM 4.71.5.6.3, Processing Delinquent Forms 5330 Received from the Taxpayer.

Periodically request a BMFOLT print to confirm that the Form 5330 has been processed and posted.

Classification will establish the Form 5330 on RCCMS and AIMS upon receipt of the" Form 5500, 5330 and 990-T Request Form" , (the Form).

The manager will email the approved form to *TE/GE-EP Classification, see IRM 4.71.1 Exhibit 13, Contact Information.

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

Process Forms 5330 received from the taxpayer for years not yet due in accordance with IRM 4.71.5.6.4, Securing Forms 5330 Not Yet Due.

To close agreed delinquent secured from the taxpayer, follow IRM 4.71.5.6.5, Closing Agreed Form 5330 Exams.

As provided in the July 28, 2020, IGM TEGE-04-0720-0014 with the subject line, Interim Guidance on Fully Electronic (100% Paperless) Cases, from the Director, EP Examinations, all cases are now closed fully electronic.

Save all workpapers, returns, forms, letters, etc., in the RCCMS Office Documents folder using the RCCMS Naming Convention.

If penalties on a secured return are assessed in error by the Service Campus, and the case is still open, they can be abated through the RCCMS Closing Records, Individual/Bus. (1 of 3) tab per the instructions provided in the table under paragraph (1) of IRM 4.71.5.6.6 using transaction code 161, Abatement of Delinquency Penalty, and 271, Manual Abatement of Failure to Pay Tax Penalty, (as applicable).

If penalties on a secured return are assessed in error by the Service Campus, and the case is closed, contact the TE/GE Closing Group manager to get them abated using Form 3870.

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

Examiners must inform their group manager at the first indication that a case might be unagreed. Examiners must document the CCR as to the method used to contact the group manager (email, telephone call, face to face discussion, etc.) and the manager’s response. Use the CCR to clearly reflect case activities and contacts with the taxpayer/representative.

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

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

Follow the procedures in IRM 4.71.5.6 (5) and (6), Processing Agreed Form 5330, to determine if there is an entity module on AIMS. If there is no entity module, prepare and process Form 4442 according to IRM 4.71.5.6.2, Preparation of Form 4442.

Prepare and send by certified mail a 30-Day Letter package to the taxpayer (and POA if applicable), see IRM 4.71.5.9.1, 30-Day Letter Package, for instructions on what is required.

As part of the 30-Day Letter package, prepare a written Revenue Agent Report (RAR) explaining the basis of the proposed adjustments and citing the provisions of the law, regulations, published rulings, United States Tax Court and other court decisions on which the conclusions are based, see IRM 4.71.5.9.1.1, Revenue Agent Report (RAR).

After you mail the letter, update the case to status 13 and call the taxpayer to discuss the issue(s) being raised.

The examiner’s phone call should be:

Verbally explain the issues either by telephone or through an arranged face-to-face meeting.

If the Form 5330 is related to a plan that is being disqualified, and the disqualification of the plan has a direct affect on whether the Form 5330 is due, close the Form 5330 case file to Mandatory Review. Mandatory Review will issue the 30-Day Letter packages simultaneously.

A minimum of 12 months must remain on the statute when Appeals receives the case.

If the statute of limitations on the Form 5330 will expire within 12 months and the taxpayer refuses to extend the statute of limitations, close the case to Mandatory Review to issue the 90-Day Letter package.

When the 30-Day Letter is mailed and the taxpayer timely files a valid protest to Appeals, close the case to Appeals, see IRM 4.71.5.9.3, Cases to Appeals.

If the taxpayer agrees and files Form 5330 or signs Form 870-EP, close the case per IRM 4.71.5.6.5, Closing Agreed Form 5330 Exams, and process any returns or checks received per IRM 4.71.5.6.3 (6), Processing Delinquent Forms 5330 Received from the Taxpayer.

If the taxpayer does not protest within the 30 day period, but previously indicated his/her intention to do so, you may send Letter 923-A to the taxpayer to allow an additional 15 days to file a protest. Send Letter 923-A no later than seven calendar days after the response date of the original 30-Day Letter.

If the taxpayer fails to timely file a valid protest to Appeals, close the case to Mandatory Review to issue a 90-Day Letter.

As is the requirement for all exam cases, prepare Form 5773-A and other relevant workpapers.

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

Complete the following before you transfer a case to Appeals or Mandatory Review:

When closing a case unagreed, prepare the RCCMS Closing Record tabs in accordance with IRM 4.71.5.9.4, Preparation of RCCMS Tabs for Unagreed Form 5330 Examinations.

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

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

Update the case on RCCMS to disposal code 601 if it is going to Appeals and disposal code 604 if it is going to Mandatory Review, and close the case to your group manager.

If the case is closing to Appeals, the group manager (or designee) will make sure the case is processed in accordance with IRM 4.71.5.9.3, Cases to Appeals.

If the case is closing to Mandatory Review, the group manager (or designee) will:

If any correspondence is received by the examiner/field group, the correspondence must be sent (as applicable) to Appeals or Mandatory Review immediately for association with the case file.

Except for prohibited transactions, the statute of limitations (SOL) for assessment of taxes expires three years from the later of:

For Forms 5330 filed for IRC 4975 excise tax, the three year statute of limitations for assessment of taxes begins on the later of:

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

For a prohibited transaction that is considered a continuing transaction, such as a loan or lease, the situation is different.

In cases where the taxpayer omitted more than 25% of the excise tax due (other than prohibited transactions), the statutory period to assess tax is six years from the later of:

Always consult Area Counsel before pursuing a six-year statute of limitations.

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

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

For Forms 5330 for excise tax other than IRC 4975, being established as an SFR, update the statute of limitations to alpha code "EE" per IRM 4.71.9.9(12), Use of Alpha Codes, when no return has been filed and the statute of limitations has not begun to run.

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

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

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.

Sometimes Forms 5330 are established on AIMS and RCCMS in error (for example, the taxpayer provides additional information which shows that excise tax is not due.)

If Form 5330 is established in error on AIMS:

For cases involving uncorrected minimum funding deficiencies or uncorrected prohibited transactions, the examiner will prepare a DOL referral package and forward it at the earliest possible time in the exam cycle.

The examiner will provide the group manager with the following items:

The group manager or designee will send approved referrals to the FAC/EP DOL Coordinator, see IRM 4.71.1 Exhibit 13, Contact Information.

See IRM 4.71.6.7, Making Referrals to the Department of Labor.

During the exam of a Form 5330 or Form 5500 series return involving an accumulated funding deficiency or prohibited transaction, the employer or disqualified person may request or currently have pending:

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

Waiver of the liquidity shortfall (as defined in IRC 430(j)(4)) excise tax under IRC 4971(f)(4) may need to be coordinated with EP Rulings and Agreements in Washington, DC.

TE/GE Counsel considers requests for waivers of the minimum funding standards under the following circumstances:

As described in IRM 4.71.5.6.1, the IRS may waive part or all of the tax under IRC 4971(b).

Under ERISA section 3003, the IRS may grant waivers of taxes under IRC 4975.

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

Cases involving prohibited transaction exemption requests with DOL are coordinated with DOL by the FAC/EP DOL Coordinator. This includes, for example, cases in which either the conditions of the exemption were not met or the facts were materially misrepresented in obtaining the exemption.

If DOL grants an exemption on a prohibited transaction, IRS may not impose taxes under IRC 4975 on that transaction. If IRS assessed tax before DOL granted the exemption, the tax must be abated.

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

See the following revenue procedures for additional guidance: Rev. Proc. 2022-1, Rev. Proc. 2022-2, Rev. Proc. 2022-3, Rev. Proc. 2022-4, Rev. Proc. 2000-17, Rev. Proc. 2004-15, and Rev. Proc. 81-44. The first four listed are revised annually, usually in January.