4.71.5 Form 5330 Examinations

Manual Transmittal

February 17, 2021

Purpose

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

Background

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

Material Changes

(1) Changed name of IRM 4.71.5.1.4 from, Contact Information for Business Units and Sub-functions, to Related Resources, and replaced content with a link to the new exhibit containing contact information in IRM 4.71.1 Exhibit 13 at IRM 4.71 - Employee Plans Examination Exhibits.

(2) Revised paragraph (1) of IRM 4.71.5.3, to incorporate the provisions of the September 22, 2020, Interim Guidance Memo (IGM) TEGE-04-0920-0021, with the subject line, Interim Guidance on Reporting Compliance Case Management (RCCMS) Electronic Case Policy, from the Deputy Commissioner, TEGE.

(3) Revised paragraph (1) of IRM 4.71.5.3, to incorporate the provisions of the March 20, 2019, IGM TE/GE-25-0319-0001, with the subject line, Guidance for Cases Affected by a Federally Declared Disaster, or Terrorist or Military Action, from the Commissioner, TEGE.

(4) Modified IRM 4.71.5.9.3(8)(d) to require the use of the Letter 5918, Protest Received Rebuttal/Transfer to Appeals.

(5) Added a note to paragraph (6) of IRM 4.71.5.9, to incorporate the provisions of the September 22, 2020, IGM TEGE-04-0920-0020, with the subject line, Interim Guidance on Tax Exempt and Government Entities Examination Process, from the Deputy Commissioner, TEGE.

(6) Added Letter 531-B as the designated 90-Day Letter for Form 5330 examinations.

(7) Added paragraph (11) to IRM 4.71.5.10, Statute of Limitations for Form 5330, to reference the new RCCMS Statute Validation Process when the statute date is 270 days or less.

(8) Revised IRM 4.71.5, to incorporate the provisions of 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. This revision included the elimination of the requirement to prepare Form 5599.

(9) Revised IRM 4.71.5, to incorporate the provisions of the July 31, 2020, IGM TEGE-04-0720-0018, with the subject line, Elimination of Requirement to Use Paper Form 895/895-EP, from the Deputy Commissioner, TEGE.

(10) Revised IRM 4.71.5, to incorporate the provisions of the September 28, 2020, IGM TEGE-04-0920-0024, with the subject line, Revision to Activity, Disposal, Source and Status Codes, from the Deputy Commissioner, TEGE.

(11) Provided more detailed instructions throughout to complete RCCMS tabs.

(12) Revised IRM 4.71.5, to incorporate the provisions of the October 29, 2019, IGM NHQ-01-1019-001, with the subject line, Clarification of Policy for Use of Fax in Taxpayer Submissions, from the Deputy Commissioner for Services and Enforcement.

(13) Revised IRM 4.71.5, to incorporate the provisions of the November 23, 2020, IGM TEGE-04-0920-0025, with the subject line, Location of IRM Exhibits for EP Examination Employees, from the Director, EP Examinations.

(14) Revised IRM 4.71.5 to incorporate the provisions of the December 14, 2020, IGM TEGE-04-1220-0026, with the subject line, Requirement to use Form 5773-A (Rev. 12-2020), and eliminating required use of Form 5772-A, from the Director, EP Examinations.

(15) Revised IRM 4.71.5.4 and IRM 4.71.5.6.5 to incorporate the provisions of the February 2, 2021, IGM TEGE-04-2221-0003, with the subject line, Interim Guidance on Letter Consolidation.

(16) Updated the links to the IRM Exhibits throughout.

(17) Made editorial changes throughout the document including changes for Plain Language (the Plain Writing Act of 2010).

Effect on Other Documents

This supersedes IRM 4.71.5 dated July 9, 2019.

Audience

Tax Exempt and Government Entities
Employee Plans

Effective Date

(02-17-2021)

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 that plan sponsors and taxpayers:

    1. Comply with the provisions of Internal Revenue Code (IRC) 401(a), the underlying regulations, and the resulting tax exempt status under IRC 501.

    2. Properly report and pay taxes related to trust assets and income are properly reported when applicable.

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

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

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

  5. 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:

    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:

      • Audit any books, papers, records or other data necessary to complete an audit.

      • Take testimony under oath to secure additional information needed.

      • Issue summons for information necessary to complete an audit.

      • 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’ authority to resolve issues is derived 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.

Background

  1. EP Examination is the division designated to determine if a retirement plan is qualified under IRC 401 and the underlying regulations, and therefore, exempt from tax under IRC 501.

  2. Policy Statement 4-119 provides that the primary objective of the Employee Plans examination program is regulatory, with emphasis on continued qualification of employee benefit plans. IRS selects and examines returns to:

    1. Promote the highest degree of voluntary compliance with the tax laws governing plan qualification.

    2. Determine the extent of compliance and the causes of noncompliance with the tax laws by qualified plans.

    3. Determine whether such plans meet the applicable qualification requirements in operation.

  3. Under Policy Statement 4-117, EP agents and managers:

    1. Are given broad authority to consider and weigh conflicting information, data, and opinions.

    2. Use professional judgement under auditing standards to make findings of fact and apply the IRS’s position on issues of law to determine the correct tax liability.

    3. Exercise this authority to obtain the greatest number of agreements to tax determinations without sacrificing the quality or integrity of those determinations.

    4. Resolve tax differences at the lowest level.

  4. Examinations must be conducted per Policy Statement 1-236, Fairness and Integrity in Enforcement Selection.

Program Controls

  1. EP Examinations established two review groups to make sure agents conduct examinations per technical, procedural and administrative requirements:

    1. Mandatory Review, see IRM 4.71.14, Employee Plans Examination of Returns, EP Mandatory Review.

    2. Special Review, see IRM 4.70.7, Special Review (SR) and Tax Exempt Quality Measurement System (TEQMS) Procedures.

  2. Tax Exempt Quality Measurement System (TEQMS) is the quality control system EP Examinations uses to measure the quality of the entire examination program. For more information on TEQMS, see IRM 4.70.7, Special Review (SR) and Tax Exempt Quality Measurement System (TEQMS) Procedures.

  3. All examinations will be done in accordance with the Taxpayer Bill of Rights as listed in IRC 7803(a)(3). Find additional information at: Taxpayer Bill of Rights and Pub 5169.

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

    1. For more information on privacy laws, see the IRC, the Privacy Act of 1974, the Freedom of Information Act, and IRS policies and practices.

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

    3. For questions about privacy, email *Privacy.

    4. For question about disclosure, email *Disclosure.

Acronyms, Abbreviations, Forms, and Publications

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

    Acronyms

    Acronym Definition
    AIMS Audit Information Management System
    ARDI Accounts Receivable Dollar Inventory
    BMF Business Master File
    CCR Case Chronology Record
    DOL Department of Labor
    EBSA Employee Benefits Security Administration
    EEFax Enterprise Electronic Facsimile
    EIN Employer Identification Number
    EP Employee Plans
    EPCU Employee Plans Compliance Unit
    ERISA Employee Retirement Income Security Act of 1974
    ESOP Employee Stock Ownership Plan
    FAC Functional Assignment Coordinator
    GCM General Counsel Memo
    IDRS Integrated Data Retrieval System
    IRC Internal Revenue Code
    MFT Master File Tax
    OSC Ogden Service Campus
    PLR Private Letter Ruling
    POA Power of Attorney
    RAR Revenue Agent Report
    RCCMS Reporting Compliance Case Management System
    SFR Substitute for Return
    SOL Statute of Limitations
    SSN Social Security Number
    TEQMS Tax Exempt Quality Measurement System
    TIN Taxpayer Identification Number (SSN for an individual or EIN for a corporation)
     

    Forms and Pubs

    Form Name
    Form 870-EP Waiver of Restrictions on Assessment and Collection of Deficiency in Tax and Acceptance of Overassessment
    Form 872 Consent to Extend the Time to Assess Tax
    Form 872-H Consent to Extend the Time to Assess Tax on a Trust
    Form 886-A Explanation of Items
    Form 895-EP Notice of Statute Expiration
    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 5330 Return of Excise Taxes Related to Employee Benefit Plans
    Form 5438 Report of Examination - Excise Taxes on Employee Plans
    Form 5456 Reviewer’s Memorandum - TE/GE
    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 5558 Application for Extension of Time to File Certain Employee Plan Returns
    Form 5599 TE/GE Examined Closing Record
    Form 5650 EP Examined Closing Record
    Form 5666 TE/GE Referral Information Report
    Form 5734 Non-Master File Assessment Voucher
    Form 5773-A Employee Plans (EP) Workpaper Summary
    Form 6212-B Examination Referral Checksheet B
    Form 6533 Examination Referral Worksheet
    Form 8821 Tax Information Authorization
    Form 9814 Request for Mail/Shipping Service
    Form 10904 Request for Record Deletion from AIMS
    Form 12203 Request for Appeals Review
    Form 13133 Expedite Processing Cycle
    Form 13496 IRC Section 6020(b) Certification
    Form SS-4 Application for Employer Identification Number
    Letter 531-B 90-Day Letter - Form 5330 Excise Tax, Form 990-T Tax or Form 5329 Tax
    Letter 2005 30-Day Letter - Form 5330, Form 990-T, and Form 5329
    Letter 5918 Protest Received Rebuttal/Transfer to Appeals
    Letter 6031 TE/GE Opening Examination Letter
    Letter 6049 TE/GE No Change Letter
    Pub 1 Your Rights as a Taxpayer
    Pub 594 The IRS Collection Process
    Pub 1020 Appeal Procedures EP Examinations
     

Related Resources

  1. You can find important contact information for individuals and business units referenced in this IRM in IRM 4.71.1 Exhibit 13 at IRM 4.71 - Employee Plans Examination Exhibits.

Overview of Form 5330 Examinations

  1. This section provides procedures for examining and closing Form 5330 exams.

  2. Examinations of Form 5330 returns may result in the assessment and collection of excise taxes. Generally, Form 5330 examinations are initiated during a Form 5500 series (Form 5500, Form 5500-SF, and Form 5500-EZ) exam.

  3. Other reasons EP may initiate a Form 5330 exam include:

    1. A DOL referral.

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

    3. EPCU secures a delinquent Form 5330 during a compliance check.

  4. See IRM 4.71.5.6, Processing Agreed Forms 5330, (and subsections thereunder) for processing for "agreed" Forms 5330 secured as part of the exam process.

  5. An agreed Form 5330 is one where the taxpayer has:

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

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

      Exception:

      If IRC 4971(b) tax is waived as permitted by Delegation Order 7-7-1, the case may be closed agreed if Forms 5330 are filed and reflect the correct amount of IRC 4971(a) tax for all years for which tax is due. See IRM 4.71.5.6.1, Waiver of the 100% 4971(b) Excise Tax, for eligibility and procedures to waive the additional tax under IRC 4971(b).

    Reminder:

    The taxpayer does not need to pay the additional excise tax assessed for the case to be considered agreed.

  6. See IRM 4.71.5.9, Unagreed Cases, (and subsections thereunder) for processing requirements for unagreed Forms 5330 secured as part of the exam process.

  7. See IRM 4.71.2, Overview of IDRS and Non-Master File Transcript Requests, for a description of various IDRS command codes to use when conducting internal research for Forms 5330.

Form 5330 Filing Requirements

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

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

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

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

    4. Prohibited transactions (IRC 4975)

    5. Certain dispositions by ESOPs (IRC 4978)

    6. Certain excess contributions (IRC 4979)

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

    8. Certain reversions of plan assets (IRC 4980)

Form 5330 Due Dates

  1. The due date for filing a Form 5330 depends on the particular Chapter 43 excise tax involved. The table below indicates the due date by IRC section.

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

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

    The employer's tax year ends March 31, and the plan is on a calendar year. If the applicable plan year ends 12/31/2019, the corresponding tax year would end 3/31/2020. The Form 5330 is due October 31, 2020.
    IRC 4972, IRC 4973(a)(3), IRC 4975, IRC 4976, IRC 4978, and IRC 4979A Last day of the 7th month after the end of the tax year of the employer or other person who must file the return. If the employer (or other person required to file the return) has a tax year of December 31, 2019, the Form 5330 is due on July 31, 2020. If the employer (or other person required to file the return) has a fiscal tax year ending October 31, 2019, the Form 5330 is due on May 31, 2020.
    IRC 4977 Last day of the 7th month after the end of the calendar year in which the excess fringe benefits were paid to the employees of the employer.  
    IRC 4979 Last day of the 15th month after the close of the plan year to which the excess contributions or excess aggregate contributions relate. Excess contributions were made to a plan for the plan year ending December 31, 2019. The Form 5330 for such excess contributions is due by March 31, 2020.
    IRC 4980 Last day of the month following the month in which the reversion occurred. Trust assets reverted back to an employer on May 16, 2019 from a plan having a plan year ending on December 31st. The Form 5330 is due for the reversion on June 30, 2020.
    IRC 4980F Last day of the month following the month in which the failure occurred.  

    Note:

    The taxpayer may file Form 5558, Application for Extension of Time to File Certain Employee Plan Returns, to request an extension of time to file. If approved, the taxpayer may be granted an extension of up to 6 months after the normal due date of Form 5330.

    Caution:

    Form 5558 does not extend the time to pay taxes

General Procedures for Form 5330 Exams

  1. 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 -

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

    2. Utilizing Form 5773-A, or its equivalent, and workpapers to document the exam findings regarding potential excise tax and penalty issues.

    3. The procedures found in IRM 4.71.1.1.5, RCCMS Use Policy, apply to Form 5330 exams.

    4. The procedures found in IRM 4.71.1.1.10, Case Suspense for Federally Declared Disaster, or Terrorist or Military Action, and the subsections thereunder, apply to Form 5330 exams.

  2. Provide complete and accurate excise tax and penalty calculations to the taxpayer and POA. See IRM 4.71.18, EP Penalties for guidance.

  3. For a Form 5330 related to a prohibited transactions not yet due, the agent must:

    1. Notify the taxpayer of the requirements to file and pay the applicable tax when due.

      Note:

      If the taxpayer files the return not yet due with the agent, see IRM 4.71.5.6.4, Securing Forms 5330 Not Yet Due.

    2. If the taxpayer does not file Form 5330, prepare Form 5666 and send it to Classification. Form 5666 can be sent by email or by regular mail. See IRM 4.71.1 Exhibit 13 at IRM 4.71 - Employee Plans Examination Exhibits for Classification’s contact information.

    3. If the taxpayer voluntarily files the return, verify its accuracy and mail it to the Ogden Service Campus (OSC; formerly called a Service Center). See IRM 4.71.5.1.4, Contact Information for Business Units and Sub-functions, for the mailing address and stop number.

      Note:

      If a discrepancy is found, notify your manager and discuss whether an examination of the return is warranted. The discussion and outcome must be documented in the CCR.

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

Initial Contact with the Taxpayer

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

  2. Once the agent and group manager agree that the information discovered warrants a Form 5330 exam, the Form 5530 taxpayer must be notified in writing of that decision.

    Reminder:

    The 5330 taxpayer is not always the same as the 5500 taxpayer.

    1. Use Letter 6031 to inform the taxpayer that a Form 5330 examination commenced. If you have sufficient information, attach Form 886-A (RAR) with the pertinent facts, law, government position, excise tax calculations and IRC 6651(a) penalty calculations (if applicable). If additional information is needed, attach an IDR.

      Note:

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

      Exception:

      In some situations, the assessment of 4971(b) may be waived. See IRM 4.71.5.6.1,Waiver of the 100% 4971(b) Excise Tax, for eligibility and procedures to waive the additional tax under IRC 4971(b).

    2. Request the taxpayer file Forms 5330 for all years due and open by statute.

      Note:

      If the return is not yet due, refer to IRM 4.71.5.6.4, Securing Forms 5330 Not Yet Due.

    3. If additional tax is proposed on a previously filed Form 5330, use Form 870-EP to secure agreement of the additional tax. See IRM 4.71.5 Exhibit 1 at IRM 4.71 - Employee Plans Examination Exhibits for an example of a completed Form 870-EP.

    4. In the case of prohibited transactions, if the taxable period extends into a taxable year for which a Form 5330 is not yet due, notify the taxpayer of the requirements to file Form 5330 and pay the tax for such taxable year. See IRM 4.71.5.6.4, Securing Forms 5330 Not Yet Due.

    5. Include a penalty calculation sheet when penalties are being imposed.

      Reminder:

      IRC 6651(a) penalties are the only penalties applicable to a delinquently filed Form 5330.

      Note:

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

    6. Solicit excise tax payment with applicable IRC 6651(a) penalties to stop interest from accruing further.

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

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

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

    1. No earlier than fourteen calendar days or ten business days (whichever is longer) after the letter referenced in IRM 4.71.5.4 (2) is mailed, and

    2. No later than fifteen business days after the letter is mailed.

    Note:

    The taxpayer must be given ample time to receive the letter before the agent calls to schedule the initial appointment.

Overview of Establishing Forms 5330 on RCCMS and AIMS

  1. 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 at IRM 4.71 - Employee Plans Examination Exhibits for the Form to be completed and sent to Classification.

  2. 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.

  3. 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.

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

  5. Establish a Substitute for Return (SFR) as soon as the agent 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.

  6. 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.

    1. Obtain a transcript of the account (BMFOLT and BMFOLR prints) for MFT 76 using the taxpayer’s EIN/SSN for the applicable year. Verify the filed status of the return and the amount of tax assessed. The return was processed on BMF if a TC "150" is present and dollar amounts are reflected.

    2. Verify the statute date on IDRS is accurate and considers the type of excise tax reported or proposed (for example, the statute date for 4971(a) excise tax does not begin to run until the Form 5330 is filed, but the statute for IRC 4975 begins to run when the related Form 5500 is filed). See IRM 4.71.9, Employee Plans Examination of Returns, Statute Control Procedures, for more on determining the statute of limitations for Form 5330 taxes.

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

      Note:

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

      Note:

      When researching a Form 5330 with an SSN, use a file source of "V" after the SSN (for example, XXX-XX-XXXV).

Processing Agreed Forms 5330

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

    1. Form 5330 is filed, and

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

      Note:

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

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

    Example:

    If excise taxes in the amounts of $400 and $600 are due in 201712 and 201812, respectively, delinquent Forms 5330 are required to be established on RCCMS and AIMS for both years.

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

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

    1. File Form 5330 and correct the funding deficiency in the case of IRC 4971 tax.

      Exception:

      See IRM 4.71.5.6.1, Waiver of the 100% 4971(b) Excise Tax, for eligibility and procedures to waive the additional tax under IRC 4971(b).

    2. File Form 5330 and correct the prohibited transaction in the case of IRC 4975 tax.

    3. File Form 5330 for any other excise tax required to be reported on Form 5330.

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

    Note:

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

    1. When obtaining an INOLES print for an SSN, use a file source of "V" after the SSN (for example, INOLESXXX-XX-XXXXV).

    2. When obtaining an INOLES print for an EIN, do not use a file source (for example, INOLESXX-XXXXXXX).

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

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

      Note:

      This happens frequently with an SSN.

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

    1. EEfax or email the completed Form 4442 to the EP AIMS Coordinator. See IRM 4.71.1 Exhibit 13 at IRM 4.71 - Employee Plans Examination Exhibits for contact information and IRM 4.71.5.6.2, Preparation of Form 4442, for Form 4442 instructions.

    2. The TE/GE Closing Group will notify the agent by EEFax or email when the Form 4442 is processed.

  7. 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.

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

    Note:

    A transaction code (TC) 150 indicates the return posted to BMF.

    Note:

    It normally takes four to eight weeks for the OSC to process and post a return once received.

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

    Note:

    After a TC 150 is reflected on the account, the Form should be completed by the agent and forwarded to the group manager. See IRM 4.71.5 Exhibit 3 at IRM 4.71 - Employee Plans Examination Exhibits for the Form.

    Note:

    The case must fully establish on RCCMS and AIMS before closed to the TE/GE Closing Group.

  10. The manager will email the approved Form to Classification at tege-cpc-classification@irs.gov.

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

    Note:

    Within a few days, the AIMS account and RCCMS activity will be reflected in the group’s organization code.

  12. 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.

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

Waiver of the 100% 4971(b) Excise Tax

  1. On a case by case basis and when circumstances warrant, all or part of the excise tax under 4971(b) (the “b” tax), may be waived by a delegated official.

  2. After all relevant information and documentation is considered, the group manager can request approval from the appropriate official to waive all or part of the “b” tax. The group manager will use the IRC 4971(b) Tax Waiver Approval Memo for this purpose. See IRM 4.71.5 Exhibit 13 at IRM 4.71 - Employee Plans Examination Exhibits for the IRC 4971(b) Tax Waiver Approval Memo.

  3. The delegated official is either the EP Examination Area Manager or the Director, EP Examinations and is determined by the amount of the unpaid minimum required contribution as follows:

    • For amounts equal to or less than $5 million, the delegated official is the EP Examination Area Manager.

    • For amounts greater than $5 million but less than $50 million, the delegated official is the Director, EP Examinations.

  4. When IRC 4971(b) tax is waived in this manner, document the CCR and include the signed IRC 4971(b) Tax Waiver Approval Memo in your exam workpapers.

Preparation of Form 4442

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

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

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

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

      Primary Business Code (PBC) Area
      401 Northeast
      402 Mid-Atlantic
      403 Great Lakes
      404 Gulf Coast
      406 Pacific Coast
      410 Exam Programs and Review

    3. Item 3 (Received Date): Enter the current date.

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

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

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

    7. Item 15 (Forms): Enter 5330.

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

  3. EEFax or email the completed Form 4442 to the EP AIMS Coordinator. See IRM 4.71.1 Exhibit 13 at IRM 4.71 - Employee Plans Examination Exhibits for contact information. Include a contact name and phone number and EEFax number.

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

Processing Delinquent Forms 5330 Received from the Taxpayer

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

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

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

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

      Note:

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

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

      Note:

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

    3. The correct tax year is listed.

    4. The correct TIN is listed for the filer.

      Note:

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

    5. The correct plan number is listed.

    6. The return is signed by the taxpayer.

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

  5. If a SFR package was previously sent to the OSC in accordance with IRM 4.71.5.9.2, Substitute For Return Package, and the taxpayer is now filing a delinquent return with the agent, process the secured return as an amended return, See IRM 4.71.5.6.7, Amended 5330 Returns.

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

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

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

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

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

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

      Note:

      Use the current version of Form 3244-A.

    4. Include, both your telephone number and your EEFax number on the "Originator Telephone Number" line at the bottom of Form 3210.

      Note:

      The OSC will return the acknowledgment copy of Form 3210 to the originator through EEFax.

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

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

    7. Put the check and the completed Form 3244-A in a separate addressed envelope, then put the envelope in the express mail envelope.

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

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

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

    Reminder:

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

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

    1. Form 3210

      Note:

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

    2. Any payments received (a check) with Form 3244-A (placed in a separate addressed envelope per IRM 4.71.5.6.3 (6)(f) above)

      Note:

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

    3. Form 3198-A (attached to each Form 5330 being processed)

      Note:

      Instructions regarding the assessment or non-assessment or IRC 6651(a)(1) and IRC 6651(a)(2) penalties should be written in the "Other Instructions" section on the bottom of the form. Normally, the OSC will assess penalties unless specifically instructed otherwise.

      Note:

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

    4. Original delinquent return

      Note:

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

  10. Mail the delinquent Form 5330 packages to the OSC address noted in IRM 4.71.1 Exhibit 13 at IRM 4.71 - Employee Plans Examination Exhibits.

  11. If the remittance is $100,000 or more, send an email to the teller unit &CTR ODN Ogden Tellers with the following information:

    1. UPS tracking number

    2. Dollar amount of the remittance

    3. The city/state the package is being shipped from

    Note:

    See IRM 5.1.2.6.1, Large Dollar Remittances.

  12. The following additional actions are required upon receipt of a single remittance of $1 million or more:

    1. Locate the designated remittance liaison on the Submission Processing Field Office Payment Processing page website at http://win.web.irs.gov/SP/Programs_Information/Standard_Proce_Webpages/Field_Office_Pymt_Proc.htm to obtain the OSC liaison's email address provided in the "Phone" column.

    2. Call, email, or EEFax the liaison that you will be sending a single remittance of $1 million or more and provide the tracking number for the overnight package containing the remittance. See IRM 5.1.2.6.1.1, Remittance Over $1M.

  13. When addressing the Express Services Routing slip (Form 9814):

    1. Use "Mail Supervisor" as the recipient name and recipient phone number of (801) 620-3750 (with or without payment).

    2. The address listed on Form 9814 should match the address on Form 3210. Make sure the proper mail stop is used.

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

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

  16. If an entity module was not previously established, generate a Form 4442 in accordance with IRM 4.71.5.6.2, Preparation of Form 4442. Form 4442 can be emailed or EEFaxed to the EP AIMS Coordinator. See IRM 4.71.1 Exhibit 13 at IRM 4.71 - Employee Plans Examination Exhibits for the EP AIMS Coordinator’s contact information.

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

    Note:

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

  18. When the return posts:

    1. The agent completes the Form 5500, 5330 and 990-T Request Form (the Form) and forwards it to the manager for review and approval. See IRM 4.71.5 Exhibit 3 at IRM 4.71 - Employee Plans Examination Exhibits for the Form.

    2. The group manager emails the Form to Classification at tege-cpc-classification@irs.gov.

    Reminder:

    Returns must be established when the tax due is $500 or more in any one year.

    Example:

    If excise taxes in the amounts of $400 and $600 are due in 201712 and 201812, respectively, delinquent Forms 5330 must be established on RCCMS and AIMS for both years.

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

    Note:

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

Delinquent Form 5330 Package Contents
  1. Complete the Form 3210 as follows:

    1. Reflect the complete mailing address noted in IRM 4.71.1 Exhibit 13 at IRM 4.71 - Employee Plans Examination Exhibits for the Ogden Service Campus.

    2. Use "Mail Supervisor" as the recipient name and the recipient phone number of (801) 620-3750.

  2. In the body of the Form 3210:

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

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

    3. Include your telephone number and EEFax number on the "Originator Telephone Number" line at the bottom of Form 3210.

      Note:

      The OSC will return the acknowledgment copy of Form 3210 to the originator through EEFax.

    Note:

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

  3. Complete Form 3198-A as follows:

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

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

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

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

      Note:

      The OSC will automatically assess IRC 6651(a) penalties unless specific instructions to the contrary are provided.

      Note:

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

    Note:

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

    Note:

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

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

    1. SSN/EIN: Enter the SSN or EIN (as applicable).

    2. Form number/MFT: Enter 5330/76.

    3. Tax period: Enter the tax year.

    4. Plan number: Enter the plan number of the related plan.

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

    6. Taxpayer name, address and zip code: Enter the taxpayer’s information.

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

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

    9. Prepared by: Enter your name and group number.

      Note:

      A Form 3244-A is required for each year for which payment is received. For example, if you receive a check from the taxpayer for $5,000 that includes payment of $2,000 for 201712 and $3,000 for 201812, you should prepare a Form 3244-A for 201712 reflecting $2,000 next to transaction code 610 and a second Form 3244-A for 201812 reflecting $3,000 next to transaction code 610.

      Note:

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

  5. Paper clip the items listed in IRM 4.71.5.6.3.1 (1) through IRM 4.71.5.6.3.1 (4) in order.

  6. Scan the returns and save each file in the package in the RCCMS Office Documents folder using the RCCMS Naming Convention.

Securing Forms 5330 Not Yet Due

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

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

    2. If the taxpayer chooses to voluntarily file the Form 5330 return with the agent, check the accuracy of the return, prepare the Form 5330 package, and forward it to the OSC in accordance with IRM 4.71.5.6.3.1, Delinquent Form 5330 Package Contents, with the following exceptions.

      Note:

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

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

    Note:

    Since the return is not yet due, the group manager has complete discretion on whether it is established on RCCMS and AIMS. The rules for the establishment of delinquent returns are found in IRM 4.71.5.6, Processing Agreed Forms 5330.

  3. If the return is established on RCCMS and AIMS, close the case disposal code 02 (AIMS)and 107 (RCCMS), and follow the procedures for delinquent secured returns found in IRM 4.71.5.6.3, Processing Delinquent Forms 5330 Received from the Taxpayer.

  4. If the group manager determines not to established the return on RCCMS and AIMS, list the excise tax for the Form 5330 years not established on the "EP taxes" line of the RCCMS Closing Record of the related Form 5500 exam.

    Note:

    See the note under paragraph (2) of this section.

  5. If the taxpayer does not voluntarily file the Form 5330, prepare Form 5666 and send it to Classification. Form 5666 can be sent by email or regular mail. See IRM 4.71.1 Exhibit 13 at IRM 4.71 - Employee Plans Examination Exhibits, for Classification’s addresses.

Closing Agreed Form 5330 Exams

  1. Forms 5330 exams are considered agreed when:

    1. The issue giving rise to excise tax has been corrected and Form 5330 secured from the taxpayer reflects the correct amount of tax, or

      Exception:

      An exception to correction exists for an accumulated funding deficiency if a 4971(b) tax waiver is obtained. See IRM 4.71.5.6.1, Waiver of the 100% 4971(b) Excise Tax, for eligibility and procedures to waive the additional tax under IRC 4971(b).

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

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

      Note:

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

  2. Prepare Form 5773-A and workpapers to document exam procedures and findings and save them in the RCCMS Office Documents folder.

  3. Prepare a closing letter that covers all Form 5330 years examined.

    1. Use Letter 6049 when the exam results in no change to the tax reported on a filed Form 5330.

      Note:

      Letter 6049 is the normal closing letter used to close a delinquent Form 5330 picked up in conjunction with a Form 5500 exam and is to be mailed from the group.

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

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

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

    5. Scan and save a copy of the closing letter in the RCCMS Office Documents folder using the RCCMS Naming Convention.

  4. Use the following disposal codes:

    Disposal Codes Conditions
    AIMS 02 (RCCMS = 107), No Change When:
    • a previously filed return is examined and there is no change to the tax liability, or

    • a timely filed return is secured and there is no change to the tax liability reported

    AIMS 03 (RCCMS = 102), Agreed Tax Change The tax has been corrected on a previously filed return and the taxpayer agreed to the changes by signing a Form 870-EP or by amending Form 5330.
    AIMS 06 (RCCMS = 208), Delinquent Return Secured A delinquent return was secured.
    AIMS 08 (RCCMS = 206), Correction of Operational Practice - Future Impact When the exam discloses an operational or administrative practice that, if continued or enlarged, would have an adverse impact upon the plan in the future.

  5. Close the agreed Form 5330 exam case file(s) and any related Form 5500 series returns to the TE/GE Closing Group in Brooklyn when the RCCMS files are received from Classification and the return has fully posted on AIMS.

    Note:

    The case must be fully established on RCCMS and AIMS before it is closed to the TE/GE Closing Group.

    Note:

    Save an AMDISA print showing full establishment on AIMS in RCCMS.

  6. RCCMS and AIMS establishment of all agreed delinquent returns is required if the tax is $500 or more in any one year.

  7. Prepare the RCCMS tabs in accordance with IRM 4.71.5.6.6, Preparation of RCCMS Tabs for Agreed Form 5330 Exams.

  8. As applicable, the following documents must be scanned and saved into the RCCMS Office Documents folder using the RCCMS Naming Convention:

    • Form 10329

    • Form 872

    • Form 870-EP

    • Copy of the Form 5330 mailed to the Ogden Service Campus

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

    • Form 2848 or Form 8821

    • All correspondence received from the taxpayer or POA

    • All relevant documents received from the taxpayer or POA

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

    Note:

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

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

    Note:

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

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

  12. Close all agreed Forms 5330 on RCCMS and AIMS to the TE/GE Closing Group in Brooklyn.

Preparation of RCCMS Tabs for Agreed Form 5330 Exams

  1. Validate cases for closure in the RCCMS closing record using the table below.

    Note:

    All items highlighted in red are required to be completed.

    Note:

    Refer to IRM 4.5.2, TE/GE Examined and Non-Examined Closures, and Document 6476 for additional Information.

    RCCMS TAB ITEM EXPLANATION
    General Penalty Reason Code No entry unless penalties previously assessed are being abated. See Exhibit 4.5.2-2, TE/GE Penalty Reason Codes, of IRM 4.5.2, TE/GE Examined and Non-Examined Closures for applicable codes.  
    General Disposal Code 102= "Agreed Tax Change"
    107= "No Change"
    208= "Delinquent Return Secured"
     
    General ARDI Code An entry is required if the disposal code is "208" .  
    General Closing With Make the appropriate selection in the drop down menu, but in most cases select "electronic prints"  
    Details Examiner’s Time Time must be entered in whole hours and in tenths of hours.  
    Details Technique Code 6- Office correspondence exam
    7 – Field exam - limited scope
     
    Details Examiner’s Name Last name, first name  
    Details Delinquent Return Code If disposal code is 208 and entry is required.  
    Individual/Business (1 of 3) Agreement Date Insert the date the signed Form 870-EP is received (if applicable).
    Individual/Business (1 of 3) Assessment Information Tax Enter transaction code (TC) 300 and $0 if no additional tax is being assessed above the amount reported by the taxpayer on the Form 5330 secured by the agent. If additional tax is being assessed on Form 870-EP above what was reported on a previously filed Form 5330, enter TC 300 and the additional amount of tax being assessed.

    Note:

    If you previously forwarded an agreed delinquent return that the taxpayer voluntarily filed with you to the Ogden Service Campus, the tax assessment would have been made at the Service Campus when the return was processed. In order to avoid double assessment, do not reflect an additional tax amount.

    Individual/Business (1 of 3) Assessment Information Penalties If Form 870-EP is signed by the taxpayer and IRC 6651 penalties are being assessed, enter TC 160 with the corresponding amount for the IRC 6651(a)(1) penalty, and TC 270 with the corresponding amount for the IRC 6651(a)(2) penalty.

    Note:

    If a delinquent Form 5330 is secured and forwarded to Ogden, the Service Campus will automatically assess the IRC 6651 penalties unless the agent provides instructions to the contrary in the "Other Instruction" section of the Form 3198-A accompanying the delinquent return when it is mailed to the Service Campus.

    Note:

    If the Service Campus erroneously assesses IRC 6651 penalties, they can be abated by entering TC 161 (for IRC 6651(a)(1)) and TC 271 (for IRC 6651(a)(2)), as applicable, with the corresponding amounts.

    Individual/Business (1 of 3) Reference Number If additional tax is being assessed on a previously filed return (i.e., you entered TC 300 with an additional tax assessment), then a reference number (manual abstract code) should be listed here with the additional amount of tax being assessed. See the table in paragraph (2) for applicable reference numbers.  
    Individual/Business (1 of 3) Interest Leave blank. Interest will be assessed by the Service Campus.
    Individual/Business (2 of 3) Delinquent Return Amount For disposal code 208, enter the amount of tax on Form 5330.  

  2. Examples of reference numbers are:

    Reference Number Condition
    159 Prohibited transaction (IRC 4975(a))
    224 Prohibited transaction (IRC 4975(b))
    161 Nondeductible employer contributions (IRC 4972)
    163 Minimum funding (IRC 4971(a))
    225 Minimum funding (IRC 4971(b))
    164 Excess contributions (IRC 4973)
    200 Disqualified Benefits (IRC 4976)
    201 Excess Fringe Benefits (IRC 4977)
    202 Certain ESOP Distributions
    203 ESOP prohibited allocations (IRC 4979A)
    204 Reversions (IRC 4980)
    205 Excess Contributions (IRC 4979)
    209 ESOP Dispositions (IRC 4978)
    226 Liquidity Shortfall (IRC 4971(f)(1))
    227 Liquidity Shortfall (IRC 4971(f)(2))
    228 Notice Failure - Benefit Accrual Reduction (IRC 4980(f))

Amended 5330 Returns

  1. Taxpayers can amend previously filed Forms 5330 by either::

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

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

  2. If an amended Form 5330 return is filed with block "H" selected, process the return as provided in IRM 4.71.5.6.3, Securing Forms 5330 Not Yet Due, with the exception that the agent should write "AMENDED RETURN SECURED BY TE/GE: EMPLOYEE PLANS" on the top of Form 5330.

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

    1. Scan the form and save it in the RCCMS Office Document folder using the RCCMS Naming Convention.

    2. The additional tax and IRC 6651 penalties are assessed 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, Preparation of RCCMS Tabs for Agreed Form 5330 Exams.

      Caution:

      Do not enter the revised tax and penalty amount. Enter only the increase for each item.

  4. Forms 870-EP can be accepted by EEFax or email if taxpayer contact has been made and the case history documents the date of contact and the desire of the taxpayer to submit the consent to assess tax by fax.

    Note:

    To document the origin of an email or EEFax, it is necessary to preserve as correspondence the incoming email or EEFax that identifies the origin. Save the email or EEFax cover page as correspondence in the RCCMS Office Documents folder using the RCCMS Naming Convention.

  5. Process payments received in accordance with IRM 4.71.5.6.3, Processing Delinquent Forms 5330 Received from the Taxpayer.

Case File Assembly

  1. 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.

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

Abatement of Penalties

  1. If penalties on a secured return are assessed in error by the Service Campus, and the case is still open, they can be abated 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).

  2. 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

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

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

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

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

  2. Agents must inform their group manager at the first indication that a case might be unagreed. Agents 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.

  3. 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.

  4. 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.

  5. 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.

  6. 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 to agent on what is required.

    Note:

    Prior to preparing a 30-Day Letter Package, you may want to consider using the Fast Track Settlement Process to resolve unagreed issues involving Forms 5330. See IRM 4.71.19, Fast Track Settlement Procedures.

  7. 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).

    Note:

    If more than one person is liable for IRC 4975 excise tax with respect to any one prohibited transaction, all persons shall be jointly and severally liable, and a separate 30-Day Letter package needs to be prepared and processed for each disqualified person.

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

  9. The agent’s phone call should be:

    • No earlier than 14 calendar days after the initial letter is mailed (unless first contacted by the taxpayer)

    • No later than 21 calendar days after the letter is mailed.

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

  11. 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.

    Note:

    30-Day Letter packages on proposed plan disqualifications continue to be issued by Mandatory Review.

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

    1. It may be necessary to send out Form 872 with the 30-Day Letter to make sure Appeals has at least 12 months when they receive the case.

    2. Take processing time into consideration when you mail out the 30-Day Letter.

      Note:

      For this reason, it is advisable to include Form 872 with the 30-Day Letter if 15 months or less remain on the statute.

    3. If the taxpayer refuses to extend the statute, the taxpayer basically forfeits their Appeal rights. Prepare the 90-Day Letter package (SNOD) using Letter 531-B for Mandatory Review to issue.

  13. 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.

    Note:

    In these instances contact the Manager, EP Mandatory Review to discuss the short statute and the need to issue a 90-Day Letter. Document the CCR accordingly.

  14. 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.

  15. 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.

  16. 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.

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

    Note:

    Prior to closing any cases to Mandatory Review, the field manager must call the Manager, EP Mandatory Review to discuss the case and obtain mailing instructions.

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

    2. Explain the appeals process to the taxpayer or POA. See Pub 1020.

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

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

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

    • Scan all paper documents you exchanged with the taxpayer including envelopes or anything the taxpayer or representative marked.

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

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

  21. 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.

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

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

  24. 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.

  25. 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.

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

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

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

      Note:

      Prior to closing any cases to Mandatory Review, the field manager must contact the Manager, EP Mandatory Review to discuss the case and obtain mailing instructions.

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

30-Day Letter Package

  1. In most instances the agent in the exam group will mail out the 30-Day Letter package. See IRM 4.71.5.9 (11) for the exception to the general rule.

  2. The 30-Day Letter gives taxpayers:

    • A copy of the final exam report and advise them of their appeals rights when they do not agree with the results of an exam.

    • 30 days to request a hearing with Appeals.

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

    1. Letter 2005

    2. Agent generated Form 5438

      Note:

      See IRM 4.71.5 Exhibit 9 at IRM 4.71 - Employee Plans Examination Exhibits for an example of a completed Form 5438 for minimum funding. Use the format shown on the exhibit.

      Note:

      Second tier excise tax under IRC 4975(b) is asserted only in the most recent tax year. IRC 4971(b) is asserted each and every year, but is computed only on the unpaid minimum required contribution due for the year that remains unpaid after the due date set by IRC section 430(j). An unpaid minimum required contribution is only subject to the excise tax under IRC section 4971(b)(1) once. The amount of the tax equals the amount of the deficiency increase for that year with the total amount of the tax for all years equal to the required correction amount.

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

    4. Agent generated RAR (on Form 886-A), which is used to support the assertion of taxes and penalties. See IRM 4.71.5.9.1.1, Revenue Agent Report (RAR), below.

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

    6. Form 12203 (optional)

      Note:

      If the total amount of tax plus penalties for any tax period is not more $25,000, the taxpayer may make a "small case request" for an Appeals conference (Protest to Appeals) when responding to the 30-Day letter. For a small case request, the taxpayer may submit Form 12203 to request an Appeals conference, or the taxpayer may send a letter requesting Appeals consideration indicating the changes they don’t agree with, and the reasons they don’t agree.

    7. Pub 1020

    8. Pub 1

    9. Pub 594

Revenue Agent Report (RAR)
  1. The RAR will be prepared on Form 886-A. Form 886-A is available within RCCMS.

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

    1. Issue(s)– Clearly state the issues. For example, if the issue is IRC 4971 excise tax, the issue might be stated as follows: "Whether a funding deficiency under Internal Revenue Code (IRC) 412, results in an IRC 4971 excise tax liability for the sponsoring employer’s taxable years ending December 31, 2015, 2016, and 2017?"

    2. Facts– A brief history of the plan and pertinent details surrounding the issue are provided in the fact section. Also cite any plan provisions relevant to the issues raised.

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

    4. Government's Position– Discuss each issue separately and apply the law and the facts relevant to each specific issue in this section. Also include a summary of taxes due and the applicability of penalties.

    5. Taxpayer's Position– Taxpayer's position including any rebuttals the taxpayer has made regarding the Government's position are reflected in this section. If the taxpayer has not provided a position on the Issue(s), a simple statement to that effect sufficient.

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

  3. Mandatory Review can assist in writing the RAR.

    Note:

    Agent requests for Mandatory Review assistance must be routed through the group manager.

Substitute for Return Package

  1. When the taxpayer refuses to file a Form 5330 after receiving a notice that a Form 5330 is due, prepare a SFR package.

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

  3. Complete only the top portion of the SFR. Complete the "Filer tax year beginning and ending" and items A through G.

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

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

    Reminder:

    Case establishment occurs at the group level. Cases must be completely established before transferred to Appeals or Mandatory Review.

  6. When the return posts:

    1. The agent completes the Form 5500, 5330 and 990-T Request Form (the Form) and forwards it to the manager for review and approval. See IRM 4.71.5 Exhibit 3 at IRM 4.71 - Employee Plans Examination Exhibits for the Form.

    2. The group manager emails the Form to Classification at tege-cpc-classification@irs.gov.

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

    Note:

    Find the forms in RCCMS.

  8. Mail the SFR to the OSC. See IRM 4.71.1 Exhibit 13 at IRM 4.71 - Employee Plans Examination Exhibits, for the mailing address.

  9. Use recipient name of "Mail Supervisor" with the recipient phone number of (801) 620-3753 on Form 9814.

  10. When the OSC processes the SFR, a TC "150" with tax of $0 will show on the corresponding BMFOLT print. A TC "150" must be present before tax can be assessed after the statutory notice of deficiency is issued.

  11. Update the statute of limitations to alpha code "EE" as instructed in IRM 4.71.9.9(12) when no return has been filed and the statute of limitations has not begun to run.

    Note:

    It would not be appropriate to use alpha code "EE" for a Form 5330 that is due for a prohibited transaction if a Form 5500 series return was filed for the period in which the prohibited transaction occurred or was deemed to occur.

    Note:

    The month and year appearing with alpha code "EE" represent the date that is six years from the date the SFR posted. If the SFR posted on 04/15/2020 the statute date on RCCMS and AIMS should be reflected as 04/EE/2026.

  12. As soon as the SFR is mailed to the OSC and the return is fully established on RCCMS and AIMS, close the case to:

    1. Appeals, if the taxpayer timely files a protest to Appeals in response to the 30-Day Letter.

    2. Mandatory Review, for issuance of the 90-Day Letter when the taxpayer does not file a valid protest to Appeals.

Cases to Appeals

  1. When the taxpayer responds to the 30-Day letter with a protest to Appeals, agents must determine whether:

    1. The statute expires within 12 months.

      Note:

      Appeals won’t accept cases with less than one year remaining on the statute of limitations.

    2. The protest is valid.

      Note:

      The requirements of a valid protest are in Pub 1020, (for Form 990-T, Form 5330 and Form 5500 protests) and in Pub 5 (for Claims, Form 1040 or Form 1120 protests).

  2. If there’s less than one year on the statute of limitations, request a statute extension. See IRM 4.71.9, Statute Control Procedures for additional information.

    1. If the taxpayer refuses to extend the statute of limitations, or you can’t find the taxpayer, get the group manager’s approval to proceed to have Mandatory Review issue a 90-Day letter instead of sending the case to Appeals.

    2. If the taxpayer provides an extension, proceed to update the statute using RCCMS.

  3. If a taxpayer submits a formal written protest that includes all the information required by Pub 1020 addressing the issues raised in the 30-Day Letter, reasons for disagreement, and factual information to support their position on the issues, then you must forward the case to Appeals for their consideration. Send to Appeals regardless of whether you disagree with the taxpayer’s facts or don’t consider the taxpayer’s position sufficiently supported. A taxpayer protest is adequate when it contains all information required by Pub 1020.

  4. If the formal written protest doesn’t comply with the requirements in Pub 1020, you may, with managerial approval, return the protest to the taxpayer with Letter 1025 and grant them additional time to perfect the protest.

    Example:

    The taxpayer submits a formal written protest that simply states that the taxpayer doesn’t agree. There is no explanation for any disagreement and/or the Taxpayer didn’t sign the documents under the penalties of perjury.

  5. If the total amount of tax plus penalties for any tax period is not more $25,000, the taxpayer may make a "small case request" for an Appeals conference (protest to Appeals) when responding to the 30-Day letter. For a small case request, the taxpayer may submit Form 12203 to request an Appeals conference, or the taxpayer may send a letter requesting Appeals consideration indicating the changes they don’t agree with, and the reasons they don’t agree.

    Note:

    See Pub 1020 and the instructions to Form 12203.

    Note:

    Form 12203 does not have to be submitted with a penalties of perjury statement as is required with a formal written protest to Appeals.

  6. If the total amount of tax plus penalties for any tax period is more $25,000, the taxpayer must submit a formal protest to Appeals.

    Note:

    See Pub 1020.

  7. If the only item missing from the protest is a copy of the 30-Day letter, the case can be closed to Appeals using the copy of the 30-Day letter in the case file; therefore, there is no need to return the protest to the taxpayer for perfection.

  8. If the taxpayer or POA files a valid timely protest to appeal the issues reflected in the RAR in the 30-Day Letter package, the agent will:

    1. Review the protest and evaluate any new facts or arguments presented.

    2. Update the RAR to address the protest, rebutting the taxpayer’s position (if necessary).

    3. Notify the group manager (or designee) that a valid protest was received.

    4. Send the revised RAR to the taxpayer and POA, if applicable, with the cover Letter 5918, Protest Received Rebuttal/Transfer to Appeals.

    5. Complete the Appeals routing slip (Form 1725) for the case to go to the Appeals Office in Chicago, (Office Code 131). See IRM 4.71.14 Exhibit 11 at IRM 4.71 - Employee Plans Examination Exhibits for an example of Form 1725 for a case going to Appeals.

    6. If the return is a SFR Form 5330 and IRC 6651 penalties are being asserted, complete Form 13496 in accordance with IRM 4.71.5.9.3 (9). See IRM 4.71.14 Exhibit 22 at IRM 4.71 - Employee Plans Examination Exhibits for an example of Form 13496.

    7. Complete Form 3198-A selecting the box, "Forward to Appeals" .

    8. Save all of the prepared forms and letters in the RCCMS Office Documents folder using the RCCMS Naming Convention. See IRM 4.71.1 Exhibit 2 at IRM 4.71 - Employee Plans Examination Exhibits.

    Reminder:

    All cases sent to Appeals require a minimum of 12 months remaining on the statute of limitations.

  9. If IRC 6651(a) penalties are to be assessed on a SFR, the IRS must certify the SFR Form 5330 per IRC 6020(b). Use Form 13496 to provide the certification.

    1. Prepare a SFR package. A SFR package includes:

      • Form 13496

      • The SFR (Form 5330 sent to the Service Campus)

      • The RAR (Form 886-A)

      • Form 5438

    2. The Form 13496 must contain an original signature and date. The date must be on or after the date the 30-Day Letter is signed and dated and before the date the 90-Day Letter is signed and dated.

    3. The completed Form 13496 must identify the taxpayer by name, contain the taxpayer identification number, purport to be a valid IRC 6020(b) return, and be signed and dated.

    4. Form 13496 requires the number of pages in the SFR package be noted. List the total number of pages in the SFR package.

    5. Whenever the agent revises a report of proposed adjustments that increases the taxpayer’s total tax liability, a recertification on another Form 13496 is required. The revised form must be signed and dated on (or after) the date of the revised report.

    6. When the report of proposed adjustments involves more than one tax year, a separate Form 13496 must be prepared for each year.

      Note:

      See IRM 4.71.14 Exhibit 22 at IRM 4.71 - Employee Plans Examination Exhibits for an example of Form 13496.

  10. Prepare the RCCMS tabs per IRM 4.71.5.9.4, Preparation RCCMS Tabs for Unagreed Form 5330 Exams.

  11. When you "validate for close" in RCCMS, you must complete any field that appears in red.

  12. Before closing the case, make sure the following items are prepared electronically and placed in RCCMS:

    1. Dated 30-Day Letter to the taxpayer with all attachments

    2. Taxpayer’s valid protest letter with all attachments (scanned)

    3. RAR revised to address the taxpayer’s protest including the rebuttal to the taxpayer’s position and the Letter 5918, Protest Received Rebuttal/Transfer to Appeals used to send the RAR with rebuttal to the taxpayer (and POA, if applicable)

    4. Completed Form 1725

    5. Copy of the return

  13. Before going to Appeals, the case will be reviewed by the group manager or their designee.

  14. The group manager or designee will send an email AIMS Coordinator and to the TE/GE Closing Group manager, notifying them that the case is being transferred to go to Appeals.

    Note:

    The AIMS Coordinator and TE/GE Closing Group manager contact information is found in IRM 4.71.1 Exhibit 13 at IRM 4.71 - Employee Plans Examination Exhibits.

  15. The group manager or designee will update the case in RCCMS to status 51 and close the case to TE/GE Closing Group.

  16. The TE/GE Closing Group will update the case to status 81 and transfer the RCCMS case file(s) to Appeals.

  17. If information is received in the group while the case file is in appellate review, the Appeals Office will be notified of such information immediately.

Cases Returned From Appeals
  1. Periodically, cases may be returned to the group from Appeals for further development.

  2. When the agent receives the case, it will be given high priority to work.

  3. After reviewing the case file and the memo from Appeals, the agent and the group manager will meet to discuss the issues raised by Appeals.

    1. If the agent can easily remedy the Appeals Officer's concerns, the agent will address the issue(s) and process the case in the appropriate manner.

    2. The agent will receive permission from the group manager before initiating any communication with Appeals. The manager will determine whether the proposed communication is necessary and whether it is an ex parte communication covered by RRA 98 limitations. See IRM 8.1.10, Ex Parte Communications, for the rules on ex parte communications.

  4. When the work is complete, the case should either be returned to Appeals or closed per group manager instruction.

Preparation of RCCMS Tabs for Unagreed Form 5330 Exams

  1. Validate cases for closure in the RCCMS closing record using the table below.

    Note:

    All items highlighted in red are required to be completed.

    Note:

    Refer to IRM 4.5.2, TE/GE Examined and Non-Examined Closures, and Document 6476 for additional Information.

    RCCMS TAB ITEM EXPLANATION
    General Disposal Code 601 = "Appealed - Protest to Appeals" (for cases going to Appeals)
    604 = "Unagreed - Without Protest" (for cases going to Mandatory Review to issue a 90-Day Letter)
     
    General Closing With Make the appropriate selection in the drop down menu, but in most cases select "electronic prints"  
    General Appeals Office Code Enter 131 if the case is going to Appeals.  
    Details Examiner’s Time Time must be entered in whole hours and in tenths of hours.  
    Details Technique Code 4 - Field exam - full scope
    6- Office correspondence exam
    7 – Field exam - limited scope
     
    Details Examiner’s Name Last name, first name  
    Individual/Business (1 of 3) Unagreed Amount Enter the tax and Failure to File penalties related to that year, if the case is going to Appeals.  

Statute of Limitations for Forms 5330

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

    1. The due date of the Form 5330 return, or

    2. The date the return is filed (See IRC 6501(a)).

      Note:

      Generally, for any excise tax other than IRC 4975, there will not be an SOL date when a Form 5330 is not filed.

      Reminder:

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

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

    1. The date the related Form 5500 series return is filed, or

    2. The date due, if the prohibited transaction is sufficiently disclosed (See IRC 6501(l)(1)).

      Note:

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

    or

    Note:

    See IRM 4.71.5 Exhibit 11, IRC 4975 Statute Control Matrix, at IRM 4.71 - Employee Plans Examination Exhibits for a matrix to help compute the statutes under IRC 4975.

  3. 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.

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

    1. In addition to the original transaction, a new transaction is deemed to occur on the first day of each subsequent taxable year of the disqualified person.

    2. The filing of the Form 5500 return for the year in which the prohibited transaction first occurred starts the running of the statute of limitations for purposes of the tax on the actual transaction occurring in that plan year.

    3. The filing of the Form 5500 return for each subsequent plan year starts the running of the statutes for transactions deemed to reoccur in subsequent years.

  5. 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:

    1. The date the return is filed, or

    2. Deemed filed.

      Note:

      See IRC 6501(e)(3).

    .

  6. Consult Area Counsel before pursuing a six-year statute of limitations. Document discussions and responses with Counsel in the CCR.

  7. 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.

    1. Presently, statute of limitation dates for all Forms 5330 are calculated on BMF as three years from the later of:
      The date the Form 5330 is filed, or
      The date due.

    2. Currently, BMF incorrectly calculates the statute of limitations date for prohibited transactions since there is no linkage to the Form 5500 series return statute date.

      Note:

      The problem exists because the prohibited transaction statute of limitation date is based on the filing of the Form 5500 in which the prohibited transaction occurred or is deemed to have occurred, and not the filing of the Form 5330.

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

  8. 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.

    Note:

    If statute date reflected in RCCMS but different than the statute date reflected on AIMS, update of the statute date on AIMS must be done manually so that it agrees with RCCMS.

  9. 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.

    Note:

    The year reflected should be six years from the date the SFR posted. For example, if the SFR posted on 10/21/2020, the statute date should be 10/EE/2026.

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

  11. 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 manager’s approval.

  12. 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.

Forms 5330 Established on AIMS and RCCMS in Error

  1. 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.)

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

    1. To delete the incorrect AIMS account, prepare Form 10904, Request for Record Deletion from AIMS, as follows:

      Field: Entry:
      Name of Taxpayer: Input the plan name.
      Name Control: Input the four digit name control.
      Taxpayer Identification Number: Input the EIN for the record being deleted.
      Plan Num.: Input the plan number for the record being deleted.
      Tax Period: Input the plan year for the record being deleted.
      Disposal Code: Select disposal code "33" .
      Other: Select "Error Account" ; Select "AIMS" .
      Reason for Request: Input a brief explanation of the requested correction.

      Note:

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

    2. Secure group manager and Area Manager approval on an electronic Form 10904.

    3. Post the approved Form 10904 in the RCCMS Office Documents folder.

    4. Secure AMDISA, INOLES and BMFOLT prints for the account being deleted and save them in the RCCMS Office Documents folder.

    5. The group manager (or designee) will update the case to status 51 on AIMS and RCCMS when it is closed.

    6. Close the Form 5330 examination on RCCMS (disposal code 901) and AIMS (disposal code 33) to the TE/GE Closing Group, requesting status "56" (Form 10904).

    7. The EP AIMS Coordinator will delete the account when the RCCMS record is received.

Referrals to the Department of Labor

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

  2. The agent will provide the group manager with the following items:

    1. Completed Form 6212-B.

      Note:

      Include a concise summary of the issue(s) referred on Line 12 "Remarks" of Form 6212-B.

    2. Any relevant information pertaining to the issue referred, including a copy of the RAR if there is an unagreed IRC 4971, IRC 4975 issue or a proposed revocation.

      Note:

      None of the Form 6212-B attachments are sent to DOL-EBSA, unless Classification receives a written request from DOL-EBSA for the information. Classification will release relevant information as required by IRC 6103(l)(2).

  3. The group manager or designee will send approved referrals to the FAC/EP DOL Coordinator. See IRM 4.71.1 Exhibit 13 at IRM 4.71 - Employee Plans Examination Exhibits, for addresses.

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

Requests for Waivers or Exemption from IRC 4971/4975 Excise Taxes

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

    1. A waiver of the funding deficiency before the IRS.

    2. An administrative exemption from the prohibited transaction requirements before DOL.

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

    Note:

    See IRM 4.71.13.4, Technical Advice Procedures.

  3. 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.

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

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

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

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

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

    Example:

    A taxpayer may request such a waiver if DOL has negotiated a settlement of a prohibited transaction but the settlement does not constitute correction within the meaning of IRC 4975(i) and the regulations under that section.

  7. 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.

  8. 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.

    Note:

    See IRM 4.71.1 Exhibit 13 at IRM 4.71 - Employee Plans Examination Exhibits, for addresses.

  9. 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.

  10. 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.

  11. See the following revenue procedures for additional guidance: Rev. Proc. 2020-1, Rev. Proc. 2020-2, Rev. Proc. 2020-3, Rev. Proc. 2020-4, Rev. Proc. 2000-17, Rev. Proc. 2004-15, and Rev. Proc. 81-44. The first four listed are revised annually, usually in January.