4.71.5 Form 5330 Examinations

Manual Transmittal

December 04, 2018

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) Modified IRM 4.71.5.11(2) Correcting the EIN, Plan Number, Tax Period or Keypunch Error though AIMS Deletion, to comply with the June 22, 2018, Internal Guidance Memorandum (TE/GE 04-0618-0016) from the Director Compliance Planning & Classification entitled, Form 10904 Deletion Requests.

(2) This IRM is revised to incorporate the October 5, 2018, Internal Guidance Memorandum (TE/GE 04-1018-0024) from the Acting Director, Employee Plans entitled, Single Type of Examination. This memo eliminates the Office Correspondence Examination Program (OCEP) effective October 4, 2018. Instead, there is now a single type of examination that allows the agent and the group manager to determine, on a case by case basis, whether a visit to the taxpayer’s place of business is appropriate or if the examination should be worked through correspondence. Changes to the IRM eliminate references to OCEP throughout the document since the OCEP program has been eliminated.

(3) The name for ESSP (Examinations Special Support and Processing) was updated to TE/GE Closing Group throughout the document.

(4) The term “ESSP Coordinator” was removed from the document.

(5) Fax numbers for the TE/GE Closing Group have been replaced with efax numbers throughout the document.

(6) IRM 4.71.5.1.4, Contact Information for Business Units was updated for specific email addresses for Classification.

(7) The zip code for the Ogden Service Campus has been updated.

Effect on Other Documents

This supersedes IRM 4.71.5 dated September 17, 2018.

Audience

Tax Exempt and Government Entities
Employee Plans

Effective Date

(12-04-2018)

Catherine L. Jones
Acting Director, Employee Plans
Tax Exempt and Government Entities

Program, Scope, and Objectives

  1. The Employee Plans (EP) examination program was established to ensure:

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

    2. That 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, Return of Excise Taxes Related to Employee Benefit Plans.

  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. See IRM 1.2.13, Servicewide Policies and Authorities, Policy Statements for the Examining Process.

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

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

    2. Will use professional judgement in accordance with auditing standards to make findings of fact and apply the Service’s position on issues of law to determine the correct tax liability.

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

    4. Will dispose of tax differences at the lowest level. See IRM 1.2.13, Servicewide Policies and Authorities, Policy Statements for the Examining Process.

  4. Examinations must be conducted in accordance with Policy Statement 1-236, Fairness and Integrity in Enforcement Selection. See IRM 1.2.10, Servicewide Policies and Authorities, Policy Statements for Organization, Finance and Management Activities.

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 used to oversee 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 must be conducted in accordance with the Taxpayer Bill of Rights as listed in IRC 7803(a)(3).

    Note:

    Additional information may be found on the irs.gov website at www.irs.gov/taxpayer-bill-of-rights.

  4. The IRS is fully committed to protecting the privacy rights of taxpayers and employees. Privacy laws are included in the IRC, the Privacy Act of 1974, the Freedom of Information Act, and IRS policies and practices. For more information about these laws, visit the IRS Electronic Freedom of Information Act Reading Room. For questions concerning privacy, send an email to *Privacy. For question concerning disclosure, send an email to *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
    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
    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 5456 Reviewer’s Memorandum - EP/EO
    Form 5464 Case Chronology Record
    Form 5500 Annual Return/Report of Employee Benefit Plan
    Form 5500-EZ Annual Return of One-Participant (Owners and Their Spouses) Retirement Plan
    Form 5500-SF Short Form Annual Return/Report of Small Employee Benefit Plan
    Form 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
    5772-A Employee Plans (EP) Workpaper
    Form 5773-A Employee Plans (EP) Workpaper Summary Continuation
    Form 6212-B Examination Referral Checksheet B
    Form 6533 Examination Referral Worksheet
    Form 8821 Tax Information Authorization
    Form 9814 Request for Mail/Shipping Service
    Form 10904 Request for Record Deletion from AIMS
    Form 13133 Expedite Processing Cycle
    Form SS-4 Application for Employer Identification Number
    Pub 1 Your Rights as a Taxpayer
    Pub 594 The IRS Collection Process
    Pub 1020 Appeal Procedures EP Examinations

     

Contact Information for Business Units and Sub-functions

  1. Phone, efax and email information:

    1. FAC/EP DOL Coordinator (Form 6212-B Referrals to DOL):
      Deborah.Thompson@irs.gov

    2. Classification (all referrals EXCEPT Form 6212-B): *Manager EO Classification (EOclass@irs.gov)

      Note:

      Classification & Case Assignment (C&CA) is a sub-function of Compliance Planning & Classification (CP&C). This IRM refers to C&CA simply as Classification.

    3. Classification (case establishment on RCCMS and AIMS):*TEGE-CPC-Classification (tege-cpc-classification@irs.gov)

    4. EP AIMS Coordinator:


      Efax: 855-821-0089
      Email: Charles.Mazzarisi@irs.gov

  2. Postal mailing addresses:

    1. FAC/EP DOL Coordinator (Form 6212-B Referrals to DOL):

      IRS
      Deborah Thompson
      3251 N Evergreen Dr NE
      Grand Rapids, MI 49525-9581

    2. Classification:

      IRS –Classification & Case Assignment
      1100 Commerce St., Mail Code 4910DAL
      Dallas, TX 75242

    3. Ogden Service Campus:

      IRS - Ogden Service Campus
      Attn: Teller Unit (line used when mailing includes remittance)
      1973 N. Rulon White Blvd.
      Mail Stop XXXX (see table below)
      Ogden, UT 84201

      Note:

      Mail Stops vary depending on items mailed. See table below:

      Items being mailed Mail Stop
      SFR packages 6054
      Form 5330 filings without remittance 6054
      Form 5330 filings with remittance:  
      less than $100,000 1999
      $100,000 or more 2003
    4. EP Mandatory Review:

      IRS - EP Mandatory Review
      c/o Samantha Nolan
      2970 Market Street
      BLN 2-H20-133
      Philadelphia, PA 19104

    5. TE/GE Closing Group:

      Internal Revenue Service
      TE/GE Closing Group
      2 Metrotech Center
      100 Myrtle Avenue
      Sixth Floor
      Brooklyn, NY 11201

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 a Form 5330 exam is initiated 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 Due Date of Form 5330 Examples
    IRC 4971 By the 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 12/31/2017, the corresponding tax year would end 3/31/2018. The Form 5330 is due October 31, 2018.
    IRC 4972, IRC 4973(a)(3), IRC 4975, IRC 4976, IRC 4978, and IRC 4979A By the 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, 2017, the Form 5330 is due on July 31, 2018. If the employer (or other person required to file the return) has a fiscal tax year ending October 31, 2017, the Form 5330 is due on May 31, 2018.
    IRC 4977 By the 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 By the 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, 2017. The Form 5330 for such excess contributions is due by March 31, 2019.
    IRC 4980 No later than the last day of the month following the month in which the reversion occurred. Trust assets reverted back to an employer on May 16, 2018 from a plan having a plan year ending on December 31st. The Form 5330 is due for the reversion on June 30, 2018.
    IRC 4980F By the last day of the month following the month in which the failure occurred.  

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 5772-A and Form 5773-A, or its equivalent, and workpapers to document the exam findings regarding potential excise tax and penalty issues.

  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 4.71.5.1.4, Contact Information for Business Units and Sub-functions.

    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 an individually designed letter or a modified Letter 1346 or Letter 1474) to inform the taxpayer that a 5330 examination commenced and provide the pertinent facts, law, government position, excise tax calculations and IRC 6651(a) penalty calculations, if applicable.

      Note:

      When the issue involves a prohibited transaction that has not been corrected, the letter 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 letter 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 statue.

      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 after the letter referenced in IRM 4.71.5.4 (2) is mailed, and

    2. No later than twenty one calendar days after the letter is mailed.

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 Related or Subsequent Year 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 201612 and 201712, 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. Efax or email the completed Form 4442 to the EP AIMS Coordinator. See IRM 4.71.5.1.4, Contact Information for Business Units and Sub-functions, 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 efax 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 Related or Subsequent Year 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. See IRM 4.71.5.1.4, Contact Information for Business Units and Sub-functions, for Classification’s email address.

  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. Efax or email the completed Form 4442 to the EP AIMS Coordinator. See IRM 4.71.5.1.4, Contact Information for Business Units and Sub-functions, for contact information. Include a contact name and phone number and efax number.

  4. The TE/GE Closing Group will call, email or efax 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, Payment Posting Voucher - Examination, and Form 3210, Document Transmittal, 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 efax 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 efax.

    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, TE/GE Special Handling Notice (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 4.71.5.1.4, Contact Information for Business Units and Sub-functions.

  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, orefax 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 efaxed to the EP AIMS Coordinator. See IRM 4.71.5.1.4, Contact Information for Business Units and Sub-functions, for the 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, the agent completes the Related or Subsequent Year Form 5500, 5330 and 990-T Request Form(the Form) and forwards it to the manager for review and approval. The group manager emails the Form to Classification. See IRM 4.71.5.1.4, for Classification’s email address.

    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 201612 and 201712, 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 Forms 5330 Package Contents
  1. Complete the Form 3210 as follows:

    1. Reflect the complete mailing address noted in IRM 4.71.5.1.4, Contact Information for Business Units and Sub-functions.

    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 efax 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 efax.

    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, ID number, phone number, PBC, and group 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 201612 and $3,000 for 201712, you should prepare a Form 3244-A for 201612 reflecting $2,000 next to transaction code 610 and a second Form 3244-A for 201712 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. Make a copy of the entire package for the case file.

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 4.71.5.6.4, Securing Forms 5330 Not Yet Due, 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 follow the procedures for delinquent secured returns found in IRM 4.71.5.6.3, Processing Delinquent Forms 5330 Received from the Taxpayer.

    1. Use disposal code 02 (disposal code 107 on RCCMS).

    2. Do not put an entry in item 37 of Form 5599.

    3. Leave item 414 of Form 5599 blank.

  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 line 602 of Form 5650 (if one is prepared) and on the "EP taxes" line of the RCCMS Closing Record of the related Form 5500 exam.

    Note:

    See the note under IRM 4.71.5.6.4 (2), Securing Forms 5330 Not Yet Due.

  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 4.71.5.1.4, Contact Information for Business Units and Sub-functions, 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 5772-A and Form 5773-A (or its equivalent) 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 2085 when the exam results in no change to the tax reported on a filed Form 5330.

      Note:

      Letter 2085 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. Save a copy of the closing letter in the RCCMS Office Documents folder. If the group has a scanner, scan the signed and dated closing letter into RCCMS.

  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. When a delinquent return is secured, use disposal code 06 (208 in RCCMS), on Form 5599, TE/GE Examined Closing Record, and complete line 414, Delinquent Return Amount.

    Note:

    Item 414 is only completed with disposal code 06.

  6. 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.

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

  8. Prepare Form 5599 in accordance with IRM 4.71.5.6.6 Preparation of Form 5599 for Agreed Form 5330 Exams, and save it in the RCCMS Office Documents folder.

  9. An agreed case can be closed as completely electronic as long as all relevant case related documents are scanned and saved in RCCMS, and the case does not contain an executed Form 870-EP.

  10. When the case contains an executed Form 870-EP, the executed Form 870-EP must be put in a manila folder (and scanned into RCCMS, if possible), with a completed Form 10329, Transmittal Sheet-Related Cases, stapled on front. Form 10329 is not required if there are no other paper files or related returns.

  11. If any of the documents listed below were not scanned into RCCMS, the case can still close as completely electronic if the documents are placed in a manila folder with a Form 10329, Transmittal Sheet-Related Cases, stapled on front.

    • Form 872

    • Form 895-EP (if required to be prepared in accordance with IRM 4.71.9.3(2), Group Manager Responsibilities and Procedures)

    • Copy of the Form 5330 mailed to the OSC

    • A copy of the check mailed to the OSC (if payment submitted)

    • Form 2848 or Form 8821, if applicable. If the filed Form 5330 was not scanned into RCCMS, the applicable form (2848 or 8821) should be attached to the back of the first page of the Form 5330 in the manila folder.

    • Any other paper documents necessary to document the exam trail (that are not saved in the RCCMS Office Documents folder) should also be included in the paper file.

  12. If there is a paper file and less than 180 days remains on the statute of limitations, the paper case file must be placed in a red folder.

  13. Save all copies of workpapers, forms and letters prepared in the RCCMS Office Documents folder using the RCCMS Naming Convention.

    Note:

    Documents scanned into RCCMS should be the final version of that document.

    Example:

    The final version of a closing letter must contain the date (the mailing date of the letter) and the Director, EP Examinations’ signature.

  14. If the group has a scanner, scan all relevant case related documents received from the taxpayer or POA and save them in RCCMS using the RCCMS Naming Convention.

  15. The group manager (or designee) will mail out the final closing letter.

    Note:

    Make sure the letter is dated and contains the Director, EP Examination’s signature when mailed.

  16. Close the case on RCCMS with the "Update AIMS" box checked.

  17. The group manager (or designee) will update the case to status 51 when it is closed from the group.

  18. Close all agreed Forms 5330 on RCCMS and AIMS to the TE/GE Closing Group. See IRM 4.71.5.1.4, Contact Information for Business Units and Sub-functions, for the TE/GE Closing Group’s address.

Preparation of Form 5599 and RCCMS Tabs for Agreed Form 5330 Exams

  1. When you validate a case for closure in RCCMS, you must complete any field that appears in red. These fields correspond to the required items on Form 5599 as detailed below.

  2. Complete Form 5599 (and saved in RCCMS) for all Form 5330 exams. Complete the related fields as appropriate within the RCCMS activity.

  3. The line items will be completed as noted:

    1. P7-18: Enter the taxpayer’s TIN.

      Note:

      Use a file source of "V" with an SSN (for example, XXX-XX-XXXXV) and no file source with an EIN (for example, XX-XXXXXXX). Remember, the "V" is not used on the RCCMS tabs.

    2. P21-22: The MFT is 76.

    3. P24-29: Enter the tax period.

    4. P31-34: Enter the name control.

    5. C: Enter the name of the taxpayer.

    6. P53-55: Enter the three-digit plan number of the related plan.

    7. Item 08: If the disposal code is 03, Agreed Tax Change, enter the date the amended Form 5330 or Form 870-EP was signed by the taxpayer. Otherwise, leave this item blank.

    8. Item 12 – Tax Liability Adjustment: Enter a transaction code of 300 and $0 if no additional tax is being assessed above what is reflected on the return secured by the agent. If additional tax is being assessed above what was reported on a previously filed Form 5330 through use of Form 870-EP, enter a transaction code of 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 OSC, the OSC would have made the tax assessment when they processed the return you sent them. Therefore, do not reflect an additional tax as being due in Item 12 to avoid a double assessment.

    9. Item 12 – Penalties (+): If Form 870-EP is signed by the taxpayer and the agent is assessing IRC 6651 penalties, enter transaction code 160 for IRC 6651(a)(1) penalties, and transaction code 270 for IRC 6651(a)(2) penalties, with the corresponding amount for each penalty.

      Note:

      If a delinquent Form 5330 is secured and forwarded to the OSC, the OSC will assess penalties on the return unless the agent provides instructions to the contrary in the "Other Instructions" section of the Form 3198-A accompanying the delinquent return mailed to the OSC.

    10. Item 12 – Penalties (-): If penalties on a secured return are assessed by mistake by the OSC, they can be abated on Form 5599 by entering, transaction codes 161 and 271 (as applicable) and the dollar amount of the decrease in penalties on this line, and by entering transaction code 300 and $0 on the Tax Liability Adjustment line (item 12 - Tax Liability Adjustment).

    11. Item 13: Enter the applicable disposal code as follows:

      Disposal Codes Exam Outcome
      02 (RCCMS = 107) No change
      03 (RCCMS = 102) Agreed tax change
      06 (RCCMS = 208) Delinquent return secured
      34 (RCCMS = 103) Claims allowed in full (surveyed)

      Note:

      See Document 6476, Employee Plans Systems Codes, for definitions. Do not use disposal code 12, Amendment Secured, (RCCMS = 202) or disposal code 15, Closing Agreement, (RCCMS = 106) to close Forms 5330 as AIMS is not programmed for these disposal codes for MFT 76 cases.

    12. Item 14: If the statute of limitations has been extended, enter the statute expiration date. Also enter the statute date anytime the Form 5330 is for IRC 4975 prohibited transaction excise tax since the statute date for IRC 4975 is governed by the Form 5500 statute date.

    13. Item 15: Leave blank if the dollar amount in item 12 is $0. If line 12 contains a dollar amount (for example, additional tax is being assessed on a previously filed return), then put a reference number (manual abstract code) here with the additional amount of tax being assessed (additional tax being assessed is listed in both items 12 and 15). 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)
      203 ESOP prohibited allocations (IRC 4979A)
      204 Reversions (IRC 4980)
    14. Item 28: Enter agent’s time on the case.

    15. Item 30: Enter the technique code:
      2 – Correspondence Exam - full scope
      4 – Field exam - full scope
      6 – Correspondence Exam - limited scope/focused audit
      7 – Field exam - limited scope/focused audit

    16. Item 31: Enter the agent’s grade.

    17. Item 32: Enter the grade of the case in the blocks from left to right as two digits (for example, Grade 9= 09).

    18. Item 33: Enter the agent’s last name; leave a space and then first initial.

    19. Item 37: Enter the delinquent return code. If there is only one delinquent return, enter a "T" . If there is more than one delinquent return, enter a "T" in the latest year and an "R" in all prior years.

    20. Item 38: Enter the applicable alpha fraud code:

      Type Alpha Code
      Civil Fraud: C
      Criminal Fraud: F
      Both Civil and Criminal Fraud: B
      No Fraud: Leave blank
    21. Item 40: Enter the project code if there is one. If not, enter 0000.

    22. Item 42: Enter the ARDI Code, if applicable.

    23. Item 50: Enter the agent’s group code.

    24. Item 414: For disposal code 06, Delinquent Return Secured, (RCCMS 208), enter the amount of tax assessed for the year.

      Note:

      No entry is made for disposal codes other than 06.

      Note:

      Make sure the box under item 50 on page one of the form is checked if an amount is entered in item 414.

    25. Item 416: Enter a "1" if Form 870-EP was secured via efax. If not, leave blank.

  4. See IRM 4.71.5 Exhibit 7 at IRM 4.71 - Employee Plans Examination Exhibits for an example of a completed Form 5599 for an agreed Form 5330 exam.

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, the agent will:

    1. Keep the original Form 870-EP in the file.

    2. Complete Form 5599 to assess tax and penalties, if applicable.

      Note:

      Assessment is based on the dollar amounts on Form 5599; item 12 (Tax Liability Adjustment) with a code of 300 for tax and item 12 (Penalties) with a code of 160 for penalties.

  4. Forms 870-EP can be accepted by efax as long as taxpayer contact has been made previously and the case chronology documents:

    • The date(s) of taxpayer contact

    • The taxpayer’s desire to have tax assessed by the efax submission of Form 870-EP

  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. Assemble case file per IRM 4.71.12, Case File Assembly Guidelines. Include electronic versions of all prepared workpapers, forms, letters, etc., in the RCCMS Office Documents folder using the RCCMS Naming Convention.

  2. The agent should dispose of any unneeded reports and/or workpapers and update the file in RCCMS before closing the case.

    Note:

    Superseded reports, letters, workpapers not sent to the taxpayer may be retained in the file, but must be renamed accordingly.

Abatement of Penalties

  1. If the OSC assessed penalties on a secured return and the case is still open, the penalties can be abated on Form 5599 by entering transaction code 300 and $0 on the Tax Liability Adjustment line (item 12 - Tax Liability Adjustment) and the following (as applicable):

    • Transaction code 161, Abatement of Delinquency Penalty

    • Transaction code 271, Manual Abatement of Failure to Pay Tax Penalty

    • The dollar amount by which the penalty should be decreased on Item 12 (the Penalties (-) line).

  2. If the OSC assessed penalties on a secured return in error and the case is closed, complete Form 3870 and send the completed form to the EP AIMS Coordinator to get them abated. See the contact information for the EP AIMS Coordinator in IRM 4.71.5.1.4 (1)d), Contact Information for Business Units and Sub-functions.

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 Forms 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:

    Effective October 1, 2017, EP Exam groups mail out 30-Day Letter packages. Prior to that date, 30-Day Letter packages were mailed by Mandatory Review. Mandatory Review will continue to mail the 30-Day Letter packages for the cases identified in paragraphs IRM 4.71.5.9 (9) and (10).

  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).

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

  9. 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.

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

    Note:

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

  11. 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.

  12. 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.

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

    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.

  14. As is the requirement for all exam cases, prepare Form 5772-A, Form 5773-A (or equivalent) and other relevant workpapers.

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

  16. All unagreed cases going to Appeals or Mandatory Review require a paper copy of all workpapers, forms, letters, etc. assembled in accordance with IRM 4.71.12, Case File Assembly.

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

    Note:

    It is not necessary to save files on a CD for the case file if the files are saved in RCCMS.

  18. When closing a case unagreed, prepare Form 5599 in accordance with IRM 4.71.5.9.4, Preparation of Form 5599 and RCCMS Tabs for Unagreed Form 5330 Exams.

  19. Follow the statute procedures in IRM 4.71.9.3, Group Manager Responsibilities and Procedures, and IRM 4.71.9.4, Agent Responsibilities and Procedures, for both Forms 5330 and any related Forms 5500 exams closed to Mandatory Review.

  20. Assemble the case in accordance with IRM 4.71.12, Employee Plans Examination of Returns - Case File Assembly Guidelines.

    Note:

    All unagreed cases require a paper copy of all workpapers, forms, letters, etc.

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

  22. Make sure the case is fully established on RCCMS and AIMS before closing to Mandatory Review.

  23. Update the RCCMS disposal code as noted below and close the case to your group manager.

    • 601 if going to Appeals

    • 604 if going to Mandatory Review

  24. 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.

  25. 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. See IRM 4.71.5.1.4, Contact Information for Business Units and Sub-functions, for Mandatory Review’s mailing address.

    Note:

    If Mandatory Review later returns the case to the group with a Form 5456, Inquiry or Correction Memorandum, the case will be updated to status 13. Keep the case in status 13 until closed from the group.

30-Day Letter Package

  1. Effective October 1, 2017, as a general rule, the EP Exam groups mail the 30-Day Letters to the taxpayer (and POA).

  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

      Note:

      See IRM 4.71.5 Exhibit 8 at IRM 4.71 - Employee Plans Examination Exhibits for an example of Letter 2005.

    2. Agent generated Form 5438, Report of Examination - Excise Taxes on Employee Plans 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. 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, 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. Pub 1020

    7. Pub 1

    8. 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.

    1. After the SFR posts on AIMS (see IRM 4.71.5.9.2 (9)), the agent completes the Related or Subsequent Year Form 5500, 5330 and 990-T Request Form and forwards it to their group manager for review and approval.

    2. When approved, the group manager emails the Form to Classification.

      Note:

      See IRM 4.71.5.1.4, for Classification’s email address.

    Reminder:

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

  6. 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.

  7. Mail the SFR to the OSC. See IRM 4.71.5.1.4, Contact Information for Business Units and Sub-functions, for the mailing address.

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

  9. 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.

  10. Update the statute of limitations to alpha code "EE" as instructed in IRM 4.71.9.9(13) 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.

  11. 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. 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 review the protest and evaluate any new facts or arguments presented and prepare a revised RAR rebutting, if applicable, the new information and position.

  2. If the protest does not alter the original conclusion, the agent will:

    1. Review the protest letter received from the taxpayer or POA to ensure the protest is valid.

      Note:

      See Pub 1020 for elements needed for a valid protest.

    2. Notify the group manager (or designee) if a valid protest was received.

    3. Update the RAR to address the protest and send a copy to the taxpayer and POA, if applicable.

      Note:

      Send the revised RAR to the taxpayer and POA, if applicable, with an individually-designed cover letter, explaining the purpose of the revised RAR and the current case status (being processed to Appeals).

    4. Complete the Appeals routing slip (Form 1725) for the case to go to the Appeals Office in Boston, MA (Office Code 121). 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.

    5. 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 (3). Attach Form 13496 to the back of the SFR. See IRM 4.71.14 Exhibit 22 at IRM 4.71 - Employee Plans Examination Exhibits for an example of Form 13496.

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

    7. 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.

    8. Assemble the case file in accordance with IRM 4.71.12, Case File Assembly Guidelines.

    Reminder:

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

  3. 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.

  4. Prepare Form 5599 per IRM 4.71.5.9.4, Preparation of Form 5599 and RCCMS Tabs for Unagreed Form 5330 Exams. Form 5599 is prepared as it is for agreed cases, except:

    1. The disposal code in item 13 should be 07 (601 in RCCMS), Appealed—Protest to Appeals.

    2. Do not make an entry on item 12.

    3. Enter Appeals Office Code 121 in RCCMS and on item 16.

    4. Enter the tax and failure to file penalties in item 18 and on the "Unagreed Amount" line in tab 3 in the Closing Records tab in RCCMS.

  5. Make sure the RCCMS closing record is properly completed. When you "validate for close" in RCCMS, you must complete any field that appears in red.

  6. 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 individually-designed letter used to send the RAR with rebuttal to the taxpayer (and POA, if applicable)

    4. Completed Form 1725

    5. Completed Form 5599 (as applicable)

    6. Copy of the return

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

  8. The group manager or designee make sure all of the following items are saved in the RCCMS Office Documents folder, and will send an email to the EP AIMS Coordinator in the TE/GE Closing Group and to the Manager, TE/GE Closing Group, attaching the following items with a Form 3210 listing all of the items included:

    1. Signed and dated 30-Day Letter to the taxpayer with all attachments (entire 30-Day Letter package)

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

    3. RAR revised to address Taxpayer’s protest including rebuttal to Taxpayer’s Position with individually-designed letter used to send the RAR with rebuttal to the Taxpayer (and POA, if applicable)

    4. Completed Form 1725

    5. Completed Form 5599

    6. Completed Form 12209, Transmittal of Cases to Appeals

      Note:

      See IRM 4.71.14 Exhibit 10 at IRM 4.71 - Employee Plans Examination Exhibits for an example of Form 12209 for a case going to Appeals.

      Note:

      Prepare this form even though it is listed as an obsolete form on the IRS Electronic Publishing website.

  9. The group manager or designee will close the case on RCCMS to the TE/GE Closing Group.

  10. When the TE/GE Closing Group accepts the case and puts it in status 51, the group manager or designee will box up the paper case files and mail them with Form 3210 listing all returns going to Appeals.

    Note:

    The Appeals address is:
    Internal Revenue Service
    Attn: Boston Appeals Office
    10 Causeway, Room 493
    Boston, MA 02222-1047

  11. Use the recipient name of "Mail Supervisor" with the recipient phone number of (617) 788-0628 on Form 9814.

  12. When the acknowledged Form 3210 is returned from Appeals, the group manager or designee will send a copy to the Manager, TE/GE Closing Group.

  13. Notify Appeals immediately if information is received in the group while the case file is in appellate review.

Cases Returned From Appeals
  1. Appeals may return a case to the group for further development.

    Note:

    Until Appeals uses RCCMS, only the physical case files will be returned to the group.

  2. The group manager or designee will:

    1. Update the case on AIMS to status 12

    2. Contact the EP AIMS Coordinator and request the RCCMS files be pulled from the RCCMS Case Library and reassigned to the group

    3. Assign the case to the agent

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

  4. 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.

  5. When the work on the case is complete, the group will return the case to Appeals or close the case as an agreed case per IRM 4.71.5.6, Processing Agreed Forms 5330, as applicable.

Preparation of Form 5599 and RCCMS Tabs for Unagreed Form 5330 Exams

  1. When you validate a case for closure in RCCMS, you must complete any field that appears in red. These fields correspond to the required items on Form 5599 as detailed below.

  2. Complete the following line items for unagreed exams going to Mandatory Review:

    1. P7-18: Enter the taxpayer’s TIN.

      Note:

      Use a file source of "V" with an SSN (XXX-XX-XXXXV) and no file source with an EIN (XX-XXXXXXX). Remember, don’t use the "V" on the RCCMS tabs.

    2. P21-22: The MFT is 76.

    3. P24-29: Enter the tax period.

    4. P31-34: Enter the name control.

    5. P52-54: Enter the three-digit plan number of the related plan.

    6. C: Enter the name of the taxpayer.

    7. Item 12: Leave blank.

    8. Item 13: The disposal code is 07 (601 in RCCMS) if the case is going to Appeals and disposal code 10 (604 in RCCMS) if the case is going to Mandatory Review.

    9. Item 14: If the statute of limitations has been extended, enter the statute expiration date. Also enter the statute date anytime the Form 5330 relates to excise tax under IRC 4975 for a prohibited transaction.

    10. Item 15: Leave blank.

    11. Item 16: Enter 121 if the case is going to Appeals. Leave blank if the case is going to Mandatory Review.

    12. Item 18: Enter the amount of tax and penalties (excluding failure to pay penalties).

    13. Item 28: Enter the agent’s time on the case.

    14. Item 30: Enter the technique code:
      2 – Correspondence Exam - full scope
      4 – Field exam - full scope
      6 – Correspondence Exam - limited scope/focused audit
      7 – Field exam - limited scope/focused audit

    15. Item 31: Enter the agent’s grade.

    16. Item 32: Enter the grade of the case in the blocks from left to right as two digits (for example, Grade 9= 09).

    17. Item 33: Enter the agent’s last name; leave a space and then first initial.

    18. Item 37: Leave blank when closing a SFR to Appeals or Mandatory Review. If a delinquent return was secured, enter the delinquent return code. If there is only one delinquent return, enter a "T" . If there is more than one delinquent return, enter a "T" in the latest year and an "R" in all prior years.

    19. Item 38: Enter the applicable fraud alpha code.

      Type Alpha Code
      Civil Fraud: C
      Criminal Fraud: F
      Both Civil and Criminal Fraud: B
      No Fraud: Leave blank
    20. Item 40: Enter the project code if there is one. If not enter 0000.

    21. Item 42: Leave blank.

    22. Item 50: Enter the agent’s group code.

    23. Item 414: Leave blank.

  3. See IRM 4.71.5 Exhibit 10 at IRM 4.71 - Employee Plans Examination Exhibits for an example of a completed Form 5599 for an unagreed case.

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. 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 4.71.5.1.4, Contact Information for Business Units and Sub-functions, for addresses.

  4. See IRM 4.71.6.8, 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 4.71.5.1.4, Contact Information for Business Units and Sub-functions, 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. 2018-1, Rev. Proc. 2018-2, Rev. Proc. 2018-4, Rev. Proc. 2018-6, Rev. Proc. 2000-17, Rev. Proc. 2004-15, and Rev. Proc. 81-44. The first four listed are revised annually, usually in January.