7.2.2 Employee Plans Compliance Resolution System (EPCRS)

Manual Transmittal

September 16, 2020

Purpose

(1) This transmits revised IRM 7.2.2, TE/GE Closing Agreements, Employee Plans Compliance Resolution System (EPCRS).

Material Changes

(1) Revised IRM 7.2.2.1.2, IRM 7.2.2.2.1 and other sections to refer to updated references.

(2) Updated IRM 7.2.2.1.4 to define "EPDFR" , "EP SME" and "FTA" .

(3) Revised and updated IRM 7.2.2.3 to remove procedures and information relating to the discontinued paper based submission process and make some clarifications with regard to submissions using the Pay.gov website.

(4) Revised IRM 7.2.2.3.2 to remove the procedures relating to Incorrect Posting of User Payments and replaced it with "Procedures to Fix Errors or Make Updates to Key RCCMS fields " that were effective as of April 23, 2020.

(5) Updated IRM 7.2.2.3.3, Procedures for Correction Disposal of VCP Cases on RCCMS, to be consistent with new procedures described in IRM 7.2.2.3.2.

(6) Revised IRM 7.2.2.4 Updated by removing outdated items and to reflect a new process for the screening of VCP cases

(7) Revised IRM 7.2.2.4.1, Screening VCP Cases in RCCMS, to remove outdated items and to reflect new procedures that apply when screening VCP cases.

(8) Revised IRM 7.2.2.5 by removing outdated items that don’t apply as individual groups are no longer involved in the screening of VC cases.

(9) Updated IRM 7.2.2.6, Specialist’s Actions Upon Receipt of Newly Assigned VCP Cases, edited for clarity and to remove updated items.

(10) Updated IRM 7.2.2.6.2, Check and Update RCCMS Activity Record, to reference and be consistent with the new procedures described in IRM 7.2.2.3.2.

(11) Revised IRM 7.2.2.7, VCP Submissions - Initial Review, to add updated references, and new procedures on evaluating VCP submissions submitted via the Pay.gov website.

(12) Revised IRM 7.2.2.8, VCP Submissions-Technical Review Procedure, to add updated references, new procedures on evaluating Pay.gov submissions and a new limited exception to the required coordination rule with IRS actuaries when evaluating certain failures and correction methods.

(13) Revised IRM 7.2.2.10, Procedures for User Fee Issues, to remove outdated items and to add updated references along with new procedures that deal with user fees associated with VCP cases that are subsequently changed into voluntary closing agreement request cases.

(14) Revised IRM 7.2.2.10.1, Instructions on Soliciting User Fees Owed and IRM 7.2.2.10.2, Refund Procedures and Instructions for VCP User Fees, and IRM 7.2.2.10.3 to revise some sample language used to request user fee payments and other miscellaneous changes.

(15) Updated IRM 7.2.2.12, Power of Attorney Form 2848 and Form 8821, to contain updated references and to require the use of the new 2020 versions.

(16) Updated IRM 7.2.2.14, Contacting and Corresponding with Applicant and POA Representative, to reference updated policies regarding the acceptance of images of original signatures by fax, the approval to temporary send or receive documents via email if certain conditions can be met through December 31, 2020 and to clarify that the Manager of VC will have to be consulted if a compliance statement won’t be issued to determine if a referral will be made to EP Examinations.

(17) Revised IRM 7.2.2.16, to remove out dated information and to clarify that the Manager of VC must be consulted if a compliance statement won’t be issued to determine if a referral will be made to EP Examinations.

(18) Updated IRM 7.2.2.20, Anonymous VCP Submissions, to contain updated references and other changes, including instructions to follow the procedures in IRM 7.2.2.3.2 to update key fields in RCCMS once the Specialist had received identifying information.

(19) Revised IRM 7.2.2.23, Closing Procedures For Specialists, to update the procedures that work better with RCCMS and to remove outdated items. This includes requiring specialists to create a subfolder called “Closing Documents” to store some specified items.

(20) Updated IRM 7.2.2.25, Required Use of Standardized VC Letters to reflect changes to official VCP letters.

(21) Updated IRM 7.2.2.30, Taxpayer Requests for Modifications to Issued Compliance Statements Relating to Closed VCP cases by removing outdated information.

(22) Revised IRM 7.2.2.31, Voluntary Compliance Referrals To EP Examination by changing the title, making clarifications, including the requirement that the Manager of VC must be consulted if a compliance statement won’t be issued to determine if a referral should be made to EP Examinations, and adding step by step instructions for specialists describing how to make such referral if necessary.

(23) Added IRM 7.2.2.31.1 to add fraud procedures applicable to the review of VCP case work.

(24) Updated links and descriptions in Exhibit 7.2.2-1 and Exhibit 7.2.2-2.

(25) Various edits have been made for clarity and for plain language.

Effect on Other Documents

This supersedes IRM 7.2.2, TE/GE Closing Agreements, Employee Plans Compliance Resolution System (EPCRS), dated November 8, 2019.

Audience

Tax Exempt and Government Entities
Employee Plans

Effective Date

(09-16-2020)

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

Program Scope and Objectives

  1. Purpose: This IRM describes the procedures Employee Plans (EP) Voluntary Compliance follows to process submissions plan sponsors make to the IRS under the Voluntary Correction Program (VCP), one of the correction programs in the Employee Plans Compliance Resolution System (EPCRS) as currently described in Rev. Proc. 2019-19, IRB 2019-19.

  2. Audience: EP employees in: EP Voluntary Compliance, Technical, Determinations, and Examination employees involved in processing VCP submissions.

  3. Policy Owner: Director, Employee Plans.

  4. Program Owner: Employee Plans.

  5. Program Goals: The goal of EP Voluntary Compliance is to provide taxpayers top quality service by helping them understand and comply with applicable tax laws, and to protect the public interest by applying the tax law with integrity and fairness to all.

  6. EP Voluntary Compliance focuses on encouraging taxpayers (administrators and employers) to:

    • comply with income tax laws

    • voluntarily identify and fix problems identified in administering tax-favored retirement plans

    • protect plan participants and American retirement savings and avoid plan disqualification

Background

  1. Certain retirement plans are qualified if they satisfy the requirements of the Internal Revenue Code (IRC) in form and operation. A qualified plan is entitled to favorable tax treatment.

  2. EPCRS is a system of correction programs that encourages sponsors of retirement plans to voluntarily correct failures to comply with applicable requirements of the IRC. These programs allow certain tax favored retirement plans to maintain their qualified status.

  3. Types of plans covered by EPCRS include:

    • Qualified plans intended to comply with IRC 401(a) or 403(a).

    • Tax deferred annuities or custodial accounts intended to comply with IRC 403(b).

    • Simplified Employee Pension (SEP) - A plan intended to satisfy IRC 408(k).

    • Salary Reduction Simplified Employee Pension (SARSEP)- A salary reduction SEP described in IRC 408(k)(6).

    • Savings Incentive Match Plan for Employees Individual Retirement Account (SIMPLE IRA) plan - A plan intended to satisfy IRC 408(p).

      Note:

      In limited situations, IRS at its discretion, accepts voluntary requests for eligible plans of deferred compensation that comply with IRC 457(b).

  4. Correction programs under EPCRS include the Self-Correction Program (SCP), the Voluntary Correction Program (VCP), and the Audit Closing Agreement Program (Audit CAP):

    • SCP doesn’t involve the IRS and plan sponsors use it to fix certain failures when the plan’s operation hasn’t been consistent with its terms or the IRC. Plan sponsors don’t have to file an application with the IRS. Beginning April 19, 2019, some plan document failures can be corrected under SCP.

    • VCP requires plan sponsors to submit a written application to the IRS.

    • Audit CAP is used to resolve certain failures discovered while the IRS is auditing a plan or reviewing a Form 5300 series determination letter application.

  5. To help taxpayers ensure that they are taking appropriate actions to fix qualification failures, EP Voluntary Compliance processes VCP submissions and issues compliance statements. In audits of employee plans, EPCRS permits EP to enter into closing agreements with plan sponsors to resolve tax qualification failures, avoiding plan disqualification.

  6. If the plan’s facts and circumstances satisfy a correction program’s eligibility requirements and the plan sponsor/employer corrects the failure per the EPCRS correction principles, the IRS won’t revoke the plan’s tax-favored status with the resulting income inclusion for affected participants, or liability for income tax withholding due to the failure.

Authority

  1. EPCRS’s various correction programs, their requirements, detailed correction principles and other information/instructions are described in a revenue procedure effective April 19, 2019 (Rev. Proc. 2019-19, IRB 2019-19). Before April 19, 2019, look to Rev. Proc. 2018-52, IRB 2018-42 and Rev. Proc. 2016-51, IRB 2016-42.

  2. VCP administration is delegated to the manager, EP Voluntary Compliance, and the authority to approve compliance statements under VCP is delegated to EP voluntary compliance group managers. See Delegation Order 7-12 and IRM 1.2.2.8.12.

  3. The authority to enter into and approve a written closing agreement with any person relating to their federal tax liability is delegated to the Director, Employee Plans. See Delegation Order 8-3 and IRM 1.2.2.9.3.

  4. Starting in 2016, the IRS determined that the Revenue Act of 1987, P. L. 100-203, Act Section 10511, requires plan sponsors to pay user fees to obtain a compliance statement. Before then, VCP fees were considered "compliance fees" and were listed in the applicable EPCRS revenue procedure.

  5. User fees for VCP submissions, for a given calendar year, are published annually. Currently, see Rev. Proc. 2020-4, IRB 2020-1.

Responsibilities

  1. The Manager of EP VC supervises and is responsible for the group managers and employees in EP Voluntary Compliance.

  2. The group managers of the EP VC groups supervise and are responsible for the employees in EP Voluntary Compliance.

  3. EP Voluntary Compliance employees work on issues assigned to them by the VC group managers. This primarily includes reviewing and processing VCP submissions, including any related closing agreements and voluntary closing agreement requests submitted outside of EPCRS.

  4. The Manager, EP Determinations Quality Assurance (QA), with a staff of senior determination specialists, independently oversees the review of closed VCP submissions and ensures case quality.

    Note:

    QA reviews VC cases selected for Tax Exempt Quality Measurement System (TEQMS) review.

Acronyms, Terms and Definitions

  1. This table lists commonly used acronyms and their definitions.

    Acronym/Term Definition
    Campus Covington Service Center
    CCR Form 5464, Case Chronology Record, or the Chronology Tab in RCCMS
    EP The Employee Plans Division.
    EPDFR EP Determinations Fraud Reviewer
    EP SME EP Fraud Subject Matter Expert
    EPCRS The Employee Plans Compliance Resolution System
    ERIM A component of TRAC, the Employee Plans Resolution System Research and Inventory Management
    FAST Field Agent Support Team
    FTA Fraud Technical Advisor
    HQEP Headquarters Employee Plans system
    IDRS Integrated Data Retrieval System
    IRC Internal Revenue Code
    IRS Internal Revenue Service
    POA Power of Attorney. For purposes of this IRM, a designated individual who represents the VCP applicant before the IRS. Documented by a signed and completed Form 2848
    QA Manager, EP Determinations Quality Assurance
    RCCMS Reporting Compliance Case Management System
    Specialist Any Internal Revenue Agent or Tax Law Specialist in VC or EP who processes VCP cases or voluntary closing agreement requests
    TE/GE. Office of the Commissioner, Tax Exempt and Government Entities Division
    TEQMS Tax Exempt Quality Measurement System
    TP Taxpayer
    TRAC TE/GE Rulings and Agreements Control System
    VC The Employee Plans Voluntary Compliance Function
    VCAP Voluntary Closing Agreement Request Procedure
    VCP The Employee Plans Voluntary Correction Program

Types of Failures

  1. Failures eligible for EPCRS correction are defined in Rev. Proc. 2019-19, IRB 2019-19, Section 5 and Section 6.07.

    Note:

    For periods before April 19, 2019, refer to Revenue Procedure 2018-52 and Revenue Procedure 2016-51.

  2. For plans intended to satisfy IRC 401(a) or IRC 403(a), there are four types of Qualification Failures:

    1. Plan Document Failure — a plan provision (or absence of a plan provision) that, on its face, violates the requirements of IRC 401(a) or IRC 403(a).

    2. Operational Failure — a failure that arises solely from the failure to follow plan provisions.

    3. Demographic Failure — a failure to satisfy the requirements of IRC 401(a)(4), IRC 401(a)(26) or IRC 410(b).

    4. Employer Eligibility Failure — an employer that fails to meet the employer eligibility requirements to establish an IRC 401(k) plan or that adopted a plan intended to include a qualified cash or deferred arrangement. This includes tax-exempt employers who were prohibited from adopting a IRC 401(k) plan between 1987 and 1986, and governmental employers who adopted an IRC 401(k) plan after May 6, 1986.

  3. Specific types of failures that can be corrected under EPCRS follow in paragraphs IRM 7.2.2.2 (4) through IRM 7.2.2.2 (9).

  4. A failure to satisfy IRC 408(k) SEP requirements or a failure to satisfy IRC 408(k)(6) SARSEP requirements.

  5. A failure to satisfy IRC 408(p) SIMPLE IRA plan requirements.

  6. A failure to satisfy IRC 72(p) participant loans requirements.

  7. Under limited circumstances and at the discretion of the IRS, a failure to satisfy IRC 457(b).

    Note:

    Requests involving IRC 457(b) are handled outside of EPCRS.

  8. These four types of IRC 403(b) failures can be fixed under EPCRS if they occurred in 2009 and later:

    1. Plan Document Failure — a plan provision (or the absence of a plan provision) that, on its face, violates the requirements of IRC 403(b). This includes the failure to adopt a written plan by December 31, 2009, that complied with the final IRC 403(b) Treasury regulations and the failure to amend the plan for any other new requirement that was not adopted within the plan's applicable remedial amendment period.

    2. Operational Failure — a failure that arises solely from the failure to follow plan provisions. This includes failing to follow plan terms for availability of elective deferral contributions as discussed in IRC 403(b)(12)(A)(ii) and IRC 401(m) as applied to IRC 403(b) plans. See IRC 403(b)(12)(A)(i).

    3. Demographic Failure — a failure to satisfy the requirements of IRC 401(a)(4), IRC 401(a)(26) or IRC 410(b) as applied to IRC 403(b) plans. See IRC 403(b)(12)(A)(i).

    4. Employer Eligibility Failure — an employer that is not a tax-exempt organization described in IRC 501(c)(3) or a public educational organization described in IRC 170(b)(1)(A)(ii) that adopted an IRC 403(b) plan where such employer is not eligible to sponsor such plan.

  9. For 403(b) failures before 2009. Issues that qualify as IRC 403(b) failures are limited to the three types of IRC 403(b) failures defined in Rev. Proc. 2008-50 CB 464, section 5.02:

    1. Operational Failure — means a 403(b) plan’s failure to:

      1. Satisfy the requirement for the availability of salary reduction contributions. See IRC 403(b)(12)(A)(ii).

      2. Satisfy the requirements of IRC 401(m) as applied to 403(b) plans.

      3. Limit participant compensation as required by IRC 401(a)(17) as applied to 403(b) plans. See IRC 403(b)(12)(A)(i).

      4. Satisfy the distribution restrictions of IRC 403(b)(7) or IRC 403(b)(11).

      5. Satisfy the incidental death benefit rules of IRC 403(b)(10).

      6. Pay minimum required distributions required by IRC 403(b)(10).

      7. Give employees the right to elect a direct rollover per IRC 403(b)(10), including the failure to give meaningful notice of that right.

      8. Offer participants the right to elect a direct rollover required by IRC 403(b)(10) and IRC 401(a)(31) in the annuity contract or custodian agreement.

      9. Satisfy the limit on elective deferrals required by IRC 403(b)(1)(E).

      10. Limit elective deferrals as required by IRC 403(b)(1)(E) and IRC 401(a)(30) in the annuity contract or custodial agreement.

      11. Correctly contribute or allocate Excess Amounts.

      12. Satisfy the applicable requirements of IRC 403(b) that results in the loss of IRC 403(b) status for the plan, custodial account or annuity contract associated with the plan that is not a Demographic Failure or an Employer Eligibility Failure, or a failure related to contributions on behalf of individuals who are not employees of the employer.

    2. Demographic Failure — a failure to satisfy the requirements of IRC 401(a)(4), IRC 401(a)(26) or IRC 410(b) as applied to IRC 403(b). See IRC 403(b)(12)(A)(i).

    3. Employer Eligibility Failure — any of the following:

      1. An employer that is not a tax-exempt organization described in IRC 501(c)(3) or a public educational organization described in IRC 170(b)(1)(A)(ii) adopts an IRC 403(b) plan.

      2. A failure to:

        1. Satisfy the non-transferability requirement of IRC 401(g).

        2. Initially establish or maintain a custodial account as required by IRC 403(b)(7).

        3. Purchase (initially or subsequently) either an annuity contract from an insurance company (unless grandfathered by Rev. Rul. 82-102 or a custodial account from a regulated investment company using a bank or approved non-bank trustee/custodian.)

EPCRS Programs

  1. The Self Correction Program (SCP) enables sponsors of qualified plans, 403(b) plans, and SEPs and SIMPLE IRA plans to self-correct operational failures they discover in their plan.

    1. Sponsors of qualified plans that have a favorable letter or employers that offer a 403(b) plan, may self-correct any operational failure, even if significant, generally, within two years from the year in which the failure occurs as long as the SCP eligibility requirements are satisfied.

    2. SEPs and SIMPLE IRA plans aren’t eligible for self-correction of significant failures.

    3. Insignificant failures may be corrected after the two-year correction period, even if the plan or plan sponsor is under audit.

    4. Beginning on or after April 19, 2019, some plan document failures can be corrected under SCP if certain conditions are met.

  2. VCP enables sponsors of qualified plans, 403(b) plans, and SEPs and SIMPLE IRA plans to voluntarily disclose to the IRS failures they discovered in their plan, propose a method of correcting the failures (including proposed modifications to administrative procedures, if any) and pay a fixed user fee. The IRS issues a compliance statement for the plan. The compliance statement contains the information identified and provided by the plan sponsor, including the applicable failures, the correction methods, changes to administrative procedures and procedures to locate affected participants approved by the IRS.

  3. VCP:

    1. Isn’t available if the plan or plan sponsor is under an IRS audit.

    2. Can be used to fix any qualification failure defined in the EPCRS revenue procedure. It is the only voluntary program that permits a plan sponsor to fix Demographic Failures and Employer Eligibility Failures.

    3. Can be used to fix problems involving 403(b), SEP, SARSEP, and SIMPLE IRA plans.

    4. Has special procedures for Group submissions and Anonymous submissions.

      Note:

      For 2019, user fees for VCP submissions are in Rev. Proc. 2019-4, IRB 2019-1.

      Note:

      For 2020, user fees for VCP submissions are in Rev. Proc. 2020-4, IRB 2020-1.

      Note:

      For 2021, you can expect user fees for VCP submissions to be in Rev. Proc. 2021-4, IRB 2021-1.

  4. A plan sponsor may submit an application for a IRC 457(b) plan, on a provisional basis, outside of EPCRS, through standards similar to EPCRS. The IRS has the complete discretion to accept the submission. Rev. Proc. 2019-19, Section 4.09 discusses the availability of correction for IRC 457(b) plans. Same language is in Rev. Proc. 2018-52, IRB 2018-42 and Rev. Proc. 2016-51, IRB 2016-42.

  5. The Audit Closing Agreement Program (Audit CAP) is a program established in EP Examination Area offices available to a qualified plan, 403(b) plan, SEP or SIMPLE IRA plan that is under examination as defined in the EPCRS revenue procedure, section 5. EP Determinations also uses Audit CAP to resolve plan document failures discovered while reviewing determination letter applications. Under Audit CAP, the plan sponsor pays a negotiated monetary sanction. See Rev. Proc. 2019-19, Sections 4, 13, and 14 for information on Audit CAP.

Processing VCP Receipts and Initial Processing by the Campus or Pay.gov

  1. As of April 1, 2019, plan sponsors or their representatives must submit VCP applications electronically using the Pay.gov website. The initial steps include:

    1. Applicant/representative (POA) establishes an account on the Pay.gov website.

    2. Applicant/representative refers to the IRS Instructions for Form 8950, Application for Voluntary Correction Program (VCP) Submission Under the Employee Plans Compliance Resolution System on the IRS.gov website.

    3. Applicant/representative gathers attachments and documents required by Rev. Proc. 2019-19 (or Rev. Proc. 2018-52), section 11.04, converts them into PDF documents, and then combines them into a single file that doesn’t exceed 15 MB.

    4. Applicant/representatuve goes to Pay.gov and locates Form 8950 or they can type https://www.pay.gov/public/form/start/438392465 into their web browser.

    5. Applicant/representative completes the Form 8950 and uploads the PDF attachments containing the VCP submission documents.

    6. Applicant/representative pays the applicable user fee via a debit/credit card or through a transfer from a checking or saving account.

    7. Pay.gov generates a payment confirmation receipt upon the successful filing of the VCP submission with the pay.gov tracking ID number serving as the IRS control number for the VCP submission.

    8. Applicant/representative faxes any required VCP submission documents that they couldn’t include in the PDF due to the 15 MB size limitation to the IRS using the number published in Rev. Proc. 2019-19 or Rev. Proc. 2018-52, section 11.03(7).

    9. Pay.gov website automatically transfers Form 8950 data the next business day to RCCMS.

    10. RCCMS automatically creates a partially completed RCCMS activity record. It’s in Status 02 and automatically assigned to the FAST Unit’s RCCMS group number.

  2. The FAST unit in Ogden:

    1. Updates the RCCMS activity by completing the "Statute" date field by entering a date that is two years from the date in the "Return received" field.

    2. Researches IDRS using the EIN listed on Form 8950. IDRS commands include INOLES, AMDISA using the EIN, the EIN with a "P" and the EIN with a "N" .

    3. Uploads the IDRS research to the "Office Documents" folder within the applicable RCCMS activity record.

    4. Downloads for each electronic submission made via the Pay.gov website: the completed Form 8950, the PDF attachment of VCP submission documents, the general & detailed deposit records from the Pay.gov website and uploads all items to the Office Documents folder within the applicable RCCMS activity record.

    5. Updates the RCCMS status code to 08 and transfers the completed RCCMS record to the Manager of EP Voluntary Compliance.

      Note:

      The IRS no longer issues any sort of acknowledgement letter.

Early Closing for Certain VCP Submissions

  1. Specialists or group managers close VCP cases on RCCMS. If you:

    1. determine that the plan or plan sponsor is "under examination" before the VCP submission was mailed to the IRS, prepare Closing Letter 5340 and Letter 5354, if applicable. Upload them to the RCCMS office documents folder.

    2. have a duplicate record or submission, see IRM 7.2.2.3.3, Procedures for Correction Disposal of VCP Cases on RCCMS, for additional information.

      Note:

      Don’t prepare a closing letter when closing duplicate records or submissions.

  2. Don’t return the VCP Submission to the applicant/representative.

  3. Use the following closing code information for the RCCMS closing record if you close a VCP submission due to their being under examination:

    • Disposal Code 772.

    • Primary Issue Code 197C.

    • Add plan assets and # of participants from Form 8950.

    • Add Time charged to case and Specialist’s name.

    • Add any other information required for closing VCP cases on RCCMS.

Procedures To Fix Errors Or Make Updates to Key RCCMS Fields

  1. Specialists and group managers can’t make changes to certain RCCMS fields:

    • TIN/EIN

    • Work Unit

    • Plan Number

    • Tax Period

    • Taxpayer or Plan Sponsor name

  2. Changes to the above RCCMS fields must be made when:

    1. Specialist or group manager discovers the RCCMS record has incorrect TIN/EIN, Work Unit, Plan number, Tax period and Taxpayer or plan sponsor name.

    2. Anonymous submissions in which the representative discloses the identity of the applicant and plan.

  3. After discussing with their group manager, specialists correct or update the key RCCMS fields in the steps below:

    Actions Steps, if necessary
    (a) Update RCCMS case record
    1. Open the activity record and go the "Codes/Checksheet Tab."

    2. Go to "Source Code" and click on the drop down menu:

      • Choose code "73-Taxpayer Requests."

      • Click on "Save and close" button.

    3. Make sure there is an entry for NAICS field. Don’t let it be blank.

    (b) Transfer RCCMS case to your group manager.
    1. Click on Actions button and:

      • Choose "Request Transfer"

      • Type “Transfer to Group 7558”. when dialog box appears and click on OK button.

      • Send the transfer request by syncing a few times after making the request by clicking on the "Send/Receive" button.

    (c) Send email to group manager Make sure the email:
    1. Informs them of the transfer and why it’s necessary.

    2. Lists the specific fields that require updating, changes needed, and indicate that the case must be transferred to Group 7558.

    3. Includes existing work unit number and taxpayer name currently on RCCMS.

  4. Group Manager:

    1. Check RCCMS case to make sure that “73-Taxpayer Requests” has been entered in the Source code field. Update the record if missing.

    2. Check RCCMS case to make sure that the NAICS field is not blank. Update the record if missing.

    3. Transfer the RCCMS case to Group 7558. Status code remains in 12.

    4. Send email to designated VC program assistant describing what needs to be revised.

  5. Designated VC program assistant profiled for Group 7558:

    1. Update the RCCMS record by making requested changes to the TIN/EIN, Work Unit, Plan number, Tax period and Taxpayer or plan sponsor name as requested using the command code “Unestablish”.

    2. Transfers the updated RCCMS case back to the group that sent the request.

    3. Contact the group manager to confirm that the case has been successfully returned.

  6. Group manager transfers the case back to the specialist working the case and confirms they successfully received it.

  7. Specialist verifies that requested changes were made. If there are problems, the specialist contacts their group manager immediately.

Procedures for Correction Disposal of VCP Cases on RCCMS

  1. Specialists must close a VCP submission case via correction disposal if the following reasons apply:

    1. The assigned RCCMS record is limited to supplemental payment information.

    2. The RCCMS record is a duplicate record.

  2. Specialists close the VCP submission following the steps below:

    Specialist’s Actions Steps, if necessary
    (a) Research HQEP, ERIM, RCCMS, Pay.gov and any other applicable records about this case. 1. Inform your group manager, or any VC program coordinator.
    2. Contact the staff assistant and program assistant to the VC manager and the manager of VC to research both open and closed cases in RCCMS.
    (b) Send email to group manager or VC program coordinator. 1. Include VCP submission case numbers or Work Unit numbers, the plan name, and the reason why this specific file needs to be correction disposed.
    2. Group manager (and VC program coordinator, if applicable) must agree that the VCP submission needs to be correction disposed.
    3. Document all actions on the CCR and make sure you upload your CCR, workpapers, emails and ERIM/HQEP printouts, etc. to the appropriate RCCMS file.
    (c) Close RCCMS record as a correction disposal. 1. Update case status to 51 and then submit an "Update" request to your group manager for approval. Don’t forget to sync a few times after making the request by clicking on the "Send/Receive" button.
    2. Once the request is approved:
    • Open the Activity and prepare it for closing.

    • Prepare "Case Closing Record."

    • Use 776- Correction Disposal- Record never should have existed.

    • If not known, for Trust Assets, and # of affected participants enter "1.00."

    • For Principle Issue Code enter "196A" .


    3. Make sure the CCR or Chronology tab and applicable workpapers are complete and part of the RCCMS record.

    Note:

    We don’t prepare closing letters for correction disposal cases.


    4. Document all actions on the CCR and make sure to upload your CCR, workpapers, all applicable emails and ERIM/HQEP/pay.gov or RCCMS printouts to the RCCMS record.
    5. Submit a Request Case Closure request. Don’t forget to sync a few times by clicking on the Send/Receive button.

Screening of VCP Cases

  1. The Manager of VC supports assessing VCP cases before assignment. Screening:

    1. Is part of a process.

    2. Is done by designated employees assigned at the Manager of VC’s discretion, who are responsible for screening cases following specific standards.

  2. To promote case processing efficiencies, screening:

    1. Identifies cases that can be immediately closed as a "Merit Closure" or are ineligible for VCP.

    2. Promptly identifies VCP submissions subject to expedited treatment. See IRM 7.2.2.4 (3) for those subject to expedited treatment.

    3. Assigns VCP cases a grade per IRM 7.11.2, Employee Plans Determinations Letter Program, EP Case Assignment Guide.

    4. Updates the Project Code. Beginning on 10/1/2019, two new project codes were added and "0999" shouldn’t be used for most cases. Select the project code that represent the type of retirement plan reported on Form 8950, item 5. Current project codes for VC cases are listed in Document 6476 and in IRM 7.2.2.6(4).

      Note:

      The two new project codes for FY20 pertain to VCP or voluntary closing agreement cases that involve IRAs or group submissions that cover multiple plan types.

    5. Ensure that RCCMS activity records are updated to effectively manage case inventory.

  3. Types of VCP submissions subject to expedited treatment include:

    1. Terminating plans, including orphan plan cases and VCP cases that have a related Form 5310 determination letter application.

    2. Governmental plans.

    3. Plans with participant loan issues involving a failure to comply with IRC 72(p) often submitted on Form 14568-E.

  4. A case is not considered "screened" unless the screener:

    1. Grades the VCP case using the grading criteria in IRM 7.11.2, Employee Plans Determinations Letter Program, EP Case Assignment Guide and inputs the grade into the "Activity grade" field in the RCCMS grade.

    2. Screens the VCP case, completes a screening checklist, and uploads it to RCCMS.

    3. Notifies the Manager of EP Voluntary Compliance as to whether the screened cases can be merit closed or must be subject to full review.

    4. Updates the project code so that the RCCMS record reflects the appropriate code based on play type, including the two new project codes that became effective as of 10/1/2019. See Document 6476 and IRM 7.2.2.6(4) for current project codes for VC cases.

    5. Updates RCCMS to identify cases that have been screened.

  5. Overall screening timeframes: Generally -

    1. Manager of VC assigns cases to screeners within 5 days of receiving VCP cases from the FAST unit.

    2. Specialists or program coordinators who receive screening cases screen them and return them to the Manager of VC within 10 days of assignment.

    3. Specialists assigned to close designated merit closure cases within 5 days of assignment.

Screening VCP Cases in RCCMS

  1. The Manager of VC transfers newly arrived VCP cases within five days to designated specialists profiled to work with RCCMS group 7550. Cases arrive as unassigned inventory in Status 08.

  2. The Manager of VC informs the designated employees when cases have been assigned to them for screening.

  3. Specialists screening VCP cases take all of the following actions within 10 days of case assignment:

    Specialist’s Actions Steps, if necessary
    (a) Access Group 7550 in RCCMS 1. Choose Group 7550 from your RCCMS profile.
    2. Click on the Send/Receive button to sync and update your screening inventory.
    (b) Review Case File. 1. Review case file, IDRS research and determine case grade using the criteria in IRM 7.11.2, Employee Plans Determinations Letter Program, EP Case Assignment Guide.

    2. Complete screening checklist:
    • Identify whether the case is eligible for merit closing or must be assigned for a full review, or must be rejected.

    • Request missing minor administrative items if the case can be closed upon receipt. Follow the procedures in IRM 7.2.2.14, Contacting and Corresponding with Applicant and POA representative. The case is still eligible for Merit Closing.

    • Make sure to save all changes and Check-In these documents back into RCCMS.

    3. Take these actions if case is to be closed on merit:
    1. Go to Office Documents.
    2. Click on File, choose Folder and then choose New folder.
    3. Name the subfolder "Closing Documents"
    4. Create the issued compliance statement from extracted documents and add the image of Manager of VC’s printed name and signature.
    5. Upload document to RCCMS and transfer it to the closing documents subfolder.
    (c) Update the RCCMS Record to show that the case has been screened. 1. Open the Activity associated with the screened case in order to Update it:
    • Make sure information on the General tab is complete and accurate.

    • "Plan type" field must be completed

    • "Return received" field must be completed.

    • "Statute" must be completed with a date that is two years from the date in the "Return received" field.

    • Check the box next to "Primary" if the case is subject to expedited processing.


    2. Update Codes/Checksheets Tab:
    • Update VC project code to reflect new codes as reflected in Document 6476.

    • Update "Status" code to "10" .

    • Enter the case grade into the "Activity case grade" field.

    • Enter a Source code. Use "20-Regular-Classification" if the case is to be merit closed or use "61-Determinations" if the case is a full review.



    3. Click on File and choose Save and Close.
    4. Request Update:
    • Go to Actions button and choose Request update.

    • Click on OK until the request is processed.

    • Don’t forget to sync a few times to send the request by clicking on the Send/Receive button.

    • Don’t take any subsequent actions until the Manager of VC approves the update request.

    (d) Notify the Manager of VC. 1. Make sure the screening checklist is complete and part of the RCCMS record.
    2. Email the Manager of VC indicating that the assigned cases have been screened.

  4. Within five days, the Manager of VC removes the screened cases from the specialist’s inventory and takes the following additional actions:

    1. Transfer status 10 cases that can’t be closed on merit to unassigned inventory.

    2. Assigns screened cases identified for merit closing to designated specialists profiled to work with RCCMS group 7550 and informs them cases assigned for closing. Cases arrive as assigned inventory, but the case status remains in 10.

  5. Within five days of assignment, the specialist takes all of the following actions to close identified merit closure cases:

    Specialist’s Actions Steps, if necessary
    (a) Access Group 7550 in RCCMS 1. Choose Group 7550 from your RCCMS profile.
    2. Click on the Send/Receive button to sync and update your inventory.
    (b) If not already done, Create “Closing Documents” subfolder 1. Go to Office Documents.
    2. Click on File, choose Folder and then choose New folder.
    3. Name the subfolder "Closing Documents" .
    (c) Create and upload closing documents 1. Prepare VCP closing letters
    2. From the PDF file that contains the initial VCP submission documents:
    • If not already done, Extract or copy Form 14568, and the narrative attachments, if applicable, or the included Form 14568 Schedule if present.

    • Upload them to the Closing Documents subfolder.


    3. Make sure to:
    • Add the mailing date, printed name and signature of the Manager of VC to the closing letters.

    • If missing, add the image of the Manager of VC printed name and signature to the compliance statement.

    • Add the mailing date to the compliance statement.


    4. Print and mail the documents to the applicant and representative, if applicable. 5. Upload a copy of the mailed documents to the RCCMS file and place them in the Closing Documents subfolder.
    (d) Update RCCMS Before Closing 1. Open the Activity to Update:
    • Codes/Checksheets Tab

    • Change Status code to 51.


    2. Request update:
    • Go to Actions button and choose Request update.

    • Click on OK until the request is processed.

    • Don’t forget to sync a few times to send the request to the Manager of VC by clicking on the Send/Receivebutton.

    • Do not take further action until the Manager of VC approves the update request.

    (e) Close the Merit Close Case on RCCMS 1. Complete RCCMS Closing Record
    • Use Disposal Code 771 for Merit Closings. Do not use code 770.

    • Complete the other items following normal RCCMS closing procedures for VCP cases.


    2. Close the case:
    • Go to Actions button and choose Request Closure.

    • Click on OK until the request is processed.

    • Don’t forget to sync a few times to send the request to the Manager of VC by clicking on the Send/Receive button.

    (f) Notify the Manager of VC. 1. Email the Manager of VC indicating that the assigned cases have been closed out and a RCCMS closing request has been submitted.

  6. The Manager of VC promptly does a final close of the RCCMS record by updating the case status to 90.

General VCP Case Assignment Procedures for Group Managers

  1. If specialists in a VC Group need additional work, the group manager:

    1. Contacts the Manager of VC for cases, who transfers cases to the group manager.

    2. Checks if the Primary field has a Yes indicator to prioritize unassigned cases designated for expedited processing.

    3. Assigns VCP cases via RCCMS by changing the status to 12.

Specialist’s Actions Upon Receipt of Newly Assigned VCP Cases

  1. Check RCCMS: Regularly sync by clicking on the Send/Receive button to see if new cases have been assigned to you. Contact your manager if you’re concerned about the new cases in your RCCMS inventory.

  2. WebETS: Generally, you must record newly assigned full review (i.e. status 12) VCP cases on WebETS within seven days of receipt.

    1. You may use "operational time" because it captures more information such as the plan number and distinguishes VCP cases on WebETS.

    2. Your manager may prefer you use the "Voluntary Compliance" category.

    3. Don’t ever use "other operational time" category. Use "EP Determ Case" as the case type.

    4. Don’t record individual RCCMS cases assigned for screening on WebETS. Use Activity Code 115 and project code 0999.

  3. Find current WebETS activity and project codes for VCP cases in the Document 6476, Information Systems Code. The Project Code is generally based upon the type of plan as reported on Form 8950, Item 5. The common VC Activity Codes are as follows:

    Activity Code Description
    113 Use for VCP submissions that don’t require a closing agreement: regular VCP, VCP Anonymous, VCP Group and VCP Group Submission Anonymous.
    115 Use for time applied to screening VCP submissions for eligibility/completeness and to identify cases that can be closed on merit.
    118 Use for time applied to voluntary closing agreement requests involving 457(b) plans made under the EPCRS revenue procedure, including anonymous submissions, and any VCP Cases Changed into a VCAP closing agreement request case.
    119 Use for time applied to voluntary requests for Delegation Order 8-3 closing agreements arising from issues/corrections that are outside of the EPCRS revenue procedure. This includes Anonymous requests and Group Submission requests.

    Note:

    You may use project code 0999 if charging time to activity codes 101, 111, 115, and 116 and occasionally, for cases using activity code 119.

  4. Project Codes for VC cases are as follows:

    Project Code Description
    6700 Profit Sharing-Not 401(k)
    6701 401(k)
    6702 Stock Bonus
    6703 Money Purchase
    6704 Target Benefit
    6705 Defined Benefit (Not cash balance or statutory hybrid)
    6706 Cash Balance or other statutory hybrid
    6707 ESOP
    6708 KSOP
    6709 403(b)
    6710 457(b)
    6711 Government 414(d) defined benefit
    6712 Government 414(d) defined contribution
    6713 SEP
    6714 SARSEP
    6715 SIMPLE IRA
    6716 Group Submission defined contribution
    6717 Group Submission defined benefit
    6718 Other
    6719 IRAs
    6720 Group Submission-Multiple Types of Plans

  5. Generally, record time already charged by another specialist, as "Transfer Time" when establishing the case on WebETS.

    Note:

    Don’t record time spent on screening as "Transfer Time" on WebETS. Time recorded on WebETS is limited to your actual time to process the assigned VCP submission.

  6. Create a CCR and if necessary, upload it to the RCCMS record for each assigned case to document case activity and time charged.

  7. Inspect the VCP submission to verify that the case was properly graded before you contact the VCP applicant or their plan representative. Find the case grading criteria in IRM 7.11.2, Employee Plans Determinations Letter Program, EP Case Assignment Guide.

    1. Contact your manager if it appears the case grade is incorrect. Document your discussion and what was agreed upon on the CCR.

    2. If the case grade is incorrect, your manager may decide to transfer the case to another specialist.

  8. Review the VCP submission to determine if the case requires expedited treatment. You may find Indications of expedite treatment in the case file itself, on the completed VCP Screening Checklist, if the box next to "Primary" is checked in the RCCMS Activity record, or if the Primary column shows a "yes" in the RCCMS inventory case listing view.

  9. Determine your work priority for newly received cases. Work cases in the following order of priority:

    1. Cases subject to expedited treatment. See IRM 7.2.2.4 (3).

    2. All other cases (oldest to newest based upon return received date).

Required Use of Form 5464 (or RCCMS Chronology Tab) And WebETS

  1. Specialists record their time on an assigned VCP case on either Form 5464 or the RCCMS Chronology Tab using these procedures:

    1. Use Form 5464, CCR or the RCCMS Chronology Tab to document all actions taken, persons contacted, time charged and planned follow-up date. See the interactive PDF version of the CCR for VCP submissions on the VC SharePoint site.

    2. Update the CCR/Chronology Tab each time a contact or activity has occurred. Adhere to follow-up dates to ensure good case management.

    3. Document and explain periods of inactivity or gaps in time that exceed 30 days in the CCR/Chronology Tab, including gaps due to leave, training, or any other reason.

    4. Ensure time charged on the CCR/Chronology Tab matches your WebETS hours for the case.

  2. Record time on WebETS:

    1. List each full review case in your RCCMS inventory. Include assigned cases with no time charged.

    2. Don’t list cases assigned for Screening separately.

    3. Record your time as you apply it.

    4. Make sure time charged on WebETS matches the hours you entered onto the CCR/Chronology Tab.

Check and Update RCCMS Activity Record

  1. For status 12 cases, open the Activity record for each case and check certain data fields for completeness and accuracy:

    RCCMS Tab and Field Steps, if necessary
    (a) TIN
    1. Check Form 8950 and IDRS research to see if the EIN is accurate and associated with the applicant.

    2. It may be blank if the case is anonymous or applicant tried to use a SSN.

    (b) Name Check Form 8950 and VCP submission documents to see if the entry is accurate.
    (c) Address Add the applicant’s address by clicking on the Address button.
    (d) General (1 of 2)- Type Check VCP submission to see if the RCCMS type is accurate. New submission types were added 10/1/2019. See Document 6476 for FY20.
    (e) General (1 of 2)- Work Unit Compare the control number on the HQEP printout or the Pay.gov Deposit Ticket PDFs to see if the RCCMS Work Unit is accurate.
    (f) General (1 of 2)- NAICS
    1. Add NAICS if blank.

    2. Look on Form 8950, item 1(l).

    3. Secure number if blank.

    (g) General (1 of 2)- Plan type Check Form 8950 to see if the plan type is accurate. This can’t be blank.
    (h) General (1 of 2)- Plan number Check Form 8950 to see if the plan number is accurate. For RCCMS, use 990 as the plan number for SEP or SARSEP plans if one is not listed. For anonymous submissions, the applicant should be using a number beginning with 401. For group submissions, the applicant should be using a number that begins with 901.
    (i) General (1 of 2)- Plan name Check Form 8950 and VCP submission documents to see if the entry is accurate.
    (j) General (1 of 2)- Return received Check postmark date and verify. Can’t be blank.
    (k) General (1 of 2)- Statute Check and verify that entered date is 2 years from the Return Received date. Can’t be blank.
    (l) General (1 of 2)- Primary Check this box if the VCP case is subject to expedited processing per IRM 7.2.2.4 (3)
    (m) Codes/Checksheets- Name control Check and verify. Must be the 1st four letters of the applicant’s name. Can’t be blank.
    (n) Codes/Checksheets- Project code Update Project code, if it’s not accurate. Code 0999 is no longer valid for most cases.
    (o) Codes/Checksheets- Status code
    1. Check and verify. Full review cases should be in Status 12 when you get them from your manager.

    2. If the status code is something different discuss with your manager before updating. Document this discussion on the CCR or in your workpapers.

    (p) Codes/Checksheets- Activity grade Enter a case grade if blank or review grade for correctness. See IRM 7.11.2, Employee Plans Determinations Letter Program, EP Case Assignment Guide, for VC case grading criteria.
    (q) POA and Misc
    1. Record fee information into the grid by indicating the type of fee, amount and date. For Pay.gov cases, this information should already be entered.

    2. If there are indications of a dishonored payment, record the information into the grid.

    3. Record subsequent collected fees (or sanctions) and list any requested refunds.

    4. Fee types for FY19 and later include: VCP User Fee-Form 8950, VCP User Fee-Form 8951, VC Sanction Payment, VCP refund, Dishonored Pmt, Refund requested, Refund issued, and manual PayGov Pmt

    5. See Step by Step instructions on how to complete the grid in email dated January 31, 2018, from the Manager of VC. View the email via the link in this IRM’s Exhibit 7.2.2-1

  2. We can’t update TIN/EIN, Taxpayer name, Work Unit and Plan number entry errors. Instead, transfer the RCCMS case to Group 7558 as instructed in IRM 7.2.2.3.3, Procedures To Fix Errors or Make Updates to Key RCCMS Fields.

  3. Be sure validate for Update has been selected and that all changes have been saved.

  4. Check to see if any of your updates require your manager’s approval.

    1. Look for any pending actions. If yes, click on the "Actions" button and choose "Request update."

    2. Changes to Statute, Project code, Status code and Activity grade fields require manager approval.

VCP Submissions - Initial Review

  1. Specialists must verify whether the VCP submissions assigned to them are complete and accurate. This requirement applies even though a VCP submission may have been screened.

  2. All paper VCP submissions sent to the IRS January 1, 2017 through March 31, 2019, must conform to Rev. Proc. 2016-51, IRB 2016-42.

    Reminder:

    Beginning January 1, 2019, plan sponsors could electronically submit VCP submissions to the IRS via the Pay.gov website. As of April 1, 2019, they can no longer send paper VCP submissions. See Rev. Proc. 2018-52, IRB 2018-42.

  3. Prepare written workpapers that document the issues in the submission, your analysis and any conclusions reached. Do not use CCR as the case file’s workpaper.

  4. Review the cover letter(s) and narrative attachments. Note any unusual representations, conflicting items, etc.

  5. Discuss with your manager if anything in the VCP case file suggests that the plan or plan sponsor is "Under Examination" as defined in the applicable EPCRS revenue procedure or any other issues that you’ve discovered based on your review. Document this discussion on the CCR or in your workpapers.

  6. Verify the applicant paid the correct VCP fee:

    Specialist’s Actions Steps, if necessary
    (a) Determine what fee the applicant paid. Review:
    1. HQEP printout.

    2. Form 8951, User Fee for Application for Voluntary Correction Program (VCP).

    3. Copy of included user fee check.

    4. Review the PDF Deposit Tickets if the submission made under Pay.gov.

    (b) Verify if the submitted fee is correct.
    1. For submissions made in 2018: Review Rev. Proc. 2018-4, IRB 2018-1.

    2. For submissions made in 2019: Review Rev. Proc. 2019-4, IRB 2019-1.

    3. For submissions made in 2020: Review Rev. Proc. 2020-4, IRB 2020-4.

    (c) For submissions made via the Pay.gov website, verify that the submitted payment went though and was deposited.
    1. Review the Pay.gov PDF Deposit Tickets. Look at the collection status. "Settled or Successful" means the payment went through and was deposited.

    2. "Retired" as a collection status is not good. It means the payment was rejected by the payor’s bank and did not go through.

  7. If you discover some potential fee issues, document the issue in the CCR or workpaper. Refer to:

    • IRM 7.2.2.10, Procedures for User Fee Issues.

    • IRM 7.2.2.10.1, Instructions on Soliciting User Fees Owed, for instructions on soliciting additional user fee.

    • IRM 7.2.2.10.2, Refund Procedures and Instructions for VCP User Fees, for instructions on the processing of VCP Refunds of paid user fees.

    • IRM 7.2.2.10.3, User Fee Waiver Requests Involving Terminating Orphan Plans, for procedures for requested fee waivers for terminated orphan plans.

  8. Verify that the user fee was not paid with plan assets:

    1. Review the cover letter or narrative in the VCP case file to determine if there is an indication that the user fee was paid by the plan.

    2. Review the HQEP printout and copy of user fee check to see if the plan is the payor of the user fee. If the copy of the check is missing, secure a copy of the user fee check from the VCP applicant.

      Note:

      For Pay.gov submissions, review the detailed Pay.gov Deposit Ticket PDF to see if there are indications that the plan paid the user fee.

    3. If there are indications that the plan paid the user fee, discuss with your manager. If the fee was paid by the plan, ensure that the plan sponsor (or some other party) immediately reimburses the plan for the VCP user fees with interest. We can’t further process the VCP submission until the plan has been reimbursed. Document the discussion and resolution in the CCR and applicable workpapers.

  9. Review Forms 2848, Power of Attorney and Declaration of Representative and/or Form 8821, Tax Information Authorization to verify that they are correctly completed before contacting or sending out any correspondence to the specified individuals. For additional procedures, refer to IRM 7.2.2.12, Power of Attorney Form 2848 and Form 8821.

  10. Review the case file to determine if the plan or plan sponsor was "under examination" as defined in the applicable EPCRS revenue procedure. Specifically:

    1. Check for any IDRS printouts in the case file for any indication of IRS examination activity or problems with the EIN listed on the VCP submission documents. Exam activity will show up on IDRS printouts if some sort of record exists. To better understand IDRS printouts, view Reviewing IDRS Reports in VC Cases (VRJ859953) in Saba.

    2. Review any cover letters or attachments to determine if it mentions any IRS examination activity.

    3. Review Form 8950, Application for Voluntary Correction Program (VCP) Submission under the Employee Plans Compliance Resolution System (EPCRS), Line 10. A "Yes" response means that the plan is ineligible for VCP. If there’s no entry, it may indicate exam activity. Secure a replacement page with this question answered.

    4. Review the Form 8950 question about abusive tax avoidance transactions (ATAT). If there’s no entry, it may indicate exam activity. Secure a replacement page with this question answered. If applicable, secure and review submitted attachments from the applicant.

    5. If there’s evidence that the plan or plan sponsor may be "under examination," determine whether the examination began before or after the VCP submission’s postmark date.

    6. If you determined that the plan or plan sponsor was "under examination" at the time the VCP submission was made:

      1. Discuss with your group manager immediately. Document this discussion in the CCR or in your workpapers

      2. Close the VCP case as ineligible per IRM 7.2.2.3.1, Early Closing For Certain VCP Submissions

      3. Use Letter 5341

      4. Issue a full refund of the user fee to the payor. See IRM 7.2.2.10.2, Refund Procedures and Instructions for VCP User Fees.

  11. Review the case file to see if the required ATAT statement is enclosed:

    If Then
    Form 8950, Line 8 is blank, it may indicate ATAT activity. Secure a replacement page that answers this question.
    The ATAT statement is missing. Form 8950, Line 8 is checked "Yes." Secure a written statement signed by the applicant or their representative.
    The VCP applicant indicated the plan or plan sponsor was involved in some sort of ATAT. Review the required ATAT explanation.
    If it’s missing, secure the missing explanation.
    The case file indicates an ATAT. Contact your manager as you may need to coordinate with appropriate IRS employees. See Rev. Proc. 2016-51, section 4. Also, look to Rev. Proc. 2018-52 and Rev. Proc. 2019-19 for latest information.

  12. Check whether a signed Form 8950 is part of the case file if it’s a paper submission. If missing, secure; a faxed form is acceptable.

  13. Verify that the Form 8950 is:

    • signed by an authorized person. See Form 8950instructions, "Who Must Sign," for additional information.

    • complete and the applicant included all required attachments.

      Note:

      For submissions made via the Pay.gov website, there is no pen and ink signature. However, the applicant or a properly authorized representative must sign the form by typing their name and title when completing the form.

  14. Inspect the VCP case file to determine if applicant submitted all required plan documents, plan amendments and sample computations. Refer to Rev. Proc. 2016-51, section 11. For submissions made on or after January 1, 2019, look to Rev. Proc. 2018-52 and Rev. Proc. 2019-19, section 11.03. This includes the following:

    • Specific enclosure items listed on Form 14568-A Forms 14568-A through 14568-I.

    • Detailed sample computations.

    • Corrective plan amendments.

    • Prior plan document in effect at the time of the specified qualification failure. For operational failures, taxpayers are permitted to submit relevant portions of the prior plan document.

      Note:

      This requirement generally doesn’t apply if the VCP submission is for failures for late good faith/interim amendment failures adopted before the end of the remedial amendment cycle that first included them

      .

    • If the POA or TP indicates that the prior plan document doesn’t exist, is missing or can’t be found, see IRM 7.2.2.29, Missing Prior Plan Document (Relevant Sections), for additional procedures.

  15. Verify, if an authorized representative submitted the VCP submission via the Pay.gov website, they included a penalty of perjury statement, as described in Rev. Proc. 2018-52 or Rev. Proc. 2019-19, section 11.04(16), signed and dated, by the plan sponsor.

  16. Use the Form 8950, Application for Voluntary Correction Program (VCP) Submission under the Employee Plans Compliance Resolution System (EPCRS), Procedural Requirements Checklist to determine if any required items are missing from the VCP case file.

  17. Inspect Form 8950 to determine if the applicant answered all applicable lines and submitted all required attachments/explanations. Secure incomplete or missing items.

  18. Review the file for a written explanation to support a request for special tax relief offered by Rev. Proc. 2016-51, section 6.09, For submissions made in 2019, look to Rev. Proc. 2018-52 and Rev. Proc. 2019-19. If missing, secure the explanation. See IRM 7.2.2.11, Special Tax Relief Requests, for procedures on how to evaluate these requests.

  19. Verify that there is a penalty of perjury statement signed by the individual who made the VCP submission for an Anonymous Submission. See IRM 7.2.2.20, Anonymous VCP Submissions, for anonymous submission procedures.

  20. Request missing or incomplete items using Letter 5345, VCP-General Letter to Request Information.

  21. Document that you’ve completed the initial review procedures in your workpapers and uploaded your workpapers to RCCMS.

VCP Submissions-Technical Review Procedures

  1. Review the documents in the VCP submission for technical compliance and accuracy. Documents in the VCP submission may include:

    1. Form 8950, Application for Voluntary Correction Program (VCP) Submission under the Employee Plans Compliance Resolution System (EPCRS).

    2. Form 8951, User Fee for Application for Voluntary Correction Program (VCP).

      Note:

      This only applies to paper VCP submissions made to the IRS by March 31, 2019.

    3. Form 2848, Power of Attorney and Declaration of Representative.

    4. Form 8821, Tax Information Authorization.

    5. Model VCP documents. These documents have been released as official forms.

    6. Form 14568, Model VCP Compliance Statement.

    7. Form 14568-A, Model VCP Compliance Statement - Schedule 1: Interim Nonamender Failures.

    8. Form 14568-B, Model VCP Compliance Statement- Schedule 2: Other Nonamender Failures and Failure to Adopt a 403(b) Plan Timely.

    9. Form 14568-C, Model VCP Compliance Statement- Schedule 3: SEPS and SARSEPs.

    10. Form 14568-D, Model VCP Compliance Statement- Schedule 4: SIMPLE IRAs.

    11. Form 14568-E, Model VCP Compliance Statement- Schedule 5: Plan Loan Failures (Qualified Plans and 403(b) Plans).

    12. Form 14568-F, Model VCP Compliance Statement- Schedule 6: Employer Eligibility Failure (401(k) and 403(b) Plans only).

    13. Form 14568-G, Model VCP Compliance Statement- Schedule 7: Failure to Distribute Elective Deferrals in Excess of the 402(g) Limit.

    14. Form 14568-H, Model VCP Compliance Statement- Schedule 8: Failure to Pay Required Minimum Distributions Timely.

    15. Form 14568-I, Model VCP Compliance Statement- Schedule 9: Limited Safe Harbor Correction by Plan Amendment.

    16. Any narratives or attachments the POA or VCP applicant submitted about the description of the failures, correction methods and changes to administrative procedures.

  2. Do a preliminary review of the submission focusing on the submitted qualification failures, proposed correction methods and requests for tax relief (if any).

    If the preliminary review involves a determination as to whether: And Then
    The described failures are eligible for VCP. There appears to be a problem. Discuss with your manager before contacting the POA or TP.

    Note:

    To ensure that cases are being properly classified as ineligible, consult the Manager of VC and the program coordinators before closing the VCP submission as ineligible.

    The plan sponsor is requesting tax relief. The tax relief is not authorized by the EPCRS revenue procedure. Discuss with your manager, who will contact the Manager of VC and the program coordinators to discuss.

  3. Prepare written workpapers that document the issues in the submission, your analysis and any conclusions you reached. Do not use CCR as the case file’s workpaper.

  4. Review the RCCMS "Type" field and verify it’s correct. The RCCMS Type field choices for VC cases are in Document 6476, Information Systems Codes FY 2020 or FY 2021 Quick Reference for EP Agents/Specialists and in the RCCMS drop down menu for this field.

    1. Contact your manager if there’s an error to see if you should change the case type.

    2. If the category needs to be changed, update the RCCMS record.

      Note:

      You may reconsider your initial determination after receiving additional information from the applicant or their representative.

  5. Review the comments/issues (such as user fee issues, VCP eligibility issues, and issue development) the screener noted on the VCP Screening Checklist in the RCCMS Office documents folder. If you don’t follow them or address them:

    1. Document your reasons in your workpapers.

    2. Request agreement from your manager or group coordinator.

  6. If the VCP submission contains Form 14568 plus any applicable Form 14568-A through 14568-I Schedules, see IRM 7.2.2.9, Reviewing Pre-Formatted Compliance Statement, for additional procedures.

  7. Social security numbers (SSNs) are not used on compliance statements, model forms (including Schedules) or on RCCMS. If the VCP applicant used an SSN:

    1. The applicant or plan sponsor can get an EIN at IRS.gov.

    2. Secure revised VCP documents once the applicant has gotten an EIN.

    3. Correction dispose the RCCMS case record and replace it with a new RCCMS record. Follow IRM 7.2.2.3.3, Procedures for Correction Disposal of VCP Cases on RCCMS.

  8. Consult with your local IRS field actuary if the VCP submission has:

    1. Defined benefit pension plans, cash balance plans, target benefit pension plans or any hybrid plan with any type of operational failure or plan design failure.

    2. Demographic failures involving coverage and non-discrimination for IRC 401(a)(4) and IRC 410(b). This includes failures involving IRC 401(a)(26).

    3. Any other issue or qualification failure that would require actuarial computations or an actuary’s expertise.

      Note:

      Document all discussions in the CCR or workpaper or by uploading all relevant internal correspondence (such as, Skype for Business chat, email, fax, etc.) to the RCCMS case file.

      Note:

      See IRM 7.2.2.8(9) for a limited exception to this rule.

  9. You don’t have to consult/coordinate with your field actuary per IRM 7.2.2.8(8) if the following conditions are met:

    1. It’s only about operational failures and doesn’t require a plan amendment.

    2. The original accrued benefit is correct and doesn’t need to be adjusted as part of any reasonable correction; nor are accrued benefits being recalculated.

    3. Specialist and their manager or group coordinator agree that it’s not necessary to coordinate with an IRS actuary.

    4. The specialist and group manager get at least one VC program coordinator’s written consent.

      Note:

      If all of these conditions aren’t met, coordinate with an IRS field actuary per IRM 7.2.2.8(8).

  10. Document your decisions and consultations with your manager or group coordinator on the CCR or workpaper or by uploading all relevant internal correspondence (such as, Skype for Business chat, email, fax, etc.) to the RCCMS case file.

    Reminder:

    Use the F12 keyboard shortcut to save a Skype conversation to a file that you can upload to RCCMS.

Reviewing Pre-Formatted Compliance Statements

  1. Pre-formatted compliance statements are model documents applicants may use in their submissions.

  2. Form 14568 is the VCP Model Compliance Statement. Forms 14568-A through 14568-I support Form 14568 by presenting certain failures and standardized correction methods.

  3. Verify the following when you review Form 14568 and, if applicable the model schedules (Form 14568-A through Form 14568-I):

    Review the Form 14568 series to determine whether: Action Examples
    1. The documents are submitted on plan sponsor or POA letterhead If submitted on plan sponsor or POA letterhead, secure a new form that is on plain white paper that doesn’t contain any letterhead.
    • Representative firm name or plan sponsor name appears on top or bottom of any page of the Form 14568 or Form 14568-A through I series.

    • Plan sponsor or representative logo appears on any page of the Form 14568, Form 14568-A through I series or applicable narrative attachment.

    2. The plan sponsor/POA modified the documents If modified:
    • The taxpayer must submit a new Form 14568 series form that hasn’t been modified or,

    • Prepare an individually drafted traditional compliance statement.

    Plan sponsor/POA:
    • Removed items and language from any form in the Form 14568 series.

    • Changed the correction method on a Form 14568-A through I series.

    • Changed the enforcement resolution language on Form 14568.

    3. The EIN, Plan Name and Plan # appear on each page of the documents Verify that these items are included on each page of the submitted documents and that the information is consistent. If items are missing or the information is inconsistent on all pages, secure revised pages as necessary.
    • EIN is on one page, but is missing on other pages.

    • Plan name listed on Form 14568, model compliance VCP statement is different than the plan name listed Form 8950 or an attached schedule associated with the Form 14568-A through I series.

    4. Section 1 of Form 14568 model VCP compliance statement are completed properly Verify that applicable line items are properly completed and are not left blank or labeled as "NA."
    • Applicant's name is incomplete.

    • Applicant's EIN is omitted or conflicts with other information in the case file or pages of the model documents.

    5. Attachments are properly referenced as official attachments to Form 14568 or Form 14568 series Schedule Verify that narrative attachments have been properly labeled as an attachment to the model documents.
    • A list detailing specific late amender failures associated with the Pension Protection Act of 2006 (PPA 06) is not labeled as an attachment to Form 14568-A, Schedule 1.

    • A representative's cover letter contains information about the correction method, but this information isn’t part of the narrative attachment to Section III of Form 14568.

    6. Schedule 1 or Form 14568-A is accurate and complete. Review for the following types of issues:
    • Incorrectly listing items as late interim amendments even though they were adopted after the end of the applicable remedial amendment cycle (RAC) that first included them.

    Note:

    These failures are not late adoptions of interim amendments.

    • Not including copies of executed amendments with the VCP submission as mentioned in Section II as a required enclosure.

    • POA or TP lists incomplete failure descriptions in Section 1. The plan sponsor/ POA must send a list of each interim amendment(s) that was adopted late.

    • Not incorporating by reference to an attached list of the interim amendments that were not timely adopted.

    • Schedule 1 lists several good faith amendments for EGTRRA that were adopted late. The corrective amendments included with the VCP submission were adopted in 2014. The RAC for EGTRRA amendments expired before 2014, therefore, Schedule 1 is not available. Applicant should’ve used Schedule 2 for the failure to timely adopt these amendments as the plan is a late amender for the applicable Cumulative List that first included these items.

     
    • The Schedule 1 indicates that the plan failed to timely adopt interim amendments for final 415 regulations. The VCP case doesn’t contain signed amendments.

    • The Schedule 1 indicates that interim amendments for PPA 06 were adopted late, but didn’t list the specific provisions that were adopted late.

    • See example discussed above in item 5.

    7. Schedule 2 or Form 14568-B is accurate and complete Review for the following types of issues :
    1. Multiple consecutive boxes for Cumulative List (CL) failures are checked.

    2. Missing copy of the plan document in effect before the adoption of the corrective amendments is included with the submission.

    3. Copies of corrective plan amendments or restatements, including a copy of a signed 403(b) written plan (if applicable) that resolve all late amender failures are not included with the VCP.

    4. Addition of amendment failures to the "Other Box" ” in Section 1 that are not late interim amendment failures. Instead they are operational failures.

    5. Addition of non-interim amendment failures to Section 1 that are considered operational failures.

    • Submission incorrectly checks consecutive cycles. Multiple CLs can be checked if the plan is late for more than one cycle.

    • Item #2: is a required item mentioned in the Section IV Enclosure list.

    • For late amender failures that occurred before 2002, it may be reasonable to accept snap-on amendments if no plan sponsor can’t secure restated plan documents.

    • Item #3: These documents are required items mentioned in Section II and the Section IV Enclosure list.

      • It’s unacceptable to simply refer to interim amendments associated with a specific tax law or a Cumulative List.

      • Instead each interim amendment provision that was adopted late must be listed separately.

      • Items must be described with a level of specificity similar to the descriptions in the Cumulative List. Any acronyms must be defined.

    • Item #4: Examples include:

      • References to "Technical Amendments. "

      • Errors made while completing an adoption agreement or in the drafting of an adopted plan document.

      • References to late discretionary amendments.

    • Item #5: Examples include:

      • References to "Technical Amendments. "

      • Errors made while completing an adoption agreement or in the drafting of an adopted plan document.

      • References to late discretionary amendments.

    8. Missing Items. If any of the above items are missing or the information is inconsistent on all pages, secure the missing items or request revised pages, as necessary.
    • Page 1 of Form 14568 lists an EIN, however the EIN listed on subsequent pages is different.

Procedures for User Fee Issues

  1. IRS waives and/or refunds user fees for VCP submissions under limited circumstances for the following types of cases:

    1. Types of Cases Circumstances for Waiver or refund include: Additional Information and Instructions
      Ineligible Cases At the Manager of VC’s discretion, refund the user fee if the case is closed as "ineligible." See IRM 7.2.2.10.2, Refund Procedures and Instructions for VCP User Fees, for refund procedures. Ineligible cases are VCP submissions in which the plan sponsor:
      • fails to describe an actual qualification failure or other failure that can be addressed under EPCRS;

      • was "Under Examination" at the time it was mailed to the IRS;

      • 403(b) submissions in which all of the failure(s) reported are in pre-2009 years, but aren’t one of the 403(b) operational failures in Rev. Proc. 2008-50, per IRM 7.2.2.2, Types of Failures. Typically this involves a failure to follow the terms of a written plan in pre-2009 plan years.

      VCP case converted into voluntary closing agreement request (VCAP) case.

      Note:

      This section doesn’t apply to VCP submissions that are converted into VCAPs due to one of three events described in IRM 7.2.2.10(2)(b), (c) and (f).

      Refund the user fee if a VCP is converted into a VCAP because the submission contains failures or requests for which relief isn’t available under EPCRS or is clearly inconsistent with the correction principles of the EPCRS revenue procedure.
      • Before taking any action, discuss with your manager and a VC Program Coordinator.

      • Follow the refund procedures in IRM 7.2.2.10.2.

      • Follow the refund procedures after the Specialist collects the owed sanction. See IRM 7.2.4.5(7).

      FDIC Cases and any other case where the plan sponsor is a federal agency. The user fee isn’t required (and if paid, will be refunded) if the VCP case was submitted by the FDIC (Federal Deposit Insurance Corporation) or any other Federal agency. See IRM 7.2.2.10.2, Refund Procedures and Instructions for VCP User Fees.
      • These are VCP submissions the FDIC makes on behalf of a bank that the FDIC has taken over and for which it is terminating its plan.

      • Also, includes submissions involving a qualified 401(a) type plan that is sponsored by a federal agency for some or all of its employees.

      • Don’t pursue any missing user fees. Refund any fee that the FDIC or other applicable federal agency paid on any open case.

      457(b) Plans. VC submissions involving 457(b) plans and VC declines to accept and the plan sponsor included a payment with their submission. See IRM 7.2.2.21, Voluntary Submissions involving 457(b) Eligible Plans of Deferred Compensation.
      Orphan Plans. The eligible party may request, in writing, waiver of the applicable user fee for a submission for a terminating orphan plan.
      • Review the written explanation to see if it’s appropriate to waive the user fee. See IRM 7.2.2.10.3, User Fee Waiver Requests Involving Terminated Orphan Plans, for detailed procedures on evaluating these requests.

      • Document your consideration of the request, and decision in case workpapers.

      Fee Overpayments. VCP submissions in which the applicant has simply overpaid the owed user fee and/or they’re entitled to a reduced fee but paid the full fee. Refund the difference between the full and reduced user fee. See IRM 7.2.2.10.2, Refund Procedures and Instructions for VCP User Fees.

  2. Soliciting Additional User Fees: Specialists determine whether the plan sponsor owes additional fees to the IRS for their VCP submission under the following circumstances and follow these procedures to get the additional payment.

    1. Errors - An error discovered while verifying the correct fee as discussed in IRM 7.2.2.7, VCP Submissions-Initial Review.

    2. Egregious or Intentional Failures - For submissions made on or after January 1, 2017, collect any additional amounts imposed as a sanction payment over any paid VCP user fee via a closing agreement per Rev. Proc. 2016-51. For submissions made in 2019 and later, look to Rev. Proc. 2018-52 and Rev. Proc. 2019-19.

    3. SEP or SIMPLE IRA with retention of excess assets - If the submission was made on or after January 1, 2017, collect any additional amounts imposed as a sanction payment over any paid VCP user fee via a closing agreement per Rev. Proc. 2016-51. For submissions made in 2019, look to Rev. Proc. 2018-52 and Rev. Proc. 2019-19.

    4. Group Submission - Collect the additional user fee imposed by Rev. Proc. 2018-4 or Rev. Proc. 2019-4, and subsequent annual updates for group submissions covering more than 20 affected plans. Use Letter 5352, Request for Signature for Group VCP Submission to request the additional user fee.

    5. Reserved.

    6. Additional Amount- The additional fee imposed in lieu of not pursuing additional income tax imposed by IRC 72(t) as allowed by Rev. Proc. 2016-51, Section 6.09(6) and subsequent EPCRS revenue procedures. The additional amounts is imposed as a sanction payment over any paid VCP user fee via a closing agreement.

    7. Follow the collection procedures in Securing Additional Fees-Procedures in IRM 7.2.2.10.1, Instructions on Soliciting User Fees Owed if an additional user fee is owed.

    8. Process sanction payments associated with DO 8-3 closing agreements under different procedures. See IRM 7.2.4.

  3. Follow the detailed refund procedures in IRM 7.2.2.10.2, Refund Procedures and Instructions for VCP User Fees, for a full or partial refund of the paid VCP user fee.

  4. Dishonored or Retired (i.e. Rejected) Payments: EP VC designated employee or VC specialist- follow these procedures:

    1. Group 7845 will contact the Manager of EP VC when they become aware that a user fee payment was rejected by the payor’s bank. The manager of EP VC designates an employee to handle.

    2. For unassigned cases, reach out to the Applicant or POA and ask them to submit a new payment or will place the information about the dishonored or retired payment into the unassigned RCCMS case file. If the case is assigned, give the specialist the information about the dishonored payment.

    3. Instruct the TP/POA to submit a new payment to the IRS via the Pay.gov website using Form 8951. Use the RCCMS work unit number of the open VCP case as the control number on Form 8951. The specialist assigned to the RCCMS case can’t close the VCP submission until the designated VC employee gives them evidence of a successful payment.

    4. Wait when you receive notification from Pay.gov that a new payment has been made, 7 to 10 days to take action to ensure that this new payment goes through.

    5. Download Pay.gov payment and collection information from Pay.gov and email it to the specialist assigned the case, if applicable.

    6. After repeated inquiries with no response and no new payment submitted, discuss the matter with your manager within a reasonable period of time to see if the case is to be closed as a failure to respond case. Follow the procedures in IRM 7.2.2.31, Voluntary Compliance Referrals To EP Examination and Fraud Referral Procedures. Use Letter 5339, Uncollected Fee-VCP Closing Letter as the closing letter.

    Note:

    Be sure to enter information about the dishonored payment any other payment information into "Fee Information" grid located in RCCMS's POA/Misc tab.

Instructions on Soliciting User Fees Owed

  1. Specialists follow these instructions/procedures to solicit additional or missing user fees owed on a VCP case assigned to them.

  2. Discuss the fee issue with your manager and/or group coordinator and make sure they agree that the additional (or missing) user fee is owed. Document your discussion on the CCR or related workpaper.

  3. Discuss the additional user fee with the TP/POA and get their concurrence that the additional fee is owed to the IRS.

  4. Ask for the owed user fee and give the TP/POA instructions. For regular VCP submissions, use Letter 5345, General Letter to Request Information.

  5. Edit and use the following sample language to request an owed user fee: "Under Appendix A.XX of Rev. Proc. 20XX-04, the user fee for this 20XX VCP submission is $XXXX based upon the asset information listed on Form 8950. It appears that you owe $XXXX. For any VCP submission made in 20XX, you must refer to the annual revenue procedure that sets VCP user fees for that year. See Rev. Proc 20XX-XX, Section 12.01(2). If you disagree with the amount owed, contact me immediately. To pay the owed user fee of $XXXX follow these instructions: 1) Go to www.pay.gov website to make the payment using a credit or debit card or through the Automated Clearing House (ACH) transfer from a checking or savings account; 2) Go to Form 8951, Additional User Fee Payment for Open Application for Voluntary Correction Program (VCP) Under the Employee Plans Compliance Resolution System (EPCRS), by entering this address into your internet browser www.pay.gov/public/form/start/438394394; 3) Complete the online Form 8951 by following its instructions. Use the control number associated with your VCP submission located at the top of this fax/letter; 4) Enter your payment and record your payment tracking ID number assigned to the new payment; 5) Send me a copy of the Pay.gov receipt for this payment."

  6. The TP/POA pays the additional fee by:

    1. Going to the Pay.gov website and establish a Pay.gov account

    2. Searching for Form 8951, Additional User Fee Payment for Open Application for Voluntary Correction Program (VCP) or enter www.pay.gov/public/form/start/438394394 into their internet browser.

    3. Completing Form 8951 and submitting payment information. User fees can be paid with a credit/debit card or by a Automated Clearing House (ACH) transfer from a checking or savings account.

      Note:

      When completing Form 8951, the Control number is the RCCMS work unit number already assigned to the VCP submission.

      Note:

      Once in a while, Specialists may be asked to provide a special 10 digit IRS number to the applicant in order for the payment to be made via ACH with Form 8951. It’s the ALC number plus 2. The number assigned to Form 8951 is 2009290005.

    4. If successful, Pay.gov will generate a receipt of the submitted payment.

      Note:

      It may take 24 or 48 hours before an ACH payment is taken from the TP’s or POA’s bank account.

  7. Once the payment is made, a designated VC employee will receive an alert from Pay.gov that a Form 8951 has been submitted.

  8. About a week after the payment date, the designated VC employee will go to the Pay.gov website and download the PDFs that contain information about the payment and related deposit.

  9. The designated VC employee emails the information from the Pay.gov website, including a copy of the submitted Form 8951 to the specialist assigned the case. The specialist uploads these files to the RCCMS record.

  10. Specialist: review the Pay.gov PDF deposit information to see if the proper payment was successfully made:

    1. Check for correctness by looking at the Transaction Amount to see if the payment was for the correct amount.

    2. For ACH payments, check to see if the payment went through correctly. Look for "Collection Status." If it says "Settled" then there is no problem and the payment was successfully made and deposited by the IRS. If it says anything else, then the payment was unsuccessful and not made.

      Note:

      Collection Status indicating “Retired” means the payment was rejected by the TP or POA’s bank. The PDF with the detailed deposit information will list the reason why it was rejected.

    3. For credit/debit card payments if the Collection Status is "Successful" the payment was properly made.

    4. If the payment was not in the correct amount or was unsuccessful (i.e. “Retired”), get a new or missing payment having the TP/POA Change submit a new Pay.gov Form 8951.

    5. Record any dishonored or retired payment within the data grid located in the RCCMS POA/Misc Tab. Additional payments made with Form 8951 will automatically appear in the RCCMS record via the POA/Misc. tab the next business day after the transaction date.

      Note:

      The appearance of this information in RCCMS doesn’t mean a successful or settled payment was paid to the IRS. Wait to get PDFs with Pay.gov deposit information from the designated VC employee.

    6. Contact the designated VC employee if you don’t receive the PDFs with the Pay.gov information for the additional payment about 10 days after the payment was submitted to the Pay.gov website.

Refund Procedures and Instructions for VCP User Fees

  1. If you believe a full or partial refund applies, special procedures apply. Follow these instructions:

    1. Discuss the fee issue with your manager and confirm that a full or partial refund of the paid fee is due. Document your discussion in the RCCMS VCP case file. Include any email exchange, VCP workpapers or comments on the CCR.

    2. Discuss the fee issue with the TP/POA and get agreement that a full or partial refund is owed.

    3. Prepare a VCP refund form once all parties have agreed as to the appropriateness and amount of the refund.

    4. Complete Part 1 of the VCP refund form and sign the form electronically. See IRM 7.2.2.10.2(2) and IRM 7.2.2.10.2(3) for additional instructions.

    5. Email the form and HQEP attachment or PDFs from Pay.gov to your group manager and ask them to sign the form.

    6. The group manager signs the form and emails it to you.

    7. Within the RCCMS record to the Office Documents folder and create a new subfolder entitled "Refund Documents" .

    8. Upload signed refund form and HQEP or Pay.gov PDFs to the Refund Documents subfolder and update the RCCMS record as needed.

    9. Transfer the RCCMS case to your group manager.

    10. The group manager transfers the RCCMS case to the TE/GE Adjustments team.

    11. The TE/GE Adjustments team processes the refund request, updates the RCCMS record and then transfers the case back to the group.

    12. The group manager inspects the POA/Misc tab record to see if the refund was processed. If the case is OK, he/she transfers the case back to the specialist. Or, if the case is in status 51, the group manager performs a final close if the case is ready for closure.

    13. When closing the VCP case, follow the instructions in IRM 7.2.2.25, Required Use of Standardized VC Letters, for the appropriate closing letter to use when issuing a refund.

  2. Include the following when preparing a refund request:

    1. A VCP Refund Form (Rev. March 2019) (located on the VC SharePoint site) with Part 1 completed, see IRM 7.2.2.10.2 (3).

    2. A copy of the HQEP printout or Pay.gov Deposit information PDFs.

  3. Complete Part 1 of the VCP Refund Form.

    Note:

    For items 1(A) through 1(G), use the information on the HQEP printout in the VCP case file. If the submission was via the Pay.gov website, look to the PDFs from Pay.gov to see who paid the user fee. If the printout or Pay.gov PDFs is not in the case file, ask your manager or a VC program coordinator for it.

    1. Part 1(A): Click on the down arrow and choose either “Paper Check Recorded on HQEP” or “PAY.Gov”. This is based upon how the initial user fee was paid.

    2. Part 1(B): Enter the Name of the Payor or Entity listed on the HQEP printout. Also, enter the mailing address for the payor. If you do not have an actual mailing address for the Payor/Entity, ask the power of attorney or taxpayer for it.

      Note:

      User fees for VCP submissions can only be returned to the Payor/Entity listed on HQEP or the Pay.gov PDF. The plan sponsor is often not the one who wrote the check or paid the user fee via the Pay.gov website. If it’s not clear who is entitled to the refund, contact the POA or applicant to obtain the necessary information.

    3. Part 1(C): Enter the Name of the Plan.

    4. Part 1(D): Enter the Date Received that is recorded on RCCMS.

    5. Part 1(E): Enter the 9 digit number (beginning with "911" ) listed on the HQEP printout for paper submissions. For submissions made via the Pay.gov website, enter the 8 digit alpha-numerical number. The entered number should match the number recorded as the RCCMS "Work Unit" field. If the numbers differ, contact your manager before proceeding any further.

    6. Part 1(F): Enter the fee originally paid as recorded on the HQEP printout or the Pay.gov PDF. If the amount shown on the HQEP printout differs from the amount shown on a copy of the user fee check that may be part of the VCP case file, contact your manager before proceeding any further.

    7. Part 1(G): Enter the check number recorded on the HQEP printout. Enter “N/A” if the original payment was made via the Pay.gov website.

    8. Part 1(H): Enter the name of the bank from the HQEP printout. Enter “N/A” if the original payment was made via the Pay.gov website.

    9. Part 1(I): Enter the amount of the refund in the box next to "Amount To Be Refunded" . Also, enter the refund amount in either column 1 or 2 of the table entitled "Refund Breakout" .” Payments received after 9/30/2014 are classified as IRS AXX5432.5

    10. Part 1(J): Enter “VCP Submission”.

    11. Part 1(K): Explain why the paid fee is incorrect.

    12. Part 1(L): Sign and date the form electronically.

    13. Email the electronically signed form to your manager. Attach the HQEP printout or Pay.gov fee PDFs to the email.

  4. Group manager: when you receive a VCP refund request from a specialist:

    1. Review the form for accuracy and consistency with prior discussions within five business days. Contact the specialist for questions or improperly completed forms and secure a new refund form if necessary.

    2. Electronically sign and date Part II of the refund form, if the form is correct and you think the refund should be issued.

    3. Email the signed refund form back to the specialist.

  5. Specialists: Update the RCCMS case file record when you receive the signed refund from your manager:

    1. Upload the signed refund form and HQEP printout or Pay.gov PDFs to the Refund Documents subfolder.

    2. Go to the POA/Misc tab and make sure the payment information is accurate and complete. Make changes if necessary. Look to HQEP printout or Pay.gov PDFs.

    3. Update the grid by requesting a refund. Go to the “Fee Type” and choose "5-Refund Requested" . Enter the refund amount as a negative number and the date.

    4. Go to the Chronology tab and make a manual entry. Choose an action code in the "Z series" that corresponds with your RCCMS group number.

    5. Save the changes.

  6. Specialist: transfer the RCCMS to your group manager. In the comment box type in:" Send RCCMS case to Group 7555."

    Note:

    Generally, the case status code remains unchanged in "12." However, if your manager prefers to do the refund during the case closing, update the case status to 51 and get it approved before initiating a closing request. Don’t forget to add the comment about transferring the RCCMS case to Group 7555.

  7. Group managers: when your receive a transfer or closing request from a specialist that involves a VCP refund:

    1. Transfer the case to Group 7555. In the comment box, indicate that the case should be returned to your group number: "Return to Group 755X."

    2. Email the TE/GE Adjustments team’s manager and designated employees to advise them of the RCCMS transfer and the refund request. Find the designated employee’s name on the VC SharePoint site.

    3. Once the refund request is processed, transfer the RCCMS case back to the group’s inventory.

    4. Go to the POA/Misc tab to see if the refund was processed. There should be an entry in the grid that indicates "6-Refund issued" as the Fee type along with the refund amount and a date. Transfer the case back to Group 7555 if there is no entry or it’s incorrect.

    5. If there are no problems, transfer the case back to the specialist if the case is still in status 12. Otherwise, do a final close if the case is ready to be closed.

User Fee Waiver Requests Involving Terminating Orphan Plans

  1. IRS may not generally waive user fees associated with VCP submissions.

  2. An eligible party who makes a VCP submission on behalf of a terminating orphan plan may request that the IRS waive any applicable user fee. This request is not automatic and will not be granted in all circumstances. See Rev. Proc. 2019-4, IRB 2019-1, Rev. Proc. 2020-4, IRB 2020-1, and Rev. Proc. 2016-51IRB 2016-42, section 4.08. For submissions made on or after January 1, 2019, see Rev. Proc. 2018-52, IRB 2018-42 and Rev. Proc. 2019-19, IRB 2019-19. The VCP applicant must:

    1. Check the applicable box on Form 8951, Line 8 for paper submissions and item 6 must be checked yes for submissions made via the Pay.gov website.

    2. Satisfy the definition of "eligible party" in the EPCRS revenue procedure, section 5.03. As with all VCP submissions involving orphan plans, if the applicant hasn’t established that it’s an eligible party, VC won’t process the submission; close it as a no action case after discussing with your group manager. See Rev. Proc. 2016-51, section 11.10 and Form 8950 Instructions. For submissions made on or after January 1, 2019, see Rev. Proc. 2018-52 and Rev. Proc. 2019-19.

    3. Include a written explanation that details or justifies why the IRS should waive the user fee. If missing, secure it.

  3. Analyze all fee waiver requests based on the facts and circumstances. Don’t grant waiver requests unless the information presented justifies the IRS waiving it.

    1. A claim of financial hardship alone is insufficient unless supported by additional information to show the financial hardship. Secure additional information to support the financial hardship.

    2. If made by an eligible party who is a widow/widower and is the sole beneficiary of a plan that has never been subject to ERISA, consider the assets they’ll receive upon plan termination when you determine whether a financial hardship exists. Generally, these retirement plans are/were sponsored by very small businesses where participation has always been limited to the owner employees and their spouses.

      Note:

      Significant plan assets don’t mean that the widow/widower is not experiencing a financial hardship because they may have liabilities that exceed plan assets.

    3. If the eligible party is a court appointed representative for the plan on behalf of the participants who have assets in the plan, you may apply a more liberal standard if there are multiple participants. However, they should still include an explanation to support the fee waiver request.

  4. If you’re unsure if you should approve the fee waiver request, talk to your manager.

  5. If you disapprove the fee waiver request, notify the eligible party (or their representative) who made the VCP submission. Then, solicit the owed user fee from the eligible party following the procedures in IRM 7.2.2.10.1, Instructions on Soliciting User Fees Owed, before continuing to process the case.

Special Tax Relief Requests

  1. Generally, excise taxes and income tax consequences associated with qualification failures can’t be resolved through EPCRS. However, plan sponsors may ask the IRS in writing not to pursue certain specific income and excise taxes imposed by IRC 72(t), IRC 4972, IRC 4973, IRC 4974 and IRC 4979 for certain operational failures.

  2. Most special tax relief is granted through VCP. It’s generally not available through SCP or Audit CAP.

  3. Special tax relief is not granted automatically; VC approves it in appropriate cases and only if certain conditions are met. See the table below for the tax relief in Rev. Proc. 2016-51, Section 6.09 and the requirements/conditions to evaluate requests. For submissions made on or after January 1, 2019, or later, look to Rev. Proc. 2018-52, IRB 2018-42 and Rev. Proc. 2019-19, IRB 2019-19

    Tax Requirement/Conditions Evaluating Requests
    (a) IRC 72(t) - special additional income tax. Limited to correction of overpayments for premature distributions of a vested benefit. Consult with your manager before discussing with plan sponsor.
    VCP submission must include a written request justifying tax relief. 100% relief from the IRC 72(t) tax is appropriate if the overpayment was inadvertent. No additional fee is needed.
    Participant/beneficiary must return the overpayment to the plan. For owner employees and HCE participants, you may appropriately deny relief if there are indications of deliberate overpayment distributions.
    No tax relief from regular income tax consequences of receiving an overpayment per Rev. Proc. 2016-51, Section 6.06. If you’re unclear after analyzing all facts and circumstances if the overpayment was deliberate or inadvertent:
    1. recommend tax relief from IRC 72(t), and

    2. collect additional payment via a closing agreement of 50% of the additional 72(t) tax if the relief is granted.

    (b) IRC 4972 - excise tax on non-deductible contributions. VCP submission must include written request justifying tax relief. Consult with your manager before discussing with plan sponsor.
    Limited to situations where corrective contributions paid to a plan are not tax deductible. You may recommend rejection if the corrective contributions primarily benefit HCE or owner employees.
    You may recommend IRC 4972 tax relief if the corrective contributions primarily benefit NHCE participants.
    (c) IRC 4973 - excise tax imposed on excess contributions to a 403(b) plan and IRA. Limited to excess contributions made to a 403(b) plan or to an IRA. Consult with your manager before discussing with plan sponsor.
    VCP submission must include written request justifying tax relief. You may recommend relief from the IRC 4973 tax if the excess contributions primarily benefits NHCE participants.
    Participant/beneficiary must remove excess amounts (adjusted for earnings) from the 403(b) plan or IRA and either:
    • treat it as a taxable distribution; or

    • return it to the plan.

    You may recommend rejection if the corrective contributions primarily benefit HCEs or owner employees.
    IRC 4974 - excise tax imposed on late required minimum distributions of IRC 401(a)(9). If some affected participants are owner employees, including a 10% owner of a corporation, applicant must submit a written explanation supporting the request. If the affected participants are limited to NHCE participants, automatically approve the request unless there are some unusual facts or circumstances.
    Plan must distribute accumulated RMD amounts (adjusted for earnings) to the affected participants and beneficiaries. For owner employees, approve the request if the failure was inadvertent and doesn’t appear egregious.
    Consult your manager if unsure whether to grant relief or if request involves some unusual circumstances.
    IRC 4979 -excise tax imposed on certain excess contributions defined in IRC 4979(c) & (d) resulting from an operational failure. Limited to ADP/ACP testing failures not corrected within 2 ½ months after close of plan year. Consult your manager before discussing with plan sponsor.
    Not available if the ADP/ACP test was not timely performed. Determine whether the original ADP/ACP test was performed timely, but was inaccurate due to incorrect data. If the original test was prepared after the 2 ½ month deadline, then don’t approve tax relief request.
    VCP submission must include a written request justifying tax relief. If the original ADP/ACP test failed, determine if corrected within 2 ½ months after the end of the year.

Power of Attorney Form 2848 and Form 8821

  1. Individuals named on Form 8821 aren’t considered taxpayer representatives and can’t act as a power of attorney for any VCP submission. The only right they have is to receive copies of IRS correspondence addressed to the plan sponsor.

  2. You may accept a faxed copy of a valid Form 2848 or Form 8821.

  3. Verify that the Form 2848 is valid before contacting or sending out any correspondence to any named person who is not the plan sponsor.

  4. Taxpayers should use Form 2848 or Form 8821 Rev. 01-2018 for all VCP submissions April 1, 2018 - March 31, 2020. If they used an earlier version, solicit a new Form 2848 or Form 8821.

  5. Taxpayers should use Form 2848 or Form 8821 Rev. 02-2020 for all VCP submissions made on and after April 1, 2020. If they used an earlier version, solicit a new Form 2848 or Form 8821.

  6. Review Form 2848 and make sure it’s completed correctly:

    1. The taxpayer name and EIN should be the plan sponsor or other entity making the submission. See "Who May File" on the Form 8950 Instructions.

    2. Line 3 (Matters) should be filled out sufficiently to describe the matter covered, as described in IRM 7.2.2.12(7).

    3. The named representative must satisfy the power of attorney requirements in Rev. Proc. 2016-51, Section 11.07 and Rev. Proc. 2018-4, Sections 6.02(11) and (12). An unenrolled return preparer can’t be a power of attorney for any VCP submission.

      Note:

      For submissions made on or after January 1, 2019, see Rev. Proc. 2018-52, IRB 2018-42 and Rev. Proc. 2019-19, IRB 2019-19.

    4. The representative must sign and date the Form 2848. An original pen and ink signature isn’t required. Photocopies are acceptable.

    5. The Form 2848 must be signed by an officer/owner of the plan sponsor. If the plan sponsor is other than an individual, ensure they include a printed name of an officer/owner, title, and name of business.

  7. Follow these instructions for completing Line 3 - Matters.

    1. The entry for "Description of Matter" should clearly indicate that the representative is appointed to represent the taxpayer in connection with the VCP submission. The matters description doesn't need to refer to the EPCRS Rev. Proc. as long as the correction program is referenced:

      Example:

      "Voluntary Correction Program Submission" or abbreviations such as: "VCP" or "RP."

    2. Tax Form Number should list "8950." The applicant doesn’t have to list "8951" but if they do, the Form 2848 is still acceptable.

    3. Generally, "Years or Periods column" should be marked with "Not applicable or N/A" as per the Form 2848 instructions. Or, it can include the years, as long as the dates listed correspond to the period of the failure(s) noted in the submission.

    4. If the representative submitted via the Pay.gov website, the Form 2848 must specifically grant that authority. To grant the necessary authority, the box next line 5a for “Other acts authorized” must be checked and the following description be added: “signing and filing of the Form 8950 and accompanying documents as part of a VCP submission.”

      Note:

      The applicant must include a penalty and perjury statement, as described in Rev. Proc. 2018-52 or Rev. Proc. 2019-19, Section 11.08, signed and dated, by the plan sponsor. See also Form 8950 Instructions.

  8. An anonymous VCP doesn’t include a Form 2848. See IRM 7.2.2.20, Anonymous VCP Submissions, for details on processing anonymous VCP cases.

Required Determination Letter Application with VCP Submission

  1. Applicants aren’t required or permitted to submit a determination letter (DL) application for submissions on or after January 1, 2017. See Rev. Proc. 2016-51, Section 6.05. Plan sponsors who want to submit determination letter applications must follow the instructions in Rev. Proc. 2016-37.

    Note:

    For submissions made on or after January 1, 2019, see Rev. Proc. 2018-52, IRB 2018-42 and Rev. Proc. 2019-19, IRB 2019-19.

Contacting and Corresponding with Applicant and POA representative

  1. You may call or write to the POA/applicant. Document all contacts on the CCR, and include the name of the person contacted and summary of what was discussed. You may document the summary in your workpapers.

  2. Send letters or faxes to the applicant and authorized individual listed on Form 2848 or Form 8821, if applicable at the same time.

  3. Use the table below for guidance on the types of taxpayer contact and conditions for using them:

    Type of Contact Special Conditions
    Letter You must:
    • Use official IRS letters when requesting additional information or asking for an applicant's signature on a compliance statement or closing agreement.

    • Address most letters to the plan sponsor or applicant.

    • Send the representative a copy of all letters you sent to the applicant. Use Letter 937-A, Transmittal of Information to Power of Attorney, as a cover letter when sending the copy to the representative listed on Form 2848 or individual listed on Form 8821.

    • See IRM 7.2.2.25, Required Use of Standard VC Letters.

    Fax
    • Contact the plan sponsor/POA before faxing, if the fax includes personal identifiable information (PII).

    • You and your group manager are encouraged to sign up and use EEFAX.

    • Taxpayers may send faxed images of a scanned original signatures.

    Email
    • Don’t email taxpayers or POAs. Taxpayer email addresses are considered PII information. See August 8, 2013, email from Manager of VC that includes comments from Privacy, Governmental Liaison and Disclosure (PGLD).

    • If you use email, follow guidelines in IRM 1.10.3, Standards for Using Email.

    • If the VCP applicant or representative emails PII information, move it to a secure file or encrypt it.

    Note:

    See IRM 7.2.2.14 (4) for information you can relay to the taxpayer and their POA about sending email to the IRS.

    Note:

    Due to COVID-19, the normal rules on email with applicants/POA don’t apply in some instances through December 31, 2020. Refer to the June 12, 2020, Memorandum (Control Number NHQ-01-0620-002) issued by Sunita Lough, Deputy Commissioner, Services and Enforcement for additional details and instructions which permit specialists to email or receive documents to taxpayers.

  4. If a VCP applicant/POA wishes to send an email, inform them that:

    • Emails sent to the IRS aren’t secure and the IRS cannot guarantee the security of any information in them.

    • The IRS prefers information be sent by mail or fax.

      Note:

      Due to COVID-19, the normal policy described above has been modified. In some limited circumstances, you may send or receive email with VCP applicants or their representatives. Refer to the June 12, 2020, Memorandum (Control Number NHQ-01-0620-002) for additional details and instructions

  5. Write requests for additional information in plain language, and make sure they’re free of grammatical and spelling errors.

  6. For initial information requests, generally allow a 21-day response time. Use Letter 5345, VCP- General Letter to Request Information.

    If the plan sponsor: Then
    Doesn’t respond to an initial information request
    1. Call them within a reasonable time after the due date to ensure they received the initial request.

    2. Document the conversation on the CCR.

    3. Follow-up with a 10-day letter, Letter 5346 , VCP 10 Day Follow up to Initial Information Request, within a reasonable time after the due date.

    Doesn’t respond to the 10-day follow-up letter Call the plan sponsor/POA within a reasonable time after the due date to make sure he/she received the letter.
    Received the 10-day letter but fails to respond to it Discuss with your manager as soon as possible to determine if you should close the VCP case using RCCMS disposal code 774- Discontinued review as a "Failed to Respond" case.

  7. See IRM 7.2.2.25, Required Use of Standardized VC Letters, for a list of the appropriate letters to use. Find links to the official letters on the VC SharePoint site or the IRS intranet.

  8. If you decide not to issue a compliance statement, consult with your group manager and the Manager of VC to determine whether to make a referral to EP Examination before you close the case. See IRM 7.2.2.31, Voluntary Compliance Referrals to EP Examination, for additional details.

Use and Types of VCP Compliance Statements

  1. A compliance statement is generally a written agreement between the IRS and a plan sponsor that results from a successful VCP submission. See Rev. Proc. 2020-4, IRB 2020-1 for a more detailed description. See also Rev. Proc. 2016-51 section 10.

    Note:

    For submissions made on or after January 1, 2019, refer to Rev. Proc. 2018-52, IRB 2018-42 and Rev. Proc. 2019-19, IRB 2019-19.

  2. Types of Compliance Statements, their characteristics and where to find them:

    Type Characteristics Find at:
    Model Compliance Statement, including Schedules. Taxpayer may only use if they use the official IRS forms 14568 series. IRS.gov as official forms. See Form 14568, Form 14568-A, Form 14568-B, Form 14568-C, Form 14568-D, Form 14568-E, Form 14568-F, Form 14568-G, Form 14568-H, and Form 14568-I
    Streamlined Compliance Statement.
    • Specialist prepares. You must draft detailed failure descriptions based on the information the TP/POA submitted.

    • Incorporate POA/plan sponsor’s letters and narrative by reference. They are an official part of the issued compliance statement.

    The VC SharePoint site.
    Traditional Compliance Statement. Specialist prepares.
    Structured into six basic sections:
    1. Describe the failures.

    2. Describe the proposed correction method.

    3. Describe the procedures used to locate and notify former employees and beneficiaries.

    4. Describe the changes made to administrative procedures so that failures do not recur.

    5. Enforcement Resolution.

    The VC SharePoint site.

  3. If Form 14568 or Form 14568-A through Form 14568-I (or both) are submitted, those documents will generally be the issued compliance statement.

    1. If you determine that it’s in the best interest of the IRS and/or the plan sponsor, you may prepare a traditional compliance statement. This includes the situations discussed below in IRM 7.2.2.15(8).

    2. Consult with your manager or group coordinator before preparing a traditional compliance statement.

    3. Document your discussion on the CCR.

  4. Use the electronic sample documents posted on VC SharePoint, if sample language exists (and is appropriate) for failure descriptions to draft a streamlined or traditional compliance statement.

  5. Get your manager’s or coordinator’s approval via email or EEFAX if you draft streamlined or traditional compliance statements before sharing the draft with the plan sponsor or POA.

  6. Revise the compliance statements for any group manager/group coordinator comments/revisions. Fax this new compliance statement draft to the plan sponsor or the POA for review. If the plan sponsor doesn’t have a fax number, mail the documents to them.

  7. Upload any and all email instructions/comments/approvals from your manager/group coordinator to the RCCMS case file.

    Note:

    Document the plan sponsor’s/POA’s acceptance of the draft document on the CCR. If the plan sponsor or POA wants changes to the document, discuss them with your manager or group coordinator. Document the discussion on the CCR.

  8. VCP Compliance statements generally don’t have to be signed by the plan sponsor, except in the following situations:

    1. Material change in fact or issues for which a new penalty of perjury statement hasn’t and won’t be secured. Including additional late amender failures isn’t considered a material change in fact. However, adding new operational failures to an open VCP case is.

    2. You believe the plan sponsor/POA may unaware of or not understand the compliance statement terms and it’s in the interests of both parties that the plan sponsor sign it. Before asking for signature, consult with your manager and document your discussion in the CCR.

    3. Group Submission compliance statements must be signed.

  9. Form 14568 can’t be signed by a plan sponsor. Prepare a traditional compliance statement. See IRM 7.2.2.15(3).

  10. If the compliance statement is to be signed by the plan sponsor, fax or mail one copy to the plan sponsor/POA. Use IRS Letter 5351, VCP Letter Used to Request a Taxpayer Signed Compliance Statement.

    Note:

    When you use a streamlined compliance statement, attach the referenced letters to each compliance statement.

Dealing With Disagreements and Conference of Right

  1. If any part of the submission is not acceptable, notify the POA or plan sponsor, request any necessary changes, and explain why they are necessary.

  2. If you and the plan sponsor/POA disagree on any of the following, discuss with your manager or coordinator:

    1. How a qualification failure should be corrected.

    2. Changes to administrative procedures.

    3. Whether a failure has been properly described or is eligible for VCP.

    4. Determination of a VCP user fee.

    5. Requests for limited tax relief made under Rev. Proc. 2016-51 section 6.09 as discussed in IRM 7.2.2.11, Special Tax Relief Requests.

      Note:

      For submissions made on or after January 1, 2019, see Rev. Proc. 2018-52, IRB 2018-42 and Rev. Proc. 2019-19, IRB 2019-19.

    6. Fee waiver requests made by terminating orphan plans as discussed in IRM 7.2.2.10.3, User Fee Waiver Requests Involving Terminating Orphan Plans

  3. The group manager and specialist consult with the Manager of VC and the VC program coordinators as appropriate.

  4. If the specialist’s position is upheld, he/she should seek agreement from the plan sponsor/POA, and inform them that they’ve discussed the issue with their group manager.

  5. If the applicant or their POA continues to disagree, they are entitled to a formal Conference of Right with the specialist’s group manager.

    1. Generally, the conference is held via conference call. The applicant or their POA has 21 calendar days after the conference date to submit additional information in support of his/her position.

    2. The taxpayer must request any extension of the 21-day period in writing before it ends, and it must be approved by the group manager.

  6. If after the conference call, and consideration of any additional information provided, the group manager and specialist still believe there are problems with the submission, they must discuss with the Manager of VC and the program coordinators to ensure consistent treatment of taxpayers.

    Note:

    Where appropriate, you may need to schedule another conference call with the plan sponsor/POA. At least one program coordinator will attend.

  7. If the IRS and plan sponsor/POA can’t agree, the VCP submission will be closed and no compliance statement will be issued.

  8. Generally, the IRS doesn’t return the user fee to the payor if the disagreement is about failure descriptions, correction methods, changes to administrative procedures or a failure to provide requested information.

    Exception:

    If the failure was an issue that was ineligible for VCP or a DO 8-3 closing agreement, the payor may be entitled to a 100% refund of any paid user fee. This applies to all VCP submissions. However, refunds under this exception are at the discretion of the Manager of VC. See IRM 7.2.2.10, Procedures for User Fee Issues, and IRM 7.2.2.10.2, Refund Procedures and Instructions for VCP User Fees, for more information on possible refund

  9. If a compliance statement won’t be issued, consult with your manager and the Manager of VC to determine if you should refer to EP Examination. See IRM 7.2.2.31, Voluntary Compliance Referrals to EP Examination, for additional details. Document all actions in the CCR or workpapers.

Analyzing Qualification Failures and Correction Methods in VCP Submissions

  1. Review plan sponsor/POA cover letters, or attachments to Form 14568 to determine if actual qualification failures are present and whether the correction proposal complies with IRC and EPCRS requirements.

  2. In general, EPCRS may only be used to protect the qualified tax-favored status of certain retirement plans and provide limited relief from certain excise taxes or additional income taxes. However, if the plan sponsor/POA requests some additional relief not offered by EPCRS, discuss this request with your group manager to determine if a DO 8-3 closing agreement is appropriate.

    Note:

    Routinely consult the Manager of VC for these requests.

  3. Review and analyze descriptions of failures, correction methods, and changes to administrative procedures using the following requirements and considering these common requirements and incomplete failure descriptions:

    Description Requirements that must be in every VCP Submission Common Incomplete Failure Descriptions
    General Rule
    • A detailed and complete description of each qualification failure

    • POA/plan sponsor doesn’t describe an actual failure to comply with the IRC or with the terms of the written plan

    • A detailed explanation as to how and why each failure arose

    • Proposed change in administrative procedures isn’t an actual change, or wouldn’t prevent future failures

    • A detailed description of the administrative procedures that were in effect at the time the failures occurred

    • For Operational, Demographic, or Eligible Employer failures

    • The description doesn't specify the period of time in which the failures occurred; the number of affected employees and the estimated cost of correction per failure, if applicable

    • Detailed Correction method and changes in administrative procedures for each failure

    Plan Document Failure
    • Describe how the plan document is defective because either it:

    1. Doesn't comply with the requirements of IRC 401(a) and/or

    2. Wasn't updated to comply with tax law changes.

    Note:

    For (1) above the applicant must state why the plan didn’t comply with 401(a) and for (2) the applicant must list each specific tax law change that they didn’t timely adopt

    • Plan sponsor doesn’t specify all the tax laws for which the plan was not amended

    • Late good faith/interim amendments or late amendments to reflect optional tax law changes can’t be incorporated by a reference to a tax law or Cumulative List.

    • Plan sponsor doesn’t define acronyms when describing late amender failures.

    • Amendment failures are described as late good faith/interim amendment failures but the corrective amendment was adopted after the end of the applicable cycle. EPCRS revenue procedure doesn’t classify this item as a late interim amendment issue.

    • Submission narrative doesn’t indicate how the failures are being corrected. In most cases, the plan must be retroactively amended.

    Operational Failure.
    • Description must describe a failure to comply with a specific IRC, such as 401(a) or 401(k) or 403(b), and/or a failure to follow the Plan’s written terms. Correction method narrative must be complete and fully describe each step in the proposed correction.

    • Narrative limited to a failure to conduct testing or errors in testing that relate to top heavy, Actual Deferral Percentage/Actual Contribution Percentage, IRC 410(b) or IRC 401(a)(4).

    • If sponsor will make corrective contributions, allocations, or repayments, the narrative must describe how earnings are determined.

    • Narrative that describes the plan's (or plan sponsor's) problems with IRC 414(h) and IRC 125, FICA compliance and requests special tax relief not authorized by EPCRS.

    • For operational failures, sponsor must include separate corrective narratives that focus on how affected terminated plan participants will be handled

    • Earnings method isn’t included or doesn’t specify that they’ll be credited through the date of correction.

    • Narrative must describe how sponsor will locate former employees, participants and beneficiaries

    • Submission lacks detail that justifies the use of reasonable estimates.

    • Narrative must describe how lost participants or lost beneficiaries will be located

    • Method for locating terminated participants or beneficiaries is missing from the correction method narrative.

    • Method for locating lost participants/beneficiaries is missing or incomplete from VCP correction narrative.

    • Method for locating lost participants refers to discontinued IRS and SSA Letter forwarding programs.

    Ineligible Employer.
    • Narrative must describe why plan sponsor is not eligible to sponsor the plan.

    • Correction narrative doesn’t provide necessary details that fully explain why the plan sponsor is ineligible to sponsor the plan.

    • Correction narrative must indicate that the plan has already been frozen and that all employer and employee contributions were suspended as of a stated date. This date generally can’t be later than the date of the VCP submission.

    • Correction narrative doesn’t include the date all employer and employee contributions ceased.

    • Cessation of contributions is not required if continuation of contributions would not be an Employer Eligibility Failure (for example, for a tax-exempt employer sponsoring a 403(b) plan that lost its exempt status and then subsequently regained it).

    • Correction narrative indicates that contributions were allowed to continue past the date of the VCP submission.

    • For IRC 403(b) and 401(k) plans, correction narrative must indicate that the plan will be terminated or that a frozen plan will be maintained subject to the distribution restrictions of the IRC.

  4. Prepare workpapers that document the issues in the submission, your analysis and any conclusions reached. Do not use the CCR as the case file’s workpaper.

  5. VCP allows the plan sponsor/POA to propose correction methods that are outside of the safe harbors described in the EPCRS revenue procedures.

    1. Depending on specific facts and circumstances, alternative proposals may be acceptable.

    2. When you evaluate other correction methods, consider if they’re reasonable given the described facts and circumstances.

    3. You may need to get information about the plan sponsor’s current financial conditions to justify a special exception to full correction.

    4. You must consult with your group manager to discuss the merits of other correction methods. When appropriate, consult the Manager of VC or the program coordinators.

  6. 401(h) retiree health benefits issues: To ensure consistency, specialists, and VC group managers must consult with the VC Program Coordinators if a submission involves retiree health benefit issues under IRC 401(h).

  7. Governmental 401(a) plans: can’t send VCP submissions for issues involving IRC 414(h) pickup contributions because the taxation of employee contributions doesn’t satisfy the definition of a qualification failure and is ineligible for EPCRS relief.

    Note:

    Don’t forget to consult with an IRS actuary if the circumstances described in IRM 7.2.2.8(8).

IRC 72(p) Participant Loan Failures

  1. Under VCP, Audit CAP, and SCP (for some IRC 72(p) loan failures corrected on or after April 19, 2019), IRS permits limited tax relief for participant loans that didn’t comply with IRC 72(p) requirements (Rev. Proc. 2019-19 or earlier EPCRS Rev. Proc., Section 6.07). The plan sponsor may either:

    1. Issue a Form 1099-R in the year of correction rather than in the year of the deemed distribution. In VCP, the plan sponsor/POA must request this relief.

    2. Request relief from a deemed distribution’s income tax consequences. The IRS will approve this relief in appropriate circumstances if the plan sponsor complies with all of the requirements in section 6.07.

  2. Applicants may use Form 14568-E to report participant loans that do not comply with IRC 72(p).

  3. Some noted problems in VCP cases involving participant loans that don’t comply with IRC 72(p):

    1. Sample computations showing original loan terms and new amortization schedule(s) not included with the submission.

    2. Sample computations and correction narrative don’t explicitly state how the loan failure is being corrected.

    3. For defaulted loans, narrative and sample computations don’t indicate that missed interest is included in the re-amortized amount.

    4. For regular loans, the re-amortized loan period exceeds the five year period measured from when the loan proceeds were provided to the plan participant.

  4. If the applicant has requested income tax relief from the deemed distribution rules, generally allow income tax relief if all of the applicable rules in Section 6.07 of the EPCRS revenue procedure have been met and the failure appears to have been inadvertent. However, it may be appropriate to deny income tax relief if:

    1. Indications that the participant loans weren’t bona fide loans as evidenced by a lack of a signed loan agreement(s), or no real intent that the plan participants would repay the loans.

    2. We hold the affected loans to owner employees or HCE participants to a higher standard if the HCE is responsible for ensuring the loans satisfy the requirements.

    3. Affected loans greatly exceed the maximum loan amount specified by IRC 72(p)(2).

  5. If the participant loan exceeds $75,000, alert your group manager. They will coordinate with the Manager of VC and the VC program coordinators to determine whether it would be appropriate to provide income tax relief from the deemed distribution.

Correction By Retroactive Amendment To Resolve Operational Failures

  1. A plan sponsor’s correction by adopting a retroactive amendment that conforms an IRC 401(a) or 403(b) plan document to the plan's actual operation is:

    1. Authorized by Rev. Proc. 2019-19 Section 4.05 or earlier EPCRS revenue procedures.

    2. Permitted under VCP or Audit CAP.

    3. Only applies to 403(b) plans failures in 2009 and later. Before 2009, there was no written plan requirement under the IRC nor was there a requirement to follow the terms of a 403(b) written plan even if one existed.

      Exception:

      A very limited exception allows a plan sponsor to use SCP to correct certain specific Operational Failures by a plan amendment to conform the plan terms to the plan’s prior operations for Operational Failures listed in section 2.07 of Appendix B.

    4. Permitted under SCP for additional Operational Failures on or after April 19, 2019, if certain conditions can be met. Look to Rev. Proc. 2019-19, IRB 2019-19, Section 4.05 and Appendix B, Section 2.07.

  2. The corrective plan amendment must comply with IRC 401(a), including IRC 410(b), IRC 401(a)(4) and IRC 411(d)(6). So, when you review a VCP case that uses this type of correction method to resolve operational or demographic failures, you must verify that the amendment complies with those IRC requirements.

  3. If the corrective plan amendment increases participant benefits, you must:

    1. Determine if the additional benefits are permitted to be provided by a IRC 401(a) qualified retirement plan and for 2009 and later years, a 403(b) plan.

    2. Determine if the amendment would violate IRC 411(d)(6). Allowing some plan participants, including terminated plan participants to retain excess contributions/allocations in a defined contribution plan may violate IRC 411(d)(6) in some circumstances because had the plan sponsor followed the plan’s written terms been followed in operation, the plan’s other participants would’ve received higher allocations or additional benefits.

      Exception:

      If the plan is a governmental plan or 403(b) plan, no need to evaluate IRC 411(d)(6) since it does not apply.

      Note:

      However, 26 CFR 1.401-1(a) and (b) require a qualified retirement plan to operate according to its written terms. Beginning in 2009, a similar requirement was imposed on 403(b) plans. See 26 CFR 1.403-3(b)(3). Therefore, as a general rule, don’t ignore this requirement by approving retroactive plan amendments to conform the written plan to the plan’s operation if it would deny some plan participants benefits specified by the plan document’s written terms.

       

    3. Determine if the corrective amendment is non-discriminatory as permitted by IRC 401(a)(4). If HCEs are benefiting, secure additional information to determine if the corrective amendment is non-discriminatory, such as detailed: benefits/rights or features demonstration, general test or IRC 401(a)(26) participation test. For amendments impacting the plan’s definition of compensation, you may need to secure a demonstration that it doesn’t favor the HCE if the plan is using an alternative definition that falls outside of the safe harbors 26 CFR 1.414(s)-1.

    4. Ask about the plan’s funding status if it is a DB plan. Ask for the most recent Adjusted Funding Target Attainment Percentage (AFTAP) certification in effect at the time of correction to determine if the plan’s funding ratio is below 80%. IRC 436 may prohibit any retroactive plan amendments that increase participant benefits or allow for certain restrictive payments.

    5. When evaluating a corrective plan amendment and related general test or average benefits test or participation test, confirm that the plan doesn’t use short service employees to pass these tests. Refer to the VC SharePoint for the October 22, 2004, Memorandum from the Director of Employee Plans.

  4. If the amendment decreases accrued benefits under the written plan, carefully review this correction proposal. Follow these instructions when evaluating these kinds of correction proposals:

    1. Reject the amendment if it doesn’t comply with IRC 411(d)(6), and ask the TP/POA to propose an alternative correction method that is consistent with EPCRS correction principles. However, we’ll deem a IRC 411(d)(6) violation to not have occurred if the plan sponsor can establish that the plan’s written terms were drafted incorrectly.

    2. For a governmental plan or 403(b) plan, see IRM 7.2.2.19, Correction By Retroactive Amendment To Resolve Operation Failures, section 3B.

    3. If the plan sponsor states the plan document was drafted incorrectly, review the file to determine if the applicant has established, through clear and convincing evidence, employer intent and employee expectations for the way the plan would be administered.

      Note:

      You may not rely on affidavits from the plan sponsor or affected employees to establish employer intent or employee expectations. This includes self serving statements in narrative attachments or correspondence associated with the submission.

  5. In evaluating this issue, consider the following documents, if available (this list is not exhaustive):

    1. Present and former SPD documents;

    2. Present and former employee handbooks;

    3. Present and former versions of the plan document and amendments;

    4. Letters to actuaries, accountants, TPAs, lawyers about the plan’s design and operation;

    5. Past emails or memos to employees about plan benefits; and

    6. Additional documents that help establish employer intent and employee expectations such as: PowerPoint presentations given to employees, employee newsletters, enrollment forms or benefit distribution forms, or plan highlights or other written documents distributed to plan participants.

  6. Consult with the EP Exam field actuaries for:

    1. Any actuarial issues involving DB plans.

    2. Correction methods for any plan type which use the IRC 410(b) average benefits test or the general test allowed by IRC 401(a)(4) or a IRC 401(a)(26) participation test to correct any operational or demographic failures.

  7. After developing the case, recommend to your group manager as to whether to approve the amendment and they’ll discuss your recommendation.

  8. Taxpayers may not request nor may VC grant IRC 7805(b) relief, even if the plan received a favorable determination letter for its plan document.

  9. If the plan is a pre-approved plan and the corrective amendment isn’t one of the pre-approved plan options, see IRM 7.2.2.28, Corrective Plan Amendments To Pre-Approved Plans, for special instructions.

Anonymous VCP Submissions

  1. Anonymous VCP cases are generally worked the same way as other VCP cases except that the plan sponsor’s identity is not disclosed to the IRS until there is agreement on correction. See Rev. Proc. 2016-51, IRB 2016-42, Section 10.09 for details.

    Note:

    For submissions made on or after January 1, 2019, look to Rev. Proc. 2018-42, IRB 2018-42, and Rev. Proc. 2019-19, IRB 2019-19, Section 10.09.

  2. For paper VCP submissions, verify that the required signed and dated penalty of perjury statement is enclosed. See Form 8950 Instructions and applicable EPCRS revenue procedures.

    • The penalty of perjury statement must read as follows: "Under penalties of perjury, I declare that I am an authorized representative of the Plan Sponsor who complies with the Power of Attorney requirements described in section 11.07 of Revenue Procedure 2016-51. I will submit an executed Form 2848 upon the disclosure of the identity of the Plan Sponsor to the IRS."

  3. Analyze the failures, correction methods and changes to administrative procedures following the described procedures in other sections of this IRM. As part of that process, secure your manager or group coordinator’s approval and document it in the CCR or VC workpapers.

  4. See IRM 7.2.2.16, Dealing With Disagreements and Conference of Right, if you have ongoing disagreements with the representative over the disclosed failures and proposed correction methodology.

  5. If you agree on the failures, correction methods and changes to administrative procedures, prepare a draft anonymous compliance statement as agreed to by your manager and the POA.

    Note:

    Or, if the POA wants to use Form 14568, work with the POA to get revised narrative attachments to attach to the model compliance statement.

  6. Send a draft compliance statement to your manager or group coordinator for review and approval before you request the disclosure of the plan sponsor’s identity or present the draft compliance statement to the POA.

  7. Once there is full agreement between VC and the POA, formally request the disclosure of the plan sponsor’s identity. Use IRS Letter 5336 for this purpose.

    Note:

    The TP/POA may fax the disclosure information and other necessary documents to you.

  8. Upon disclosure of the taxpayer’s identity, tell your manager the plan sponsor's identification, including the EIN, name of plan sponsor, name of plan, and plan number. Your manager directs an IDRS check to verify that the plan sponsor/plan is not under audit. If the submission is "Under Examination" as of the date of disclosure, they’re ineligible for VCP and we don’t issue a compliance statement.

  9. After the IDRS check, arrange to have the key data fields in RCCMS updated by working with your group manager to transfer the case to Group 7558. Refer to IRM 7.2.2.3.3 for detailed case processing procedures. After the updated RCCMS case is returned to you, proceed with the next step.

  10. If ATAT issues were included with the disclosure documents, contact your manager as you may need to coordinate with appropriate IRS employees. See Rev. Proc. 2016-15, Section 4.12, or Rev. Proc. 2018-52 or Rev. Proc. 2019-19 for submissions made in 2019.

  11. If there are no "Under Examination" or ATAT issues, revise the draft compliance statement to include the necessary identifying information and share with the plan sponsor/POA to get feedback on accuracy.

Voluntary Submissions involving 457(b) Eligible Plans of Deferred Compensation

  1. Rev. Proc. 2019-19, Section 4.09 permits plan sponsors to voluntarily submit a closing agreement request for their 457(b) plan if they're either:

    • Government entities

    • Tax exempt organizations (in limited circumstances)

      Note:

      This was permitted in prior EPCRS revenue procedures

      . See Rev. Proc. 2018-52 and Rev. Proc. 2016-52.

  2. These filings are not VCP submissions. Resolution of any 457(b) failure is accomplished outside of EPCRS, in the form of a DO 8-3 closing agreement signed by the plan sponsor and the Director of EP Rulings and Agreements.

  3. Look to IRM 7.2.4 for additional case processing procedures.

Group VCP Submission Procedures

  1. A Group VCP submission is submitted by an eligible organization for qualification failures affecting at least 20 individual client plans. The qualification failures must result from a systemic error involving the eligible organization.

  2. Generally, a single submission is made. If the qualification failure affects more than one of the eligible organization’s pre-approved plans, then the organization may need to submit additional VCP submissions.

  3. Determine if the proper number of submissions have been made. Discuss with your manager if you think the applicant should make additional submissions or made too many related group submissions.

  4. If you think a group submission doesn’t satisfy the group submission eligibility requirements, discuss with your manager before contacting the POA or VCP applicant.

  5. The Group VCP submission should enclose a $10,000 fee. If more than 20 plans will be part of the submission, we collect the remaining fee near the end of the VCP process. The additional fee is $250 per plan in excess of 20 with the total fee capped at $50,000. In 2019, look at Rev. Proc. 2019-4 for fee amounts. In 2020 look at Rev. Proc. 2020-4 for fee amounts. In 2021, look in the annual EP revenue procedure that list the fees in effect for that year.

  6. Fix user fee problems:

    1. If the minimum fee was not fully paid, collect any amounts owed as soon as possible.

    2. If the minimum fee was not paid at all, consider not processing the submission unless it can be promptly collected unless there are indications of unique circumstances.

    3. If (a) or (b) applies, discuss with your manager before taking any action.

    4. If more than $10,000 was submitted, determine that the amount submitted is the appropriate user fee for the Group Submission.

    5. If additional fees are owed, follow IRM 7.2.2.10.1, Instructions on Soliciting User Fees Owed, to collect any additional user fee.

  7. Generally, review group submissions like any other VCP submission.

  8. The Model Compliance Statements and Schedules (Form 14568 series) are not designed for Group VCP Submissions and may not be used as the issued compliance statement.

  9. If the stated qualification failures or correction methods don’t uniformly apply to the listed employers/plans in the group submission, the applicant must clearly indicate which specific failures apply to specific employers/plans in submitted attachments and narratives.

    1. The group submission compliance statement must include a narrative and listing that clearly shows which specific failures apply to the employers/plans.

    2. If using the sample group submission compliance statements on the VC SharePoint site, this information would be part of a modified Attachment A or a separate attachment (for example, Attachment B).

  10. Once the issues and correction methods have been finalized, prepare a draft group submission compliance statement that the eligible organization and the IRS will sign. See sample group compliance statements posted to the VC SharePoint site.

  11. A group manager must approve all correction methods and the draft compliance statement before it is sent out to the POA/eligible organization.

  12. When the group manager approves the draft group submission compliance statement:

    1. Share the draft with the POA/eligible organization and request their comments or approval.

    2. If the draft document is acceptable to the POA/eligible organization, mail or fax one copy to the eligible organization for signature along with Letter 5352, Request for Signature for Group VCP Submission.

    3. Get the required certifications and attachments, if not already provided via Letter 5352. See applicable EPCRS revenue procedures. See Rev. Proc. 2016-51, Section 10.10. For submissions made on or after January 1, 2019, look to Rev. Proc. 2018-42, IRB 2018-42, and Rev. Proc. 2019-19, IRB 2019-19.

      Note:

      The POA/eligible organization may have an extended deadline of 120 days to submit these items.

Closing Procedures For Specialists

  1. When a VCP case is ready for closing, take the following actions:

    1. Create a subfolder in the RCCMS Office Documents folder to store the closing letters, issued compliance statement and address documents. Call this subfolder “Closing Documents”.

    2. Prepare a VCP closing letter for the taxpayer and POA or individual listed on Form 8821, if applicable. Closing letter types are described more fully in IRM 7.2.2.25, Required Use of Standardized VC Letters, on the required use of standardized official IRS letters.

    3. Do not date the closing letters. Make sure the typed name and signature of the current Manager of VC has been added to the letter.

    4. Letter 5353 is for VCP cases that are closed favorably with or without a refund.

    5. Prepare and upload a MS Word document to the RCCMS case record that contains the mailing address for applicant and POA or individual listed on Form 8821, if applicable.

    6. Upload closing letters and compliance statement to the RCCMS record and place them in the “Closing Documents” subfolder in Office Documents.

      Document # of Copies
      Closing Letter Original
      Closing Letter-POA, if applicable. Original
      Model Compliance Statement. Original version is part of the RCCMS case file. Extract a copy of the final version that will be signed by the VC group manager and upload it to the RCCMS record.

      Note:

      Make sure to clean up the extracted pages by removing references to fax numbers, the sender and receiver, etc. that often appear at the top and bottom of received fax pages.

      Streamlined Compliance Statement Original

      Note:

      Extract a copy of all referenced letters. Create a single PDF and upload it to the RCCMS record. This will be attached to each streamlined compliance statement.

      Traditional Compliance Statement Original
      1 This assumes one POA listed on Form 2848 or a single individual listed on Form 8821. No extra copies need to be printed if there is no POA or if no other individual has been authorized to receive copies of written correspondence. You may need to print and mail additional copies if multiple individuals are listed on Form 2848 or 8821 and the box has been checked indicating that they will be sent notices and communications. In order to reduce costs, the maximum number of POA letter packages is limited to two.

  2. Go to the Activity record and update status code to "51" . After saving and closing send an "Update request" by clicking on the Actions button. Don’t forget to sync few times by clicking on the "Send/Receive" button. Wait for the group manager to approve the request. Try clicking on "Send/Receive" every few minutes.

  3. In the Activity record, make sure you input all fee information in the "POA and Misc" tab. This includes:

    1. The initial fee paid.

    2. Subsequent VCP user fees collected or sanctions if a closing agreement.

    3. Refunds requested.

    4. Dishonored or retired payments.

  4. In the Activity record, make sure the project code is accurate and reflects the correct plan type.

  5. Organize the compliance statement items mentioned above within the Office documents folder. Try to order them as follows (top to bottom):

    1. Closing Letter to VCP applicant (generally Letter 5353). Use Letter 5355 if there is a partial refund.

    2. Closing Letter to POA, if applicable Letter 937-A.

    3. Compliance statement (i.e. Form 14568 series or a drafted streamlined or traditional).

    4. Referenced attachments, if using a model or streamlined compliance statement.

  6. Scan and/or upload any emails, faxes, paper correspondence, Exhibits, workpapers, files, etc. created or obtained during your review to the RCCMS record.

  7. Follow these general guidelines when organizing files in VCP RCCMS cases:

    1. Use file names that make sense and inform the user as to what the file is just by looking at its name.

    2. Consider creating sub-folders in the Office Documents folder to help organize the files and material in the submission.

    3. Place a number in front of the file name to make it easier to group and order files.

    4. Get feedback from your manager and other employees in your group as to how the files in RCCMS should be organized.

    5. Keep correspondence and emails together in chronological order.

    6. Organize closing documents (i.e. closing letters and compliance statements to be issued) so they are at the top of the files in Office documents folder.

      Note:

      Be sure they have been placed into the Closing Documents subfolder.

  8. Open the Activity. Set "Validate" to "Close" . Be sure all "red" items have an entry.

  9. Go to the Closing Records tab and click on "New compliance" . Once it opens, be sure the Validate is set to "Close" .

  10. Take action on all "red" items. Complete the following fields in the closing record:

    Closing Record Steps, if necessary
    (a) General Tab- Disposal Code. Enter a VC disposal code. Valid codes are between 770 through 780.
    (b) General Tab- Closed by: PBC. Choose 400.
    (c) General Tab- Closed by: SBC. Choose or enter 12401.
    (d) General Tab- Closed by: EGC. Choose or enter Specialist’s group number.
    (e) Details Tab- Total Trust Assets. Enter Asset number record on Form 8950, Line 4d.
    (f) Details Tab-Number of participants affected. Enter the number of participants listed on Form 8950, Line 4e.
    (g) Details Tab-Examiners time. Enter the total time charged by Specialist to the case.
    (h) Details Tab- Examiner’s Name. Enter or choose the Specialist’s name.
    (i) Individuals/Bus. (2 of 3). Enter or choose Principal issue codes. These are VC failure codes. Up to four may be entered. The codes can be found in Document 6476 and in a listing on the VC SharePoint. See Exhibit 7.2.2-1.
  11. If there are more than four failures in your VCP submission, refer to the listing on the VC SharePoint for instructions on how to choose the Principle issue codes to enter into RCCMS.

  12. Save and close after completing all required items.

  13. If the case is ready to be closed click on the "Actions" button and choose "Request Closure." After making the request, don’t forget to syc a few times by clicking on the Send/Receive button.

  14. If you received paper documents, scan them, and upload them to the RCCMS record.

  15. After uploading scanned images of paper documents, refer to the TE/GE Record Retention Guide for information on the proper way to retire paper documents to the Federal Record Center.

Closing Procedures For Group Managers

  1. Group managers:

    1. Monitor your RCCMS inventory and look for cases in Status 51 with pending closing requests. Accept them as soon as possible.

    2. Generally, within five business days of receiving a RCCMS VCP case file for closing, issue the compliance statement and closing letters and update RCCMS or, if the case is not ready for closure, send the case back to the specialist via RCCMS.

    3. Upload applicable files, etc. to RCCMS and do a final close via RCCMS update on the same date.

  2. When closing cases, take the following actions:

    1. Review the case file, including the RCCMS closing record, applicable RCCMS activity screens, the closing letters, and compliance statements to determine if the VCP case is ready for closure.

    2. Return the VCP case to the specialist for correction or further development if there are errors or the case was not properly developed.

    3. Address and correct errors in the compliance statement or closing letters before final close on RCCMS.

    4. Sign and date the compliance statements and closing letters: add the date, printed name and signature of the Manager of VC.

      Note:

      At the manager’s discretion, a clerical person can sign and date. If they choose to do this, the RCCMS case will be temporarily transferred to the clerk.

    5. Promptly mail one approved compliance statement plus applicable closing letters to the VCP applicant and copies to the POA or designated individual listed on Form 8821, if applicable. Upload one set of the signed and dated documents to the RCCMS case’s Office Documents folder.

      Note:

      At the manager’s discretion, a clerical person can mail and upload.

    6. Update RCCMS, and close the case off the system by clicking on the "Actions" ” button and choosing Final Close.” Update the status code to 90- Final Close.

Required Use of Standardized VC Letters

  1. Specialists and group managers must use specific, official IRS letters when corresponding with plan sponsors for VCP submissions. This includes VC’s closing letters.

  2. VCP closing letters contain the title "Manager of Voluntary Compliance" and his/her printed name and signature.

  3. Use the specialist’s signature and address for all letters requesting missing or additional information.

  4. Customize official IRS letters where allowable and necessary. But don’t change the content and format of these letters in any way.

  5. The representative or appointee listed on Form 2848 or Form 8821 must receive concurrent copies of all letters IRS sends to the applicant, if the applicable box on Form 2848 was checked or Form 8821 was completed. Specialists use Letter 937-A to send the POA the copy of the applicant’s or plan sponsor’s letter.

  6. Use the following table for a list of all published official IRS VC letters; most were revised in 2019 and 2020. Discard any previous versions or sample letters. If a letter previously listed on the VC SharePoint is not on this list or in the publishing depository, it is not a valid letter. See IRS Product Catalog Information for the latest version of these letters.

    Letter # Letter Type Description When to Use
    937-A Transmittal Letter to POA. Cover letter for authorized persons listed on Form 2848 or Form 8821 who are receiving copies of any IRS letters addressed to VCP applicant. Use as a cover letter when sending copies of any IRS letters addressed to the Applicant to the authorized persons listed on Form 2848 and Form 8821, along with a copy of the issued compliance statement when applicable.
    5335 Request plan sponsor identity for Anonymous Submissions using model compliance statement (Form 14568). Cover letter to POA requesting plan sponsor’s identity when applicant uses Model IRS compliance statements. Don’t use - obsolete.
    5336 Request plan sponsor identity for Anonymous Submissions. Cover letter to POA requesting plan sponsor’s identity. Use to request the applicant and plan identity for anonymous VCP submissions.
    5337 Return VCP Submissions mailed to Washington DC-Rev. Proc. 2008-50 case. Cover letter the Washington DC office issues when they return a VCP submission made under Rev. Proc. 2008-50 received on or after July 1, 2013. Don’t use - obsolete.
    5338 Returning Paper VCP Cases Mailed to IRS on or after April 1, 2019. Cover letter the TE/GE Adjustments group uses to return a paper VCP submission sent to Covington campus on or after April 1, 2019. Don’t use.
    5339 Uncollected Fee-VCP Closing Letter. Closing letter when a VCP submission has an unpaid user fee. Use when you close a VCP submission because:
    • no user fee paid

    • a dishonored payment,

    • part of the user fee is still owed

    and the applicant refused to make the payment.
    5340 Closing Letter-Ineligible VCP Submissions. Closing letter where no action taken for ineligible VCP cases. Use for the following ineligible VCP submissions:
    • no IRS qualification failures or 403(b) failures or participant loan failures.

    • the plan or EO plan sponsor is under examination.


    Taxpayer may be entitled to 100% refund of paid user fee. See IRM 7.2.2.10.
    5341 Ineligible for VCP-Under Examination. No action letter for ineligible VCP cases determined to be "under examination" at the time applicant made the submission. Don’t use - obsolete. Use Letter 5340.
    5342 Ineligible for VCP-403(b) pre-2009 Issues that are not failures. No action letter for ineligible VCP cases where all failures in the submission involve pre-2009 years, but the described failures don’t conform to a failure described in Rev. Proc. 2008-50 Section 5.02. Don’t use - obsolete. Use Letter 5340.
    5343 Closing Letter-No Action Letter-Dishonored Check Not Replaced. No action letter for VCP cases with dishonored check where TP or POA refused to submit a new check. Don’t use - obsolete. Use Letter 5339.
    5344 21 Day Letter to Request additional info. Request missing or additional information for all VCP submissions made under Rev. Proc. 2008-50. Don’t use - obsolete.
    5345 VCP-General Letter to Request Information. Request missing or additional information for all VCP submissions. Use to request missing or additional information for VCP submissions made under any EPCRS revenue procedure.
    5346 VCP 10 Day Follow-up to Information Request. Follow up letter if no response to a request for information. Use if plan sponsor/POA doesn’t:
    • submit requested information

    • responds incompletely to a previous information request.

    5347 VCP- No Action Letter-Failure to Agree.
    • No action letter used when IRS and POA disagree on correction method. Generally, no refunds of paid fees.

    • Partial refund permitted if the applicant originally overpaid their VCP fee.

    • Use for VCP cases where the IRS and POA can't agree on how to describe or correct a failure.

    • No refund owed where the POA or TP refuses to provide requested information or if case has been substantively processed.

    5348 Favorable Closing Letter-VCP with DL Application.

    Note:

    Don’t use this letter if the VCP submission was made on or after 1/1/2017.

    Favorable closing letter for a DL Application submitted concurrently with the VCP submission. Don’t use - obsolete.
    5349 Failure to Respond- VCP Closing Letter. No action closing letter used when we don’t receive a response to any requests for additional information. Use where the POA/TP doesn’t respond or is unwilling to fulfill IRS requests for missing or additional information.
    5350 No Compliance Statement- VCP Submission In Error. No action letter for cases where the TR/POA realizes that the VCP submission was made in error. Use when the TP/POA informs VC that they submitted to VC in error.
    Usually occurs when TP or POA obtains new information or realizes that no qualification failure occurred.
    No refunds permitted if VC has substantively processed the case.
    5351 VCP Request a Taxpayer Signed Compliance Statement. Cover letter when the compliance statement must be signed by the plan sponsor. Use when material change in VCP narrative affecting failures and correction and you haven’t secured a new penalty of perjury statement
    5352 Request for Signature for Group VCP Submission. Cover letter to request signed group submission compliance statement, and final procedural items. Use for all VCP group submissions.
    5353 Favorable VCP Closing Letter. Regular favorable letter sent to the VCP applicant with the issued compliance statement. Use for favorable closings
    5354 Favorable Closing Letter to POA. Cover letter for closing letter addressed to VCP applicant with copies of issued compliance statement. Don’t use - obsolete. Use Letter 937-A.
    5355 Favorable Closing Letter with partial refund. Favorable letter where a partial refund was processed due to taxpayer error. Use April 2017 version. Don’t use - obsolete . If there is a refund on a favorable closed case, use Letter 5353.
    5356 Letter to Extend 150 day correction period. Letter that extends the standard VCP correction period. Use if the group manager grants a request for an extension to the 150-day correction period on a closed VCP case.
    You might need to coordinate with the Manager of VC IRM 7.2.2.26, Extension of The 150-Day VCP Correction Period.
    5357 VCP Cover Letter to POA with Copy of TP Letter. Cover letter when copying a POA on a letter addressed to a VCP applicant. Don’t use. Letter is obsolete and retired. Use Letter 937-A instead.
    5359 Letter to request a signed DO 8-3 closing agreement for a 457(b) plan. Cover letter requesting plan sponsor to sign DO 8-3 closing agreement for a 457(b) plan. Use only if the closing agreement has been approved by VC program coordinator and IRS Management.
    5360 Closing Letter-No Action -Decline to Process.
    • Closing letter used in situations where VC declines to issue a compliance statement in the interests of sound tax administration.

    • Closing letter when VC declines to process a submission involving a 457(b) plan.

    • Use if no compliance statement is issued in the interests of sound tax administration.

    • Use if VC management and others decline to process a submission involving a 457(b) plan.

    • Refund paid user fee, if any. Follow IRM 7.2.2.10.2 Refund Procedures and Instructions for VCP User Fees.

    5361 Closing Letter-No Action-457(b) governmental plan using SCP. Cover letter when a plan sponsor/POA withdraws a governmental 457(b) submission because they may resolve any described failures using SCP rules available to these plans.
    .
    Use when a governmental plan sponsor chooses to use SCP after being informed of the liberal SCP already in the IRC and Regs.
    Refund any initial user fee payment per IRM 7.2.2.10.2, Refund Procedures and Instructions for VCP User Fees.
    5362 Closing Letter-Favorable Letter for 457(b) submissions. Favorable closing letter. Issue after securing signed closing agreements and sanction payment.

Extensions of The 150-Day VCP Correction Period

  1. Specialists or group managers may receive requests to extend the 150-day correction period in a closed VCP case. VC will consider these requests if the request:

    1. Is in writing to a group manager or specialist before the end of the 150-day correction period in the issued compliance statement.

    2. Explains why the extension is needed and specifies the amount of additional time sought.

  2. The group manager will:

    1. Contact the Manager of VC’s staff assistant to get the closed case file from RCCMS.

    2. Review the request in consultation with the specialist who worked the closed VCP case.

  3. Generally, the group manager can approve or deny the request. However, the group manager must seek approval from the Manager of VC if:

    1. The extension request exceeds six months.

    2. The TP or POA requests a second extension.

  4. The group manager issues Letter 5356, VCP Letter That Extends the 150-day Correction Period extending the 150 day correction period.

  5. The group manager contacts the staff assistant to the Manager of VC to upload a copy of the issued Letter 5356 to the closed RCCMS VCP case.

  6. VC doesn’t charge a fee for an extension of the correction period.

  7. If the request is denied or not timely submitted, the group manager should advise the taxpayer that they need to file a new VCP submission to obtain a new compliance statement if they’re still eligible for VCP. The old compliance statement is no longer valid as the taxpayer has failed to comply with its terms.

Information Requests Regarding Open and Closed VCP Cases

  1. A VCP submission and any resulting compliance statement are subject to the confidentiality requirements of IRC 6103 and are not a written determination per IRC 6110.

  2. Generally, VC doesn’t provide copies of compliance statements or information about specific individual VCP applicants to other functions of the IRS, including EP Examinations.

  3. In order to provide efficient tax administration and to lessen taxpayer burden, VC provides limited information about a VCP submission under the following circumstances:

    1. VC will fax a copy of the issued compliance statement to EP Determinations for VCP submissions with a received date before 1/1/2017, associated with a determination letter application required by the EPCRS revenue procedure.

    2. EP Determinations and EP Examination should contact VC if they believe that an open or closed VCP submission is ineligible due to the plan sponsor or plan being "under examination" at the time of the VCP filing. "Under examination" is defined in the EPCRS revenue procedure.

    3. EP Determinations or EP Examinations may, with the consent of the plan sponsor, contact VC to get information about a past submission if a plan sponsor has lost, misplaced or never received a copy of their compliance statement.

    4. Closing Agreement coordinators for EP Determinations may contact VC to discuss a prior VCP case if EP Determinations discovers in an application, additional failures that weren’t addressed in the issued compliance statement. This is allowed per IRM 7.11.1.20, DL Cases with Related Voluntary Correction Submissions, and IRM 7.11.8.3, Miscellaneous Issues,

  4. You may ask about a VCP case at the VCP Status Inquiry Line at 626-927-2011. If this doesn’t result in a full and timely response, EP Exam and EP Determinations may call or email a VC program coordinator, the Manager of VC or VC group managers.

  5. Generally, EP Determinations Closing Agreement coordinators should contact a VC program coordinator or the manager of Voluntary Compliance for situations in IRM 7.11.1.20, DL Cases with Related Voluntary Correction Submissions and IRM 7.11.8.3, Miscellaneous Issues, to determine if it would be appropriate to resolve any newly discovered failures or disclosed failures through a new or existing VCP submission.

    Note:

    Per email instructions dated July 18, 2019, from the Manager of VC, EP Determination and VC should follow new coordination procedures.

  6. If a submitted VCP case is determined to be "under examination" at the time it was mailed to the IRS, the submission will be closed as ineligible if it is still open. If the VCP was closed favorably, the issued compliance statement is not valid. While, not required, VC may choose to rescind the issued compliance statement.

  7. If the VCP case was submitted before becoming "under examination," the EP Examination function should suspend their examination while the VCP is in process. The VC specialist should coordinate with EP Determinations specialist when they resolve the VCP case. To coordinate with EP Examination, refer to the memos issued to EP Examination and Voluntary Compliance employees dated 9/12/05 and 9/26/06.

Corrective Plan Amendments To Pre-Approved Plans

  1. A corrective plan amendment to a pre-approved document that modifies the terms of a prototype plan or a volume submitter plan may cause that plan to lose reliance on the plan’s opinion or advisory letter. The corrective plan amendment won’t cause the plan to lose reliance if:

    1. The corrective amendment would otherwise be permitted per the rules for pre-approved plans; and

    2. The plan sponsor hasn’t made any other modifications to the pre-approved plan that would cause the plan to lose its reliance on the opinion or advisory letter.

  2. If the corrective amendment would normally cause the plan sponsor to lose reliance on the plan’s opinion or advisory letter, or if you’re uncertain if it will:

    1. Ask your manager to contact the pre-approved plan coordinators and ask whether the corrective amendment is permitted for pre-approved plans.

    2. Document the response and the coordinator’s name who responded in the VCP case file.

    3. If the amendment is acceptable to the pre-approved plan coordinators, include a caveat on the compliance statement in the enforcement section. See Form 14568 for sample language for this enforcement caveat.

    4. If the corrective amendment is for an operational failure or demographic failure, it must also satisfy Rev. Proc. 2016-51, Section 4.05. For submissions made on or after January 1, 2019, look to Rev. Proc. 2018-52 and Rev. Proc. 2019-19. If this document is missing, the VCP submission is incomplete.

Missing Prior Plan Document (Relevant Sections)

  1. VCP submissions for nonamender failures, must include a copy of the plan document that was in effect at the time of the described qualification failures (Rev. Proc. 2016-51, Section 11.04). For submissions made on or after January 1, 2019, look to Rev. Proc. 2018-52 and Rev. Proc. 2019-19. If this document is missing, the VCP submission is incomplete.

    Note:

    We don’t enforce this rule if the submission is limited to late interim/good faith amendments that were adopted before the end of the extended remedial amendment cycle that first included them.

  2. VCP submissions for all other qualification failures, must include a copy of the plan document (or relevant sections) that was in effect during the time of the described failures (Rev. Proc. 2016-51, Section 11.04). If these documents are missing, the VCP submission is incomplete.

    Note:

    For submissions made on or after January 1, 2019, look to Rev. Proc. 2018-52 and Rev. Proc. 2019-19. If this document is missing, the VCP submission is incomplete.

  3. Secure the missing documents. If the applicant or POA refuses to provide them, close the case as a Failure to Respond.

  4. For nonamender failures, if the applicant or POA informs you that they can’t submit a copy of the prior plan document because it doesn’t exist or they can’t find it:

    1. For cases assigned to a VC Group or eligible EP Determination Letter specialist working VCP cases, check all appropriate IRS records, including EDS and IDRS to determine if there is some evidence of a prior plan document or issued determination letter. If there is, VC considers it resolved for VCP processing purposes even though no actual document was secured. This only applies to VCP submissions that are limited to late amender failures (Form 14568-B, Schedule 2 failures).

  5. If there is no IRS record of a prior plan document, allow the applicant or POA to expand the VCP submission to include the failure to timely adopt an initial plan document. The applicant/POA must provide clear evidence that a qualified retirement plan existed in these earlier years and was made available to all eligible employees. They can prove this by submitting:

    1. Old financial statements in the name of the plan or trust.

    2. Forms 5500. IDRS command code EMFOLI will list filed Forms 5500 associated with an EIN and plan number.

    3. Old correspondence to employees.

    4. Old annual plan statements issued to individual plan participants.

    5. Correspondence with legal advisors and past TPAs.

    6. An IRS Employee Plans favorable audit closing letter.

  6. Correction would generally require the plan sponsor retroactively adopt a plan document back to the initial plan year.

  7. If the applicant/POA can’t establish that a plan existed in prior plan years, consult with your manager or group coordinator to determine if you should close the case as a no action case. Consider using VC Closing Letter 5350.

  8. If you don’t expand the VCP submission to include a new failure, use one of the no action closing letters because the VCP submission is incomplete due to the missing prior plan document. You may waive this requirement, if appropriate, if it is an FDIC case or orphan plan.

Taxpayer Requests for Modifications to Issued Compliance Statements Relating To Closed VCP Cases

  1. Once a compliance statement is issued to the VCP applicant, we don’t change it or reopen it.

  2. If the former VCP applicant or their representative requests a change to any of the issued compliance statement provisions such as the failure descriptions, factual information, changes to administrative procedures or correction method, they must submit a new VCP submission for a new compliance statement. See Rev. Proc. 2016-51, IRB 2016-42. For submissions made on or after January 1, 2019, look to Rev. Proc. 2018-52 and Rev. Proc. 2019-19. If this document is missing, the VCP submission is incomplete.

  3. The applicant must pay a new user fee based on the amounts in effect when they make the new submission to the IRS. See Rev. Proc. 2020-4, Appendix A (and its annual successors).

  4. Charge the time spent working these types of VCP submissions to the new VCP case. Don’t reopen the original VCP case or charge any new time/fees to it.

  5. If a VCP applicant/POA notifies a specialist or group manager that a recently issued compliance statement has IRS clerical errors and is inconsistent with the information in the VCP submission, the group manager may issue a corrected compliance statement. The procedures mentioned in IRM 7.2.2.30 (2) don’t apply. Some examples of clerical errors include:

    1. Incorrect plan name.

    2. Incorrect EIN

    3. Incorrect name of plan sponsor or VCP applicant

  6. The revised compliance statement issued, discussed in IRM 7.2.2.30 (5), should have the same execution date as the original issued compliance statement.

  7. If IRM 7.2.2.30 (5) applies, don’t open the original VCP submission. Charge time you spend preparing and mailing the revised compliance statement to group manager time (WebETS Code 680) or VC Coordination (WebETS Code 111) depending on who prepares the revised compliance statement.

  8. In rare situations, VC may need to reopen a closed VCP case. The group manager:

    1. Gets the Manager of VC’s written permission.

    2. Asks the Manager of VC’s staff assistant to pull the closed case from the RCCMS Library.

Voluntary Compliance Referrals To EP Examination and Fraud Referral Procedures

  1. Generally, Employee Plans VC doesn’t make referrals to the IRS Examination functions.

  2. Historically, the EPCRS revenue procedures permit VC to consider making a referral to EP Examination in limited, specific situations.

  3. The specific plan sponsor-caused situations that may result in a referral to EP Examination and the specific EPCRS revenue procedure sections include:

    1. Applicant doesn’t timely provide requested information needed to bring the submission to resolution to VC - Section 10.06(4).

    2. IRS and plan sponsor can’t agree - Section 10.06(7).

    3. Applicant doesn’t return a signed compliance statement to the IRS (and any owed user fee) within 30 days of request - Section 10.06(8).

    4. Plan sponsor doesn’t timely begin the corrections and the administrative procedures required by the compliance statement - Section 10.06(11).

  4. If any of the specific situations apply, discuss with your manager and the Manager VC to see if you should make a referral to EP Examinations. Document this discussion in the CCR, workpapers, or email.

    Note:

    Use these procedures for any VCP submission in which you aren’t issuing a favorable compliance statement.

  5. Specialists and managers follow the steps below if a referral is to be made to EP Examinations:

    Actions Steps, if necessary
    (a) Specialist Completes Form 5666, TE/GE Referral Information Report
    1. Complete Form 5666 boxes:

      • A-F (for plan year generally use the most current plan year for which a Form 5500 has been filed.

      • J (if applicable).

      • L- Add your electronic signature.

      • P-1-P12 (i.e. EIN of plan sponsor)

      • P40-P42 (Plan #)

      • O

    2. When completing Box O include the following information:

      • Full plan name

      • Specialist name and telephone #

      • Describe the qualification failures in the VCP submission. Include the type of failure, related tax issues if known, the plan years in which the failure occurred Describe the IRC 401(a) violations, listing the specific Code section. Explain your reasoning for referring the plan for examination (for example, "there could be a potential prohibited transaction because..." or, "the plan has violated Code section because....," or "the correction proposal was not reasonable citing the appropriate section in the EPCRS revenue procedure."

      • Be sure to indicate that we’re not going to issue a VCP compliance statement.

    (b) Specialist creates PDF copy of relevant documents from the VCP submission. Include:
    • Documents that describe the qualification and or tax issue.

    • For failure to respond cases, include copies of the case chronology record and VC letters sent to the applicant.

    (c) Specialist signs Form 5666 electronically Sign using Adobe.
    (d) Specialist emails the completed Form 5666 and the PDF attachment(s) to group manager Make sure to send it via encrypted email.
    (e) Group Manager reviews Form 5666 and if approved returns a signed and dated form to the specialist.
    1. Sign and date Item M on Form 5666.

    2. Use Adobe to sign and date.

    (f) Specialist updates the RCCMS record Go to the Office Documents folder and create a subfolder called "Referral to EP Exam."
    (g) Specialist uploads documents to the Referral to EP Exam subfolder Upload:
    • Documentation of discussion with your manager and the Manager of VC about the referral.

    • Signed Form 5666 and PDF attachment.

    (h) Specialist sends the referral to the Referrals Group
    1. Make referral via secure, encrypted email.

    2. Make sure the subject line of the email says "EP Referral from VC."

    3. Send email to EOclass@irs.gov

    4. Upload a printed copy of the sent email to RCCMS and place in the Referral to EP Exam subfolder.

  6. Find sample versions of completed Form 5666 on the VC SharePoint.

Fraud Referral Procedures

  1. Tax fraud is defined as an intentional wrongdoing by a taxpayer, with the specific purpose of evading a tax known or believed to be owed.

  2. Tax fraud requires:

    1. A tax due and owing, and

    2. A fraudulent intent.

  3. Taxpayers who knowingly understate their tax liability often leave evidence in the form of indicators. Fraud indicators are divided into two categories:

    1. Indications of Fraud are a sign or symptom, or signify that actions may have been done for the purpose of deceit, concealment or to make things seem other than what they are.

    2. Affirmative Acts (Firm Indications) of Fraud are those actions that establish that a particular process was deliberately done for the purpose of deceit, subterfuge, camouflage, concealment, some attempt to color or obscure events, or make things seem other than what they are.

  4. Don’t pursue fraud unless affirmative acts are present. For examples, see IRM 25.1.1.3, Fraud Handbook, Indicators of Fraud vs. Affirmative Acts of Fraud.

  5. Follow these procedures for potential fraud referrals:

    If: Then:
    1. You discover potential fraud during the review of a VCP submission. Discuss any possible issues with your group manager.
    2. Your manager agrees that potential fraud may exist. Contact the EP Determinations Fraud Reviewer (EPDFR) at TE/GE Connect-Fraud
    3. The EPDFR agrees that potential fraud may exist. The EPDFR contacts the EP SME in EP Exam.
    4. The EP SME agrees that potential fraud may exist. The EP SME may contact the TE/GE Fraud Specialist.
    5. The EP SME wants to discuss the matter with VC. The EP SME arranges a conference call to discuss the case with the:
    • Specialist

    • Specialist’s group manager

    • Manager of VC

    • EPDFR, and TE/GE Fraud Specialist

    5. If the FTA agrees that potential fraud exists. The EP SME arranges a conference call to discuss the case with the:
    • Specialist

    • Specialist’s group manager

    • Manager of VC

    • EPDFR, TE/GE Fraud Specialist and FTA

  6. At any point, the parties may decide that a fraud referral is not appropriate and instruct the specialist to:

    1. Make a referral to EP Examination. Follow the procedures in IRM 7.2.2.31 to make the referral.

    2. Make a promoter referral using Form 14242 Report Suspected Abusive Tax Promotions or Prepares to the Lead Development Center.

    3. Make a referral to other areas such as the Office of Professional Responsibility or another operating division of the IRS or another agency.

  7. The group manager and the Manager of VC determine whether or not VC will issue a compliance statement in the interest of sound tax administration or because it would be inappropriate.

  8. If all parties agree that the case should be developed for fraud:

    1. Specialist completes Form 11661, Fraud Development Recommendation - Examination and the sends the completed form to their manager via encrypted email.

      Note:

      EP SME and TE/GE Fraud Specialist and FTA help complete the form.

    2. Group manager reviews the form and if acceptable signs the form electronically and returns it to the specialist.

    3. Specialist sends the signed form to the EPDFR, EP SME and TE/GE Fraud Specialist

    4. Specialist may need to take additional actions as instructed.

  9. If criminal fraud is suspected, then specialist completes Form 2797, Referral Report of Potential Criminal Fraud Cases. Follow procedures similar to those in IRM 7.11.10.3.1.1 Criminal Fraud Procedures.

Miscellaneous Links to the VC SharePoint site

Listing of internet links to the VC SharePoint site for various miscellaneous items

  1. Summary Listing of Published VC Letters

  2. VC Failure Codes Used as RCCMS Primary Issue Code lookup table

  3. VC Codes in RCCMS

  4. VC Refund Form mentioned in IRM 7.2.2.10.2, Refund Procedures and Instructions for VCP User Fees

  5. Email contacts in TE/GE Adjustments With Regard to VCP Refund Requests mentioned in IRM 7.2.2.10.2, Refund Procedures and Instructions for VCP User Fees

  6. Sample Compliance Statements

  7. January 31, 2018 Email Instructions To Record Fee Info in RCCMS mentioned in IRM 7.2.2.6.2

  8. July 18, 2019 Email Instructions and Attachment Detailing New Procedures Regarding Coordination Between EP Determinations and VC mentioned in IRM 7.2.2.27.

Guide to VCP Case Processing Procedures

Guide to VCP Case Processing Procedures:

Processing VCP Receipts and Initial Processing By the Campus or Pay.gov

Early Closing For Certain VCP Submissions

Procedures To Fix Errors Or Make Updates to Key RCCMS Fields

Procedures for Correction Disposal of VCP Cases on RCCMS

Screening of VCP Cases and Screening VCP Cases In RCCMS

General VCP Case Assignment Procedures for Group Managers

Procedures for Specialists Working VCP Cases at the Group Level:

  1. Required Use of Form 5464 (or RCCMS Chronology Tab) and WebETS

  2. Actions To Be Taken Upon Receipt of New VCP cases

  3. Check and Update RCCMS Activity Record

  4. Reviewing VCP Cases-Initial

    1. Basic Responsibilities

    2. Verify correctness of fee and check to see if paid with plan assets

    3. Check Form 2848

    4. Check to see if Under Examination

    5. Check ATAT Statement

    6. Check for missing or incomplete Forms 8950

    7. Check for required enclosures

    8. Check prior plan document

    9. Check for missing explanations for special tax relief

    10. Check for penalty of perjury-Anonymous Submissions if the case is a paper submission

    11. Request additional information

    12. Documentation

  5. Reviewing VCP Cases-Technical Review Procedures

    1. Basic Responsibilities

    2. Conduct an initial review of the submission

    3. Check category type

    4. Review & respond to Screener comments

    5. Model compliance statements

    6. Check and see if SSN is being used

    7. Check and see if required DL application is missing

  6. Model Compliance Statements

    1. Reviewing pre-formatted compliance statements

  7. Procedures Involving User Fee Issues

    1. Special fee waivers/refunds

    2. Additional fees and Instructions

    3. VCP Refunds and Instructions

    4. Dishonored User Fee Payments

    5. Terminating Orphan Plans

  8. Special Tax Relief Requests permitted by section 6.09 of Rev. Proc. 2016-51. For submissions made on or after January 1, 2019, refer to Rev. Proc. 2018-52 and Rev. Proc. 2019-19.

    1. Basic Principle and authority

    2. IRC 72(t) additional income tax

    3. IRC 4972, IRC 4973 and IRC 4974

    4. IRC 4979

  9. Power of Attorney Form 2848 and Limitations of Form 8821

    1. Limitations and basic requirements

    2. Verify that Form 2848 correctly completed

    3. Anonymous submissions

  10. Procedures for contacting and corresponding with POA and VCP applicant

    1. Permitted contacts and conditions involving Letters, Fax, and email

    2. Use of plain language

    3. Letter Types

    4. Procedure if no response

  11. Compliance Statements

    1. Defined

    2. Types and characteristics

    3. General procedures

  12. Conference of Right and dealing with disagreements with VCP Applicant/POA

  13. Analyzing qualification failures

    1. Principle

    2. General rule and plan document failures

    3. Operational failures

    4. Ineligible employer

    5. Corrections outside of Appendix A/B safe harbors

    6. Required coordination

    7. Pick-up contributions permitted by IRC 414(h)

  14. Participant loan failures-IRC 72(p) violations only

  15. Procedures for handling retroactive plan amendments that conform the written plan to the plan's operation

    1. Basic rules

    2. Amendment increases benefits

    3. Amendment decreases benefits

    4. Required coordination

    5. Effect on Pre-approved plans

  16. Dealing with Anonymous Submissions

    1. General rule

    2. Required penalty of perjury of perjury statement from POA-Rev. Proc. 2016-51 case

    3. Analyze case and required coordination

    4. Requesting disclosure of plan sponsor's identity

    5. Check audit status as of date of disclosure

  17. Procedures for 457(b) submissions

    1. Special rules

  18. Procedures for Group VCP Submissions

  19. Closing procedures for Specialists

  20. Closing procedures for Group Managers

  21. Required use of Standardized VC letters; listing of official letters

  22. Extensions to 150-day correction period

  23. Information requests from EP Exam and EP Determinations

  24. Amendments to Pre-approved plans

  25. Procedures- Missing prior plan document

  26. Modifications to issued compliance statements associated with closed VCP cases

  27. Voluntary Compliance Referrals To EP Examination

  28. Fraud Referral Procedures