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Employee Plans Compliance Unit - General FAQs

These frequently asked questions and answers provide general information only and shouldn’t be cited as legal authority. They provide you with information responsive to general inquiries. Because these answers don’t apply to every situation, yours may require additional research.

 

  1. What is a compliance check?
  2. What should I do if I receive a compliance check letter from the EPCU?
  3. What do I need to do if I want my representative to answer an EPCU compliance check?
  4. What occurs during a compliance check?
  5. Is there a penalty for not responding to a compliance check?
  6. How often can the EPCU do compliance checks?
  7. Will I receive a closing letter?
  8. Does EPCU also conduct audits?

 

What is a compliance check?

A compliance check is a plan review to determine whether the recordkeeping and reporting requirements are being met. We also use it to:

  • match information from returns or other information items to resolve errors,
  • help educate plan sponsors, administrators and trustees about plan reporting and filing requirements, and
  • increase voluntary compliance.

A compliance check is not an examination or an audit. It doesn’t directly relate to determining a tax liability.


 

What should I do if I receive a compliance check letter from the EPCU?

Provide the requested information within the requested number of days. You may also provide additional documents or clarifying information. Either mail or fax your response as indicated in the letter. Some letters may include an email address to receive responses. If you can’t provide your response within the requested timeframe, contact the individual identified in the letter and request an extension of time.


 

What do I need to do if I want my representative to answer an EPCU compliance check?

If you want your representative to respond to your compliance check, you need to authorize EPCU to discuss the contact letter with the representative by sending us either:

  • Form 2848, Power of Attorney and Declaration of Representative
  • Form 8821, Tax Information Authorization

Complete the appropriate form as you would for an Employee Plans audit, except complete Form 2848, Line 3, Description of Matters, or Form 8821, Line 3d, Specific Tax Matters, with “Compliance Check.”


 

What occurs during a compliance check?

At the beginning of a compliance check, we’ll send a letter to the plan sponsor. We’ll notify you that this is a compliance check and not an audit. We may ask questions concerning items related to filings or the lack of filings. If we determine an audit is appropriate, we’ll notify you that we’re beginning an audit before asking questions related to tax liability.


 

Is there a penalty for not responding to a compliance check?

No, you may refuse to respond to a compliance check without penalty. However, we have the option of opening a formal audit, whether or not you respond to the compliance check.


 

How often can the EPCU do compliance checks?

Since a compliance check is a review to determine whether the plan sponsor is adhering to reporting and recordkeeping requirements and isn’t an audit, it’s possible to have more than one compliance check for a tax year if facts and circumstances warrant.


 

Will I receive a closing letter?

Yes, once the EPCU completes its review, EPCU will send one of two letters to the plan sponsor:

  • The 1564 letter indicates the compliance check was reviewed and you don’t need to take further action.

  • The 1564-A letter indicates the compliance check was reviewed but you do need to take further action or it confirms that you have already taken additional action. An enclosure to the letter identifies the items. Address any questions to the person identified on the letter.

 

Does EPCU also conduct audits?

Yes. Furthermore, some contacts can result in a referral to an examination agent for future action.

Page Last Reviewed or Updated: 22-Feb-2016