EP Examination Process Guide - Section 6 - Resolution of Issues and Closing the Examination


This Section will explore the resources and procedures available to a plan sponsor/authorized representative and EP agent to resolve examination issues to aid in closing an examination favorably.

This Section will address operational violations which were discovered as a result of an EP agent conducting an examination but before a decision as to which method of correction best satisfies the needs of the taxpayer and is acceptable to the IRS.

Basically, there are two types of cases:

  • One where the plan sponsor or authorized representative and the EP agent agree on the issues and the resolution, and
  • The other is where the plan sponsor or authorized representative and the EP agent disagree on the issue or resolution.

Initially, the plan sponsor or authorized representative and the EP agent should share their positions in a respectful, non-confrontational manner. It is recommended that each person’s positions should cite the relevant laws and any factual or legal documentation (i.e., Laws, Regulations, Revenue Rulings, General Counsel Memorandums or Court Cases), which support that position. One of the most important aspects of the issue resolution process is establishing and agreeing to the issues and the facts. Therefore prior to agreeing that a plan failure or violation occurred, be sure the facts are correct.

Below are some informal and formal ways to assist in resolving technical issues.

  • It is helpful to address the facts and issues verbally first.
  • Secondly, each party can exchange his or her respective position in writing.
  • Finally, the plan sponsor or authorized representative and the EP agent can have a face-to-face meeting to try and resolve any differences.

Exploring these means should resolve most differences of opinion. However, you may encounter a situation where you believe the EP agent is being unreasonable, insufficient guidance is available or you disagree with the way the EP agent is interpreting or applying the available guidance. If a satisfactory resolution cannot be agreed upon, you should request a conference with the EP agent’s manager.

This conference will provide an opportunity to revisit all the facts, documentation and applicable law. Generally, the manager will be in a better position to objectively review the issue but if the issues cannot be resolved at this conference, the manager can request Technical Assistance from either:

  • Review Staff, or
  • Area Counsel, generally in the format of a memorandum, which is a request for a legal position or guidance on interpretation of the law.

In certain circumstances issues may be irresolvable at this level because the issue is of a high profile nature, there is a lack of uniformity regarding the disposition of an issue, the issue is unusual or complex or sufficient guidance is unavailable. In these instances, a manager may recommend Technical Advice.

Agreeing to the issues and resolution could result in a closing agreement. These errors can be corrected and tax benefits preserved for plan participants and sponsors with fees greater than those available under the Voluntary Correction Program (VCP) but less than the impact of the plan losing its tax benefits. This closing agreement falls under our Audit Closing Agreement Program or Audit CAP. It is one part under the EP Compliance Resolution System (EPCRS).