IRS provides tips on avoiding processing delays with VCP submissions

On its website, the IRS has provided five tips to help practitioners avoid processing delays with their Voluntary Correction Program (VCP) submissions under Rev. Proc. 2013-12.

1. Compliance fee check must be included

All VCP submissions must include Form 8951 and the appropriate compliance fee. The Voluntary Corrections staff will automatically return the entire VCP submission if it does not contain a check for the compliance fee.

2. Identify late interim amendment failures

The IRS advises practitioners to specifically describe any late interim amendments associated with a change in the tax law that are to be included in the VCP submission. These may include changes required by the Pension Protection Act of 2006 (PPA) or the Heroes Earnings Assistance and Relief Tax Act (HEART) of 2008. Each PPA or HEART Act provision that was adopted late should be listed. A general statement that “The plan was not timely amended for PPA or HEART” is not acceptable. A statement that the late amendments “include” certain specified items is not acceptable, as it suggests there may be other items not specified.

3. Check the right boxes in Appendix C

Processing delays can be caused by not properly completing Appendix C Part I and Appendix C Part II, Schedule 2. The right boxes must be checked. Practitioners should check the boxes applicable to their submission, and not check other boxes.

4. Ensure that the right person signs Form 8950 or Power of Attorney forms

The IRS reminds practitioners to make sure the Form 8950 is signed by an authorized officer of the plan sponsor, and not by the sponsor’s legal representative. The Power of Attorney, Form 2848, if included, should be signed by an authorized person such as an officer of the plan sponsor. Generally, these items cannot be signed by a plan trustee or plan administrator unless the plan is a multiemployer plan or a governmental plan governed by an independent board of trustees.

5. Remember the limits of the compliance statement

The IRS Voluntary Compliance staff’s review of the VCP submission is limited to the failures and correction methods that are identified by the plan sponsor. The VC staff will not review the language in the plan document or plan amendments submitted to resolve late amender plan document failures or conduct a compliance review of all paperwork included with the submission to see if there are other plan document failures that may not have been noted in the VCP submission.

If a determination letter application is included with the VCP submission, it will not be reviewed by VC. It will be transferred to the EP Determinations staff to process. They will then review the determination letter application independently. Once the VCP case is closed by VC, the issued compliance statement cannot be used to resolve additional failures that may be subsequently discovered by EP Determinations or the Examinations staff.

Source: IRS website, May 2, 2013.

For more information on this and related topics, consult the CCH Pension Plan Guide, CCH Employee Benefits Management, and Spencer’s Benefits Reports.

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