7.2.2. Employee Plans Compliance Resolution System (EPCRS)

(1) Purpose: This IRM describes the procedures that Employee Plans (EP) Voluntary Compliance follows to process submissions made 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. 2021-30, and taking into account Notice 2023-43.

(2) Audience: EP employees in: EP Voluntary Compliance (VC), Technical, Determinations, and Examinations employees involved in processing VCP submissions.

(3) Policy Owner: Director, Employee Plans.

(4) Program Owner: Employee Plans.

(5) Program Goals: The goal of EP VC 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 VC 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.

(1) Failures eligible for EPCRS correction are defined in Rev. Proc. 2021-30, Section 5 and Section 6.07.

(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 an 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). See IRM 7.2.2.21.

(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 IRC 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. 2008-50CB 464, section 5.02:

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

Satisfy the requirement for the availability of salary reduction contributions. See IRC 403(b)(12)(A)(ii). Satisfy the requirements of IRC 401(m) as applied to 403(b) plans. Limit participant compensation as required by IRC 401(a)(17) as applied to IRC 403(b) plans. See IRC 403(b)(12)(A)(i). Satisfy the distribution restrictions of IRC 403(b)(7) or IRC 403(b)(11). Satisfy the incidental death benefit rules of IRC 403(b)(10). Pay minimum required distributions required by IRC 403(b)(10). Give employees the right to elect a direct rollover per IRC 403(b)(10), including the failure to give meaningful notice of that right. 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. Satisfy the limit on elective deferrals required by IRC 403(b)(1)(E). Limit elective deferrals as required by IRC 403(b)(1)(E) and IRC 401(a)(30) in the annuity contract or custodial agreement. Correctly contribute or allocate Excess Amounts. 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:

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. A failure to: Satisfy the non-transferability requirement of IRC 401(g). Initially establish or maintain a custodial account as required by IRC 403(b)(7). 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).

(1) A plan sponsor or their representative (POA) must submit VCP applications electronically using the Pay.gov website beginning April 1, 2019. The initial steps include:

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

2. Applicant/POA 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/POA gathers attachments and documents required by Rev. Proc. 2021-30, Section 11.04, converts them into PDFs, and combines them into a single file that doesn’t exceed 15 MB.

4. Applicant/POA accesses Pay.gov and finds Form 8950 or they can type https://www.Pay.gov/public/form/start/438392465 into their web browser.

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

6. Applicant/POA 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/POA 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. 2021-30, 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.

11. Beginning with the June 2022 release (Version 3.7.1) RCCMS automatically updates the "Statute" date field by entering a date that is two years from the date in the "Return received" field.

(2) The FAST unit in Ogden:

1. 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".

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

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

4. Updates the RCCMS status code to 08 and transfers the completed RCCMS record to the Manager of EP VC.

Note: The IRS no longer issues an acknowledgement letter.

(3) Beginning in May of 2023, the EP VC sends out a special letter to applicants whose cases can’t be closed on merit and must be assigned to a specialist. Refer to IRM 7.2.2.4, Preliminary Review of VCP Cases.

(1) The Manager, EP VC supports assessing VCP cases before they’re assigned to a specialist. This review is part of evaluating cases. The Manager, EP VC designates employees (usually EP VC program coordinators) to conduct this preliminary review following specific standards.

(2) To promote case processing efficiencies and allow for the accelerated processing of some VCP case work, this preliminary review:

1. Identifies cases that can be immediately closed as a "Merit Closure" by the preliminary reviewer either immediately with minimal effort, or are ineligible for VCP.

2. Identifies suitable "Quick Closure" cases that can be closed favorably with minimal effort by individuals other than a preliminary reviewer.

3. Promptly identifies cases subject to expedited treatment. See IRM 7.2.2.4 (3) for VCP cases subject to expedited treatment.

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

5. Checks the project code. Don’t use project code "0999." The RCCMS project code for VCP cases represent the type of retirement plan reported on Form 8950, item 5. Current VCP case project codes are in Document 6476 and in IRM 7.2.2.6(4).

6. 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.

2. Any case where the applicant has made a specific request for expedited treatment, provided detailed reasons as to why such request should be granted, and at the discretion of the Manager, EP VC, has been granted.

(4) Preliminary reviewer: complete the following actions when evaluating a case:

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

2. Conducts an initial high level review of the VCP case, completes a preliminary review check sheet, and uploads it to RCCMS.

   Reminder: For Merit Closure cases, the preliminary review check sheet must contain the reasons why the case can be closed.

   Reminder: For Quick Closure cases, the preliminary review check sheet must describe what additional items, information, or revisions are needed for the case to be closed quickly.

3. Makes sure there is an entry in RCCMS field relating to the NAICS code if this field is blank. Compare the code entered on Form 8950 to the available NAICS codes in RCCMS and choose the closest appropriate code.

4. If the user fee payment was dishonored (i.e. retired) or is clearly less than what is owed, the preliminary reviewer will attempt to secure a new payment by soliciting a Form 8951 as discussed in IRM 7.2.2.10.1, Instructions on Soliciting User Fees Owed.

5. Makes a specific written entry on to the RCCMS Chronology tab indicating that the case has been preliminary reviewed and chooses the appropriate action code. Generally, it’s between "201-Merit Close" or "203-Full Review/Quick Closure".

6. For merit closure cases, updates RCCMS by entering appropriate EP VC issue/failure codes in the RCCMS VC Issue grid. Prior to 10/1/2023 up to four issue/failure codes were entered in the closing record via the "Principal issue codes" field within the closing record of the RCCMS case.

7. For merit closure cases, updates the RCCMS closing record by choosing the appropriate disposal code. Make sure to choose "771-Favorable-Merit (Screeners only)". Beginning on 10/1/2023, the description of this code was revised to be "771-Favorable-Merit (Source Code 20 cases only)."

8. For merit closure cases, creates the issued compliance statement and places it into a "Closing Documents" subfolder in the RCCMS Office documents folder.

9. Checks the plan type entered on Form 8950 plus the resulting project code on RCCMS and verify that it’s accurate based on plan type and type of submission. See Document 6476 and IRM 7.2.2.6(4) for current project codes for VCP cases.

10. Updates RCCMS to designate whether the case is a "Full review" or "Quick Closure" case or is a "Merit closure" by entering the appropriate classification code to the RCCMS Chronology Tab.

11. Updates RCCMS to identify cases that have been preliminary reviewed by submitting an update request to change the status code from status 08 to Status 10.

(5) Overall preliminary review timeframes: Generally -

1. Manager, EP VC assigns cases to preliminary reviewers within 15 days of receiving VCP cases from the FAST unit.

2. Preliminary reviewers review cases and return them to the Manager, EP VC (i.e. Group 7550) within 10 days of assignment.

3. Designated employees (usually a EP VC program assistant) must close designated merit closure cases within 10 days from the date the preliminary reviewer identified the case for merit closure and transferred the RCCMS case file back to RCCMS Group 7550.

(6) Action taken if a preliminary reviewed case is not closed on merit:

1. Program assistant mails Letter 5265, Notification to Applicant that a VCP/VCAP Case needs to be Assigned to a Specialist, to the applicant and their representative, if applicable, informing them that the case has been received by the IRS, placed into unassigned inventory as it can’t be closed on merit and is awaiting assignment to a specialist. It also provides information how the applicant can check on their submission’s current status and includes a link to a special webpage on IRS.gov that provides information on unassigned VCP cases.

(1) When specialists need EP VC case work, they must send a request via email to the EP VC program assistant and staff assistant with a courtesy copy to their group manager.

(2) Unless the manager objects, the cases will be transferred to the group manager.

(3) The manager will check to see if the Primary field has a Yes indicator to prioritize unassigned expedited processing cases.

(4) Expedited and Quick Closure work is assigned first and then all other cases are assigned using the first in first out rule based upon the received date.

(5) The manager changes the RCCMS status to 12 and assigns the cases to the specialist who requested work.

(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 Quick Closure/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 that 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 preliminary review as discussed in IRM Section 7.2.2.4 and 7.2.2.4.1 on WebETS. Use Activity Code 115 and project code 0999.

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

(4) Project Codes for VCP cases are as follows:

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

(6) Create a CCR using the official current PDF Form 5464, and if necessary, upload it to the RCCMS record for each assigned case to document case activity and time charged.

(7) Check the RCCMS case grade to verify it’s not higher than your current grade, and inspect the VCP submission to verify that the case was properly graded before you contact the VCP applicant or representative. Find the case grading criteria in IRM 7.11.2, Employee Plans Determinations Letter Program, EP Case Assignment Guide. Contact your manager if it appears the case grade is incorrect or is above your current grade level.

1. Document your discussion and what was agreed upon on the CCR.

2. Your manager may decide to transfer the case to another specialist.

(8) Review the VCP submission to determine if the case requires expedited treatment. Find indications of expedite treatment:

1. In the case file.

2. On the completed preliminary review checklist.

3. If the box next to "Primary" is checked in the RCCMS Activity record.

4. 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).

(1) You must verify whether the VCP submissions assigned to you are complete and accurate, even though a VCP submission may have been preliminary reviewed as discussed in IRM Sections 7.2.2.4 and 7.2.2.4.1.

(2) Prepare written 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. Refer to IRM 7.2.2.17.1, Workpapers for VCP cases for additional procedures pertaining to workpapers applicable to all VCP cases.

(3) Review the cover letters and narrative attachments. Note any unusual representations, and conflicting items.

(4) Discuss with your manager if anything in the VCP case file suggests that the plan or plan sponsor is "Under Examination" as defined in Rev. Proc. 2021-30or any other issues that you’ve discovered based on your review. Document this discussion on the CCR, or in your workpapers.

(5) Verify the applicant paid the correct VCP fee:

(6) If you discover potential fee issues, document the issue in the CCR or workpaper. Refer to:

1. IRM 7.2.2.10, Procedures for User Fee Issues.

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

3. 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.

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

(7) 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’s an indication that the plan paid the user fee.

2. Review the detailed Pay.gov Deposit Ticket PDF to see if there are indications that the plan paid the user fee.

3. Discuss with your manager if you see evidence that the plan paid the user fee. If the plan did pay the fee, ensure that the plan sponsor (or some other party) immediately reimburses the plan for the VCP user fees with interest. The VCP submission can’t be further processed until the plan has been reimbursed. Document the discussion and resolution in the CCR, and applicable workpapers.

   Note: If you see indications that the user fee was paid by a non-owner plan participant, take action to ensure that they are reimbursed by the plan sponsor.

(8) Review Form 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.

(9) Review the case file to determine if the plan or plan sponsor was "Under Examination" as defined in Rev. Proc. 2021-30, Section 5. 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. Examination activity will show up on IDRS printouts if a record exists. For additional information on IDRS consult the training PowerPoint slides on IDRS located on the EP VC SharePoint. Contact your manager if you don’t understand the information in the IDRS.

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 examination 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 examination 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 return received date.

(10) Take the following actions if the plan or plan sponsor is under examination:

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:

(12) Check whether the case file has a complete PDF of a submitted Form 8950. If missing, contact an EP VC program coordinator.

(13) Verify that the Form 8950 is:

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

2. Complete and verify that the applicant included all required attachments.

(14) Inspect the VCP case file to determine if applicant submitted all required plan documents, plan amendments and sample computations. Refer to Rev. Proc. 2021-30, Section 11.04. This includes the following:

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

2. Detailed sample computations.

3. Corrective plan amendments.

4. 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

   .
   

5. 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, that they included a penalty of perjury statement, as described in Rev. Proc. 2021-30, Section 11.04(16), signed and dated, by the plan sponsor.

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

(17) Review the file for a written explanation to support a request for special tax relief offered by Rev. Proc. 2021-30, Section 6.09. If missing, secure the explanation. See IRM 7.2.2.11, Special Tax Relief Requests, for procedures on how to evaluate these requests.

(18) Request missing or incomplete items using Letter 5345, VCP-General Letter to Request Information.

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

(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 2848, Power of Attorney and Declaration of Representative.

3. Form 8821, Tax Information Authorization.

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

5. Form 14568, Model VCP Compliance Statement.

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

   Caution: This form was completely revised in July of 2023 and has a new title and purpose. It’s now known as Form 14568-A, Model VCP Compliance Statement-Schedule 1: Plan Document Failures for 403(b) Plans.

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

   Caution: This form was completely revised in July of 2023 and has a new title and purpose. It’s now known as Form 14568-B, Model VCP Compliance Statement-Schedule 2: Nonamender Failures for 401(a) Plans.

8. Form 14568-C, (July 2023), Model VCP Compliance Statement- Schedule 3: SEPS and SARSEPs.

9. Form 14568-D, (July 2023), Model VCP Compliance Statement- Schedule 4: SIMPLE IRAs.

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

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

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

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

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

15. Any narratives or attachments the POA or VCP applicant submitted describing 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).

(3) Prepare written workpapers that document the issues in the submission, your analysis, and any conclusions you reached. Do not use a CCR as the case file’s workpaper. Refer to IRM 7.2.2.17.1, Workpapers for VCP cases for additional procedures pertaining to workpapers applicable to all VCP cases.

(4) Review the RCCMS "Type" field and verify it’s correct. The RCCMS Type field choices for EP VC cases are in Document 6476, Information Systems Codes FY 2024 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. Update the RCCMS record if the category needs to be changed.

   Note: You may reconsider your initial determination after receiving additional information from the applicant/representative.

(5) Review the comments/issues (such as user fee issues, VCP eligibility issues, and issue development) the preliminary reviewer noted on the preliminary review 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.

   Caution: The preliminary reviewer’s notes on the checklist are not an all-inclusive or exhaustive list of issues with the case. They are not meant to be the only items that need addressing. Specialists must conduct their own independent review of the submission.

(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 must get an EIN at IRS.gov.

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

3. Update the RCCMS record. Follow IRM 7.2.2.3.2, Procedures to Fix Errors or Make Updates to Key RCCMS Fields.

(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 and upload all relevant internal correspondence (such as, Microsoft Teams chat, email, fax) to the RCCMS case file.

   Exception: 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 all of the following conditions are met:

1. The failure is 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. You and your manager agree that you don’t need to coordinate with an IRS actuary.

4. You and your group manager get at least one EP 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) If Form 8950, Line 6b was answered Yes or if there are other indications that the submission resulted from an earlier pre-submission conference request then contact your manager:

1. Manager: Must request the RCCMS case file associated with the pre-submission conference request from the EP VC staff assistant or program assistant.

2. Specialist: Must review the closed pre-submission conference case file to see what feedback was provided and if the new submission differs from the information that was previously provided to the IRS.

(11) Document your decisions and consultations with your manager on the CCR or workpaper and upload all relevant internal correspondence (such as, Microsoft Teams chat, email, fax) to the RCCMS case file.

(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):

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

Types of Cases	Circumstances for Waiver or Refund:	Additional Information and Instructions
Ineligible Cases.	At the Manager, EP 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; makes a IRC 403(b) submission and all of the failures reported are in pre-2009 years, but aren’t one of the IRC 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 EP 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 Federal Deposit Insurance Corporation (FDIC) 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.
IRC 457(b) Plans.	VCP submissions involving IRC 457(b) plans and EP VC declines to accept, and the plan sponsor included a payment with their submission.	See IRM 7.2.2.21, Voluntary Submissions involving IRC 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.	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: 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 - Collect any additional amounts imposed as a sanction payment over any paid VCP user fee via a closing agreement per Rev. Proc. 2021-30, Section 4.10.

3. SEP or SIMPLE IRA with retention of excess assets - Collect any additional amounts imposed as a sanction payment over any paid VCP user fee via a closing agreement per Rev. Proc. 2021-30, Section 6.11(5)(b).

4. Group Submission - Collect the additional user fee imposed by Rev. Proc. 2024-4, 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. 2021-30, Section 6.09(6). The additional amounts are 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 for a group VCP submission.

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 are generally identified by the TE/GE Adjustments Team, Group 7845, who informs the Manager, EP VC and a designated EP VC employee.

(5) The designated EP VC employee takes the following actions when they become aware of a retired/rejected payment:

1. Get the necessary information from Pay.gov to document the dishonored/retired payment.

2. Take the necessary steps to upload the Pay.gov information into the RCCMS record.

3. For unassigned cases, reach out to the applicant/POA and ask them to submit a new payment using Form 8951. If the payment is not immediately made, mark the RCCMS case accordingly and assign the case for a full review.

(6) If a EP VC specialist receives a VCP case with a retired/dishonored payment, take the following actions:

1. Instruct the TP/POA to submit a new payment to the IRS via the Pay.gov website using Form 8951 as instructed in IRM 7.2.2.10.1.

2. Get confirmation from the TP/POA that a new Pay.gov payment has been made.

3. Wait seven to ten days from the payment date for the designated EP VC employee to send a three-page PDF file that includes detailed Pay.gov payment information and a copy of the submitted Form 8951.

   Note: Follow-up with the designated EP VC employee if they don’t send the PDF. You can’t close the case until you receive the three page PDF file that documents a successful/settled new user fee payment.

4. If the TP/POA doesn’t submit a new payment (or is unsuccessful) after repeated inquiries, discuss with your manager within a reasonable period to see if you can close the case as a failure to respond or ineligible case. Follow the procedures in IRM 7.2.2.31, Voluntary Compliance Referrals to EP Examinations and Fraud Referral Procedures. Use Letter 5339, Uncollected Fee-VCP Closing Letter as the closing letter.

(1) Generally, excise taxes and income tax consequences associated with 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 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. 2021-30, Section 6.09, and the requirements/conditions to evaluate these requests.

(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 you contact or send any correspondence to any named person who is not the plan sponsor.

(4) Taxpayers should use Form 2848 or Form 8821 (Rev. 01-2021) for all VCP submissions on or after May 1, 2021. If they used an earlier version, solicit a new Form 2848 or Form 8821.

(5) 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. It needs to be clear as to whether the named representative is entitled to copies of IRS correspondence. That authority is granted in Line 2, if the applicable box(s) located next to first two named representatives is checked. If the box is not checked the representative is not entitled to receive copies of IRS correspondence.

   Note: If none of the correspondence boxes are checked, call the representative to see if it was an oversight when the form was completed. Secure a replacement form if it was not completed properly.

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

4. The named representative must satisfy the power of attorney requirements in Rev. Proc. 2021-30, Section 11.08 and Rev. Proc. 2024-4, Sections 6.02(11) and (12). An unenrolled return preparer can’t be a power of attorney for any VCP submission.

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

6. 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.

(6) 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 have to refer to Rev. Proc. 2021-30 as long as the correction program is referenced:

   Example: The matters description may use terms like "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 model IRS forms, such as "14568" 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 failures noted in the submission.

4. If the representative submitted the VCP submission on behalf of the applicant via the Pay.gov website, the Form 2848 must specifically grant that authority. To grant the necessary authority, the box next to line 5a for “Other acts authorized” must be checked and the following description 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. 2021-30, Section 11.08, signed and dated, by the plan sponsor. See also Form 8950 Instructions.

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

(8) When a VCP submission case is converted into a VCAP case, you must get a new Form 2848 because the original submitted form lacks the necessary authorization. Make sure:

1. Line 3 - Acts authorized contains something like "EP Voluntary Closing Agreement Request permitted by Rev. Proc. 2024-4."

2. Line 3 Tax Form Number and Years or periods should reflect "Not applicable."

(1) Applicants aren’t required or permitted to submit a determination letter (DL) application for any VCP submission. See Rev. Proc. 2021-30, Section 6.05. Plan sponsors who want to submit determination letter applications must follow the instructions in Rev. Proc. 2022-40 for individually designed plans and Rev. Proc. 2023-37 for pre-approved plans.

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

(2) Send letters or faxes to the applicant and properly 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:

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

1. The IRS prefers that if they wish to submit information and documents electronically to the IRS that they use secure messaging via Taxpayer Digital Communications (TDC) for case related communications. Encourage them to submit Form 15314, TEGE Secure Messaging Taxpayer Authorization of Disclosure to Designated Users.

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

3. The IRS prefers that they send information by TDC or 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 November 18, 2021, Memorandum (Control Number NHQ-01-1121-0004) 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) Generally, allow a 21-day response time for initial information requests. Use Letter 5345, VCP- General Letter to Request Information.

(7) When requesting additional information from applicants you must offer the TP/POA the opportunity to respond to your information request using the Taxpayer Digital Communications Secure messaging (TDC) portal. Take the following actions:

1. Make sure the check box relating to the secure messaging paragraph is checked when preparing Letter 5345 and any other VC letter (Letter 5336, 5346, 5351, 5352 and 5359) where additional information or documents are being requested.

2. Fax or mail Pub 5295, Secure Messaging for Tax Exempt and Government Entities to the TP/POA along with the applicable VC letter.

3. Promptly follow-up with a telephone call to see if they are interested in using TDC, to provide the requested information.

   Note: If the POA/TP are not interested in TDC, document the follow-up contact and their response in the CCR.

4. Secure a fully completed and signed/dated Form 15314, TEGE Secure Messaging Taxpayer Authorization of Disclosure to Designated Users by fax or mail.

5. Make sure Form 15314 is completed properly and signed properly by an authorized officer of the plan sponsor consistent with the submitted Form 2848.

   Note: TDC/Secure Messaging is not available to individuals listed on Form 8821 or unenrolled return preparers.

6. Email the completed Form 15314 to *TEGE TDC TP Provisioning.

7. After the form has been processed sign in to the TDC portal and send the initial welcome message and other applicable items.

(8) 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 EP VC SharePoint site or the IRS intranet.

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

(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. 2024-4. See also Rev. Proc. 2021-30, Section 10.

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

(3) If the applicant submits Form 14568 and applicable attachments (such as narrative attachments or if applicable, Form 14568-A through Form 14568-I,) those documents will generally be the issued compliance statement.

1. If you determine that it’s in the IRS’s and/or the plan sponsor’s best interest, 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 before preparing a traditional compliance statement.

3. Document your discussion on the CCR.

(4) Use the electronic sample documents posted on the EP 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 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 comments/revisions. Make sure the manager approves the revised document. Fax the approved 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 all email instructions/comments/approvals from your manager to the RCCMS case file.

(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 considered a material change in fact.

2. If plan sponsor/POA may be 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. Secure a revised form or prepare a traditional compliance statement. See IRM 7.2.2.15(3).

(10) If the traditional or streamlined 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. Generally, the response timeframe is 30 days. However, the specialist may use a shorter timeframe, such as 15 or 21 days in appropriate circumstances. Specialists are obligated to give taxpayers a 30 day response period if the applicant or their representative subsequently requests it.

(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:

1. How a 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. 2021-30, Section 6.09 as discussed in IRM 7.2.2.11, Special Tax Relief Requests.

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, EP VC and the EP VC program coordinators as appropriate.

(4) If your position is upheld, seek agreement from the plan sponsor/POA, and inform them that you’ve discussed the issue with your manager.

(5) If the applicant or their POA continues to disagree, they are entitled to a formal Conference of Right with your 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 maintain there are problems with the submission, they must discuss it with the Manager, EP VC and the EP VC program coordinators to ensure consistent treatment of taxpayers.

(7) If the IRS and plan sponsor/POA can’t agree, the IRS closes the VCP submission and doesn’t issue a compliance statement.

(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.

(9) If IRS doesn’t issue a compliance statement, consult with your manager and the Manager, EP VC to determine if you should refer to EP Examinations. See IRM 7.2.2.31, Voluntary Compliance Referrals to EP Examinations, for additional details. Document all actions in the CCR, and the specialist’s workpapers.

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

(2) In general, EPCRS may only be used to protect the 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 additional relief not offered by EPCRS, discuss this request with your group manager to determine if a DO 8-3 closing agreement is appropriate.

(3) Review and analyze descriptions of failures, correction methods, and changes to administrative procedures using the following requirements. Consider particularly the common incomplete failure descriptions.

(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, we may accept alternative proposals.

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, EP VC or the EP VC program coordinators.

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

(7) Governmental 401(a) plan sponsors can’t use VCP to resolve 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.

(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. 2021-30 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 Rev. Proc. 2021-30, 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, but new amortization schedules aren’t 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 not used to purchase a principal residence, the re-amortized loan period exceeds the five year period measured from when the plan lent the money 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 Rev. Proc. 2021-30, Section 6.07 have been met and the failure appears to have been inadvertent. However, it may be appropriate to deny income tax relief if:

1. There is evidence 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. Loans to owner employees or HCE participants require strict scrutiny if the HCE is responsible for ensuring the loans satisfy the requirements for a bona fide loan.

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’ll coordinate with the Manager, EP VC and the EP VC program coordinators to determine whether it would be appropriate to provide income tax relief from the deemed distribution via VCP. Consideration should be made as to whether the failure is egregious and should be resolved via a Director’s closing agreement with an additional sanction.

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

1. Authorized by Rev. Proc. 2021-30, Section 4.05 or earlier EPCRS revenue procedures.

2. Permitted under VCP or Audit CAP. It’s also generally available under SCP to fix operational failures where participants or beneficiaries received additional benefits not authorized by plan terms as described in Rev. Proc. 2021-30, Section 4.05 and Appendix B, Section 2.07.

Reminder: Refer to Notice 2023-43 which limits the availability of SCP to fix some inadvertent qualification failures under SCP.

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 IRC 403(b) written plan even if one existed.

(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 an IRC 401(a) qualified retirement plan (and for 2009 and later years, a IRC 403(b) plan) is permitted to provide the additional benefits.

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 when operating the plan, other participants would’ve received higher allocations or additional benefits.

   Exception: If the plan is a governmental plan or IRC 403(b) plan, there is no need to evaluate IRC 411(d)(6) since it doesn’t apply.

   Note: However, Treas. Reg. 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 IRC 403(b) plans. See Treas. Reg. 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.

   Example: In a traditional profit sharing plan with a uniform allocation formula based upon participant compensation/total participant compensation, errors in the determination of participant compensation or mathematical errors result in plan participants not receiving a uniform allocation percentage. For example, The employer contributes a discretionary $10,000 contribution to the plan allocated among two participants each of whom made $50,000 resulting a uniform allocation rate of 10% of compensation (10,000/100,000). However, assume compensation was overstated for one participant (Participant B) by $25,000. Therefore, the uniform allocation rate should have been 13.33% (10,000/75,000) based upon the $10,000 contribution paid to the plan. In operation, the allocation rate for Participant A is 10% (5,000/50,000) and 20% (5,000/25,,000) for Participant B. Therefore, if Participate B is permitted to keep their allocation of $5,000 it comes at the expense of Participant A who is entitled to an allocation of 13.33% of compensation. In operation, he is only getting 10%.

   
   

3. If the affected plan participants are subject to a collectively bargained agreement, be sure there is evidence in the case file indicating that the union consents to the adoption of the corrective amendment.

4. 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 Treas. Reg. 1.414(s)-1.

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 EP VC SharePoint for the October 22, 2004, Memorandum from the Director of Employee Plans.

6. For DB plans - ask about the plan’s funding status. 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.

(4) If the amendment appears to decrease accrued benefits or other protected benefits described 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 may deem the correction acceptable under the EPCRS revenue procedure if the plan sponsor can establish that the plan’s written terms were drafted incorrectly.

2. 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.

3. For a governmental plan or IRC 403(b) plan, see IRM 7.2.2.19, Correction by Retroactive Amendment to Resolve Operation Failures, section 3B.

(5) If it’s necessary to determine employer intent or employee expectations, 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. If affected plan participants are subject to collective bargaining, copies of the signed and dated collectively bargaining agreements that were in effect during the period of failure.

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

6. Past emails or memos to employees about plan benefits.

7. Employment offer letters.

8. 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 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 an IRC 401(a)(26) participation test to correct any operational or demographic failures.

(7) After developing the case, recommend to your manager whether to approve the amendment. The group manager must approve your recommendation. Document your analysis, and any discussion, and manager’s approval in your workpapers and in the RCCMS case file as well as the CCR. In addition, the following actions should be taken:

1. Specialist: Complete the Proposed Correction Via Retroactive Amendment form and email it along with any necessary attachments to your manager if you determine the amendment should be approved.

2. Manager: Review the form and attachments. Indicate whether the correction proposal should be approved or denied. If the proposal is denied, be sure to explain why the amendment was not approved and return the signed form to the specialist. Generally, a new correction proposal will be needed if the corrective amendment is not approved because it failed to satisfy the requirements of Rev. Proc. 2021-30, Section 4.05.

3. If corrective amendment appears to result in the appearance of an IRC 411(d)(6) cutback, but the manager and specialist determine the amendment should be approved because of facts and circumstances as permitted above in IRM 7.2.2.19(4) and IRM 7.2.2.19(5), an EP VC program coordinator must be consulted and they must also sign the form before it’s returned to the specialist.

4. Manager: Check the appropriate box on the form indicating the possible appearance of a IRC 411(d)(6) cutback. Email the signed form and applicable attachments to the appropriate EP VC program coordinator in order to obtain 2nd level approval.

5. EP VC program coordinator: The EP VC program coordinator reviews the form and included attachments. If they agree that the amendment should be approved, they will sign and date the form and return it to the group manager and the specialist. If the EP VC program coordinator determines the amendment should not be approved they will mark and sign the form indicating the correction proposal was not approved. An explanation for the denial will be listed on the form.

   Note: If the group manager does not agree with the program coordinator’s decision, they may make an appeal to the Manager, EP VC.

6. Specialist: Upload the signed form to the RCCMS case file.

(8) Taxpayers may not request nor may EP 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.

(10) The requirement to complete the Retroactive Amendment Form and to seek approval from a manager does not apply to individuals’s who are EP VC program coordinators conducting the Preliminary Reviews discussed in IRM 7.2.2.4.

(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. 2019-19.

(2) 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’s approval and document it in the CCR and in your workpapers.

(3) 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.

(4) 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.

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

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

(7) 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 examination. If the submission is "Under Examination" as of the date of disclosure, they’re ineligible for VCP and a compliance statement will not be issued.

(8) After the IDRS check, update the key data fields in RCCMS by working with your group manager to transfer the case to Group 7558. Refer to IRM 7.2.2.3.2 for detailed case processing procedures. After the updated RCCMS case is returned to you, proceed with the next step.

(9) 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. 2019-19, Section 4.12.

(10) 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.

(11) IDRS check requirement applies to Anonymous Group VCP cases. Take these actions once you have received the Attachment A listing that identifies participating employers and plans:

1. Provide a copy of the Attachment A listing to your group manager.

2. The group manager contacts the Manager, EP VC and the EP VC staff assistant to request help with an IDRS check to see if the disclosed EINs are valid and if there is examination activity involving the plan sponsors and plans listed on Attachment A.

3. The EP VC staff assistant conducts the necessary research on IDRS using the generalized IDRS interface application -EICTRAA (GII-EICTRA).

4. If the information on Attachment A is inaccurate or if there is examination activity involving any company listed on Attachment A or any of its retirement plans, it’s possible they can’t be party to the group VCP compliance statement as they are ineligible for VCP. See Rev. Proc. 2019-19, Section 5.08. If either problem occurs, the specialist must secure a revised Attachment A.

5. EP VC can’t close the group submission case until this IDRS check is performed, and if necessary, a revised replacement Attachment A is associated with the group compliance statement.

Caution: As of January 1, 2022, it’s not permitted for VCP submissions to be made anonymously. If you are assigned an anonymous VCP submission case with a received date of January 1, 2022, or later, discuss the matter with your group manager and immediately request the identity of the plan sponsor, the name of the plan, plan number, fully completed Form 2848, and non-redacted VCP submission documents. If the POA refuses to provide the identity of the plan sponsor and plan, and any other necessary documents, close the case without issuing a compliance statement. See Rev. Proc. 2021-30, Section 10.10.

(1) Rev. Proc. 2021-30, 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).

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

(3) Review IRM 7.2.4 for additional case processing 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 failure affects more than one of the eligible organization’s pre-approved plans, then the organization may need to submit additional VCP submissions.

(3) Review the submission to:

1. Determine if the proper number of submissions have been made.

2. Determine if the group submission satisfies the group submission eligibility requirements.

3. Make sure that the submission does not pertain to any IRC 457(b) plans.

(4) Discuss with your manager before you contact the applicant/POA if:

1. The applicant should make additional submissions or made too many related group submissions.

2. The group submission doesn’t satisfy the group submission requirements.

(5) The Group VCP submission should enclose a $10,000 fee. If more than 20 plans will be part of the submission, 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 2022 and 2023 refer to Rev. Proc. 2022-4 or Rev. Proc. 2023-4 for fee amounts. In 2024, refer to Rev. Proc. 2024-4 to determine the user fee for cases submitted in that year.

(6) Fix problems with the initial user fee payment:

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 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. Follow IRM 7.2.2.10.1, Instructions on Soliciting User Fees Owed, to collect initial owed user fee.

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

(8) The Model Compliance Statements and Schedules (Form 14568 series) aren’t designed for Group VCP Submissions, so don’t use them 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 EP 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 EP 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 your 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 POA/eligible organization accepts the draft document, 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, listing of participating employers, if not already provided, and collect the additional owed user fee via Letter 5352. See Rev. Proc. 2021-30, Section 10.11.

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

(13) Check IDRS for every Group VCP submission. Take these actions after you receive the signed compliance statement and Attachment A listing of participating employers and their plans:

1. Give your manager a copy of the Attachment A listing.

2. Group manager: contact the Manager, EP VC and the EP VC staff assistant to request help with an IDRS check to see if there’s examination activity for the plan sponsors and plans listed on Attachment A.

3. If IDRS shows examination activity for any company listed on Attachment A or any of their retirement plans, they may not be party to the group VCP compliance statement because they are ineligible for VCP. See Rev. Proc. 2021-30, Section 5.08. If it occurs, the specialist must secure a revised Attachment A.

4. Specialist: Do not close the group submission case until this IDRS check is performed, and if necessary, include a revised replacement Attachment A with the group compliance statement compliance that we issue.

(14) Group submissions are closed like any other VCP submission. Follow the procedures in IRM 7.2.2.23.

(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. Name 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 or compliance statements. Make sure the typed name and signature of the current Manager, EP VC is on the letter and the compliance statement.

4. Use Letter 5353 for VCP cases closed favorably with or without a refund. There are several no action letters for cases not closed favorably. (IRM 7.2.25).

5. Prepare and upload a MS Word document or PDF to the RCCMS case record that contains the mailing address for the 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	Number of Copies
Closing Letter	Original
Closing Letter-POA, or individual listed on Form 8821 if applicable.	Original
Model Compliance Statement.	Original version is part of the RCCMS case file. Extract a copy of the final version and add the Manager, EP VC’s printed name and signature. Upload it to the RCCMS record. Note: On the extracted pages remove references to fax numbers, the sender and receiver 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. Attach this PDF 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. You don’t have to print extra copies if there’s no POA or other individual named 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. To reduce costs, we limit the maximum number of POA letter packages 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. Sync a few times by clicking on the "Send/Receive" button. Wait for the group manager to approve the request.

(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. Set up a Closing Documents subfolder and try to order them as follows (top to bottom):

1. Closing Letter to VCP applicant (generally Letter 5353).

2. Closing Letter 937-A to POA or individual listed on Form 8821, if applicable.

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

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

5. Address sheet/label for large windowed envelopes.

(6) Scan and/or upload all emails, faxes, paper correspondence, exhibits, workpapers, and files, you created or obtained during your review to the RCCMS record.

(7) Organize your files in VCP cases in RCCMS using these general guidelines:

1. Follow the naming convention described in IRM 7.2.2.17.2, Mandatory RCCMS Naming Convention for EP VC Cases.

2. Place all closing documents into a Closing Documents subfolder.

3. Use file names that make sense and inform the user as to what the file is by looking at its name, consistent with naming convention for EP VC cases.

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

(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 the existing, partial closing record that should be present. When it opens, be sure the Validate is set to "Close."

(10) Take action on all "red" items. Review the following fields in the closing record and make sure they are complete and accurate. Update if needed:

(11) Be sure to save and close your changes to the closing record and then save your changes to the activity.

(12) Locate the issue data grid. It can be found under the Inventory or Folder list view in the RCCMS left hand navigation pane.

(13) Enter Principal issue codes and information relating to correction into the "Issues" RCCMS data grid. Find the codes in Document 6476 and in a list on the EP VC SharePoint. See Exhibit 7.2.2-1.

(14) Complete the Issue data grid:

1. Click on “Issue” located on the left side of the specified RCCMS case to open the grid.

2. Click on the first row, first column and click on space for “Activity” and chose the default which is the name of the activity. This needs to be done for each failure being entered.

3. Go to the 2nd column and click on the space for “VCP/VCAP Issue Code”. Choose the appropriate issue code from the drop down menu. Do this for every disclosed failure which is covered by the compliance statement.

4. Go the 3rd column and click on the space for “Correction Fully Completed”. Choose “Yes” if the failure has been fully corrected by the plan sponsor at the time the case is being closed. Choose “No” if additional actions by the plan sponsor are needed to fully correct the failure within the 150 day correction period. Use “N/A” for those rare cases, likely VCAP, where a “Yes” or “No” response is not appropriate.

5. Go the 4th column and click on the space for “Plan Amendment Fixes Failure”. Choose “YES” if the adoption of a plan amendment is part of the approved correction methodology. Otherwise choose “No”.

6. Go the 5th column and click on the space for “Appearance of an IRC 411(d)(6) Cutback”. Choose “Yes” if the original correction proposal would appear to show that plan participants would be getting less benefits than what was specified by the plan’s original terms. Yes applies even if the correction was ultimately approved. Otherwise, choose “No”.

7. Repeat steps (b) through (f) for each failure. An unlimited number of failures can be entered.

8. Save the entries you have made to the Issue data grid.

9. The case can’t be closed unless there is at least one failure entered and none of the columns can be left blank.

(15) Save and close after you complete all required items.

(16) If the case is ready to be closed, click on the "Actions" button and choose "Request Closure." After making the request, sync a few times by clicking on the Send/Receive button.

(1) Group manager:

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 ten 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 to RCCMS and do a final close via RCCMS update on the same date.

(2) Group manager closes cases by taking these actions:

1. Review the case file, including the RCCMS closing record, Issue data grid, applicable RCCMS activity screens, the closing letters, retroactive amendment approval form, 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. Document the reasons for the return by updating the CCR as instructed by IRM 7.2.2.6.1(2)(a).

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. If missing, add the printed name and signature of the Manager, EP VC.

Note: At the manager’s discretion, a clerical person can sign and date them. If you 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 them.

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.

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

(2) VCP closing letters have 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, however 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 the IRS sends to the applicant if the applicable box on Form 2848 and Form 8821 was checked. Specialists use Letter 937-A to send the POA and the appointee the copy of the applicant’s or plan sponsor’s letter.

(6) Use the following table for a list of all published official IRS EP VC letters. Use the most recent version and 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’s not a valid letter. See IRS Product Catalog Information for the latest version of these letters.

(1) Specialists or group managers may receive requests to extend the 150-day correction period in a closed VCP case. EP 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) Group manager:

1. Contact the Manager, EP VC’s staff assistant to get the closed case file from RCCMS.

2. If possible, review the request in consultation with the specialist who worked the case.

(3) Group manager can generally approve or deny the request. However, the manager should seek approval from the Manager, EP VC if:

1. The extension request exceeds six months.

2. The TP/POA requests a second extension.

(4) Group manager:

1. Issue Letter 5356, VCP Letter That Extends the 150-day Correction Period extending the 150-day correction period.

2. Contact the staff assistant to the Manager, EP VC to upload a copy of the issued Letter 5356 to the closed RCCMS VCP case.

(5) VC doesn’t charge a fee for an extension of the correction period.

(6) Group manager: If you deny the request or it’s not timely submitted, 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.

(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, EP VC doesn’t give 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, EP VC provides limited information about a VCP submission under the following circumstances:

1. EP 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 Examinations should contact EP VC if they determine 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 Rev. Proc. 2021-30, Section 5.

3. EP Determinations or EP Examinations may, with the plan sponsor’s consent, contact EP 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) Ask about a VCP case at the VCP Status Inquiry Line at 626-927-2011. If you don’t get a full and timely response, EP Examinations and EP Determinations may call or email an EP VC program coordinator, the Manager, EP VC or EP VC group managers.

(5) Generally, EP Determinations and EP VC take the following actions where there are determination letter cases with late amender failures and the employer or their POA has disclosed that they have a pending VCP submission with the IRS:

1. EP Determinations specialists: Send an email to their manager which contains the name of the plan, name of the employer/plan sponsor, employer identification number, and plan number asking to verify the filing of the VCP submission with EP VC.

2. EP Determinations group managers forwards the email to the Manager, EP VC’s staff assistant along with a copy to the Manager, EP VC and requests verification of the VCP filing as well as the name of the EP VC specialist assigned to the case and RCCMS work unit number assigned to the submission.

3. The EP VC staff assistant or administrative assistant checks RCCMS and provides the requested available information. If the case is not assigned to an EP VC specialist at the time of the inquiry they will disclose that information to the EP Determinations group manager.

4. EP Determinations specialists: Contact the EP VC specialist assigned to the VCP case via email. Ask the specialist to confirm the late amender failures disclosed in the VCP case and the date those late amendments were adopted.

5. EP VC specialist: Provide a written response via email based upon the information in the RCCMS VCP case file.

(6) If it is determined a submitted VCP case was "Under Examination" when it was mailed to the IRS, close the submission as ineligible if it’s still open. If IRS closed the VCP case favorably, the issued compliance statement is invalid. While, not required, EP VC may choose to rescind the issued compliance statement.

(7) If the VCP case was submitted before becoming "Under Examination," the EP Examinations function should suspend their examination while the VCP is in process. The EP VC specialist should coordinate with EP Examinations when they resolve the VCP case. To coordinate with EP Examinations, refer to the memos issued to EP Examinations and VC employees dated September 12, 2005 and September 26, 2006.

(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 not sure 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 your 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. 2021-30. If this document is missing, the VCP submission is incomplete.

(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. 2021-30, Section 11.04). If this document is missing, the VCP submission is incomplete.

(2) VCP submissions for most other failures, generally must include a copy of the plan document (or relevant sections) that was in effect during the time of the described failures (Rev. Proc. 2021-30, Section 11.04). If these documents are 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 (Form 14568-B, Schedule 2 failures) only, if the TP/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, the VC or eligible EP Determination Letter specialist working a VCP case should:

1. Check all appropriate IRS records, including EDS and IDRS to determine if there is evidence of a prior plan document or issued determination letter.

2. Consider it resolved if you find evidence for VCP processing purposes even though you don’t have an actual document.

(5) If there’s 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 lists filed Forms 5500 for 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 examination closing letter.

(6) Correction is for the plan sponsor to 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 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.

(1) Once IRS issues a compliance statement to a 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. 2021-30. 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. 2024-4, 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.

(6) Use the same execution date as the original issued compliance statement in the revised compliance statement - discussed in IRM 7.2.2.30 (5).

(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, EP VC may need to reopen a closed VCP case. The group manager:

1. Gets the Manager, EP VC’s written permission.

2. Asks the Manager, EP VC’s staff assistant to pull the closed case from the RCCMS Library.

(1) Generally, EP VC doesn’t make referrals to the IRS Examination functions.

(2) Historically, the EPCRS revenue procedures permit EP VC to consider making a referral to EP Examinations in limited, specific situations.

(3) The specific plan sponsor-caused situations that may result in a referral to EP Examinations and the specific EPCRS revenue procedure sections include:

1. Applicant doesn’t timely provide requested information needed to bring the submission to resolution - Section 10.07(4).

2. IRS and plan sponsor can’t agree - Section 10.07(7).

3. Applicant doesn’t return a signed compliance statement to the IRS (and any owed user fee) within 30 days of request - Section 10.07(8).

4. Plan sponsor doesn’t timely begin the corrections and the administrative procedures required by the compliance statement - Section 10.07(11).

(4) If any of the specific situations apply, discuss with your manager and the Manager, EP VC to see if you should make a referral to EP Examinations. Document this discussion in the CCR, or email.

(5) Specialists follow the steps below if making a referral to EP Examinations:

(6) Find sample versions of completed Form 5666 on the EP VC SharePoint.

(1) 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

(1) Guide to VCP Case Processing Procedures:

(2) Processing VCP Receipts and Initial Processing by the IRS or Pay.gov

(3) Early Closing for Certain VCP Submissions

(4) Procedures to Fix Errors or Make Updates to Key RCCMS Fields

(5) Procedures for Correction Disposal of VCP Cases on RCCMS

(6) Preliminary Review of VCP Cases and Preliminary Review of VCP Cases in RCCMS

(7) General VCP Case Assignment Procedures for Group Managers

(8) 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

Basic Responsibilities Verify correctness of fee and check to see if paid with plan assets Check Form 2848 Check to see if Under Examination Check ATAT Statement Check for missing or incomplete Forms 8950 Check for required enclosures Check prior plan document Check for missing explanations for special tax relief Check for penalty of perjury-Anonymous Submissions if the case is a paper submission Request additional information Documentation

5. Reviewing VCP Cases-Technical Review Procedures

Basic Responsibilities Conduct an initial review of the submission Check category type Review and respond to preliminary reviewer’s comments Model compliance statements Check and see if SSN is being used Converting a VCP Case into a VCAP

6. Model Compliance Statements

Reviewing pre-formatted compliance statements

7. Procedures Involving User Fee Issues

Special fee waivers/refunds Additional fees and Instructions VCP Refunds and Instructions Dishonored User Fee Payments Terminating Orphan Plans

8. Special Tax Relief Requests permitted by section 6.09 of Rev. Proc. 2021-30.

Basic Principle and authority IRC 72(t) additional income tax IRC 4972, IRC 4973, and IRC 4974 IRC 4979

9. Power of Attorney Form 2848 and Limitations of Form 8821

Limitations and basic requirements Verify that Form 2848 correctly completed Anonymous submissions

10. Procedures for contacting and corresponding with POA and VCP applicant

Permitted contacts and conditions involving Letters, Fax, and email Use of plain language Letter Types Procedure if no response

11. Compliance Statements

Defined Types and characteristics General procedures

12. Conference of Right and dealing with disagreements with VCP Applicant/POA

13. Analyzing qualification failures

Principle General rule and plan document failures Operational failures Ineligible employer Corrections outside of Appendix A/B safe harbors Required coordination Pick-up contributions permitted by IRC 414(h)

14. Workpapers for VCP Cases

15. Mandatory RCCMS Naming Convention for EP VC Cases

16. Participant loan failures-IRC 72(p) violations only

17. Procedures for handling retroactive plan amendments that conform the written plan to the plan's operation

Basic rules Amendment increases benefits Amendment decreases benefits Required coordination Effect on Pre-approved plans

18. Dealing with Anonymous Submissions

General rule Analyze case and required coordination Requesting disclosure of plan sponsor's identity Check audit status as of date of disclosure

19. Pre-Submission Conferences

20. Procedures for 457(b) submissions

Special rules

21. Procedures for Group VCP Submissions

22. Closing procedures for Specialists

23. Closing procedures for Group Managers

24. Required use of Standardized VC letters; listing of official letters

25. Extensions to 150-day correction period

26. Information requests from EP Examinations and EP Determinations

27. Amendments to Pre-approved plans

28. Procedures- Missing prior plan document

29. Modifications to issued compliance statements associated with closed VCP cases

30. Voluntary Compliance Referrals to EP Examinations

31. Fraud Referral Procedures