By Pension and Benefits Editorial Staff
The IRS has issued a limited update to the Employee Plans Compliance Resolution System (EPCRS) that is focused on implementing modified procedures for submissions under the Voluntary Correction Program (VCP). The main revisions to the VCP submission procedures relate to the required use of the www.pay.gov website for filing new submissions and paying user fees, effective April 1, 2019.
Revised VCP submission procedures. Plan sponsors, beginning April 1, 2019, must use the www.pay.gov website when filing a VCP submission and paying applicable user fees. However, under a transition rule in effect from January 1, 2019 through March 31, 2019, plan sponsors may file VCP submissions through the www.pay.gov website or by filing paper VCP submissions in accordance with the procedures set forth under Rev. Proc. 2016-51.
Note: The transition rule is of limited duration. The IRS cautions that it will not accept paper VCP submissions postmarked on or after April 1, 2019.
Authorized representative may file VCP submissions. The plan sponsor is responsible for filing the VCP submission and paying the user fee using the www.pay.gov website. However, the plan sponsor may designate an authorized representative to file the VCP submission, if specified requirements are satisfied.
Electronic VCP submission procedures. The previously applicable procedures have been modified to reflect the required electronic filing of VCP submissions and payment of applicable user fees using the www.pay.gov website. IRS notes, that an electronic VCP submission will include many of the same documents as a VCP submission filed on paper. However, some new requirements will apply after March 31, 2019.
Use pay.gov account. An applicant must use the www.pay.gov website to create a pay.gov account. This pay.gov account will be used when filing a VCP submission and paying applicable user fees.
Electronically file Form 8950. After a pay.gov account has been established, the applicant must complete Form 8950 (Application for Voluntary Correction Program (VCP) Submission Under the Employee Plans Compliance Resolution System), using the www.pay.gov website. Beginning April 1, 2019, applicants may not submit a paper version of Form 8950.
Consolidate required documents into single PDF. VCP submission documents, including the description of failures, Form 14568 (Model VCP Compliance Statement), Schedules 1 through 9 of Form 14568, and any other applicable items for the submission must, generally, be converted into a single PDF and then uploaded onto the www.pay.gov website.
Size limit on PDF documents. There is a 15 MB size limit for uploading a PDF document onto the www.pay.gov website. Accordingly, special instructions are provided for PDF files that exceed that limitation.
Payment of user fees. New procedures cover the payment of user fees using the www.pay.gov website, including the generation of a payment confirmation.
Pay.gov Tracking ID replaces acknowledgement letter. The IRS will not mail an acknowledgement letter of user fee submissions made using the www.pay.gov website. Receipt of a submission will be acknowledged through the generation of a unique Pay.gov Tracking ID on the payment confirmation after the VCP submission is filed and the user fee is paid.
Additional modifications. The IRS has made additional modifications to other existing EPCRS procedures to reflect recent changes to the Pre-approved Plan program for Qualified Plans and the Pre-Approved 403(b) Plan program, as well as other changes. The modifications clarify that:
- The provisions of the Self Correction Program (SCP) for significant Operational Failures are available for a 403(b) plan if the plan satisfies the conditions for being treated as having a Favorable Letter.
- Applicants of submissions for 457(b) plans must use the www.pay.gov website to file submissions.
- The additional amount that a plan sponsor may pay as a condition for the IRS to not pursue some or all of the 10% additional tax under Code Sec. 72(t) is a sanction, not an additional fee.
- The IRS reserves the right, in certain cases, to not issue a compliance statement and to set forth the circumstances under which a user fee may or may not be refunded.
- Sanctions under Audit CAP may be paid using the payment methods available on the www.pay.gov website.
Future enhancements.The IRS and the Treasury Department anticipate continuing to update the EPCRS procedures, in whole or in part, from time to time, based on comments received. Accordingly, the Agencies continue to invite further comments on how to improve EPCRS.
Recoupment of overpayments and potential modifications to SCP. Among the possible future modifications are those related to the recoupment of overpayments. In response to comments requested under Rev. Proc. 2015-27, the IRS and Treasury are in the process of developing further changes to modify the EPCRS rules governing the correction of overpayments. An expansion of SCP is also being considered.
Source: IRS Rev. Proc. 2018-52.
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