Kind 8950 (Software for Voluntary Correction Program (VCP)) and Directions (2022)
The IRS has revised Kind 8950 (Software for Voluntary Correction Program (VCP)), and its directions, to accommodate nameless pre-submission convention requests underneath the Voluntary Correction Program (VCP) portion of the Worker Plans Compliance Decision System (EPCRS). In its most up-to-date restatement of EPCRS, Income Process 2021-30, the IRS eradicated nameless submissions underneath VCP and added the choice to request nameless, no-fee, pre-submission conferences underneath VCP for sure specified corrections (see our Checkpoint article). Such requests should be made by submitting Kind 8950 (Software for Voluntary Correction Program (VCP)) on the pay.gov web site. In its description of the data that should be offered when requesting a pre-submission convention (comparable to an outline of the failure and proposed correction), Income Process 2021-30 indicated that extra specificity relating to the required info would probably be offered in revised directions for Kind 8950.
The IRS has now up to date each Kind 8950 and its directions, making numerous adjustments to implement the process for nameless pre-submission conferences. Listed here are highlights:
Kind 8950. The revised type deletes references to nameless submissions and provides “VC pre-submission convention request” as a submission sort. A brand new merchandise asks submitters to point whether or not an software is “the results of a selected not too long ago closed VC Pre-submission convention request” and, if that’s the case, requires entry of the IRS management or work unit quantity assigned to that request. Additionally, the penalty of perjury assertion has been break up into three components, the primary relevant to submissions by a plan sponsor, the second relevant to submissions made by a consultant on behalf of a plan sponsor, and the third relevant to pre-submission convention requests. No matter which half applies, the penalties of perjury field should be checked.
Representatives. The directions require that the consultant requesting a pre-submission convention should be designated on an influence of lawyer by the employer (or the plan administrator within the case of a a number of employer plan), and the consultant should be prepared to submit a signed Kind 2848 (Energy of Lawyer and Declaration of Consultant) with figuring out info as a part of a subsequent VCP submission.
Directions Repurposed. A number of the directions that beforehand utilized to nameless submissions have been modified to use to pre-submission convention requests. For instance, when a licensed consultant makes its first request for a pre-submission convention, it should enter “401” in lieu of the plan’s three-digit plan code. Every subsequent pre-submission convention request by the identical consultant’s agency ought to use the subsequent greater quantity, creating distinctive plan numbers for every submission by that agency. An analogous process beforehand utilized to nameless submissions.
Prescribed Entries. When a pre-submission convention is being requested, the shape is usually accomplished as if the consultant have been the plan sponsor, however the directions have modified to require that the enterprise code on line 11 be “111111” somewhat than the consultant’s enterprise code. Additionally, requesters should enter “1.00” as the entire greenback worth of the plan’s property on line 4c, and “1” because the variety of members on line 4d.
Content material of Convention Request. Along with the gadgets that Income Process 2021-30 states ought to be included with a pre-submission convention request, the directions state {that a} pre-submission convention request ought to embody the variety of folks impacted and the durations of time when the qualification failure occurred; an in depth narrative that not solely proposes a correction but additionally explains why the correction is according to the rules of EPCRS; and an evidence of the strategy used to compute earnings, if relevant. The directions acknowledge that some gadgets required for a typical VCP submission might not be wanted for a pre-submission convention request.
Convention Monitoring Numbers. When a VCP software is filed following a pre-submission convention, the brand new Kind 8950 for that software should point out {that a} convention occurred and supply the relevant management/pay.gov monitoring quantity that was assigned to the closed pre-submission convention request.
Impact of Convention. The directions develop barely on the restatement’s warning concerning the advisory nature of a convention, noting that any dialogue can’t be relied on as a foundation for aid underneath EPCRS or “any federal tax regulation.”
EBIA Remark: Whereas the IRS has, as promised, offered some further particulars relating to the content material of pre-submission convention requests, the steerage about what to place in a pre-submission convention request stays, maybe essentially, broad and non-specific. Representatives requesting conferences will subsequently want to think twice about what to incorporate of their requests. Embrace too little, and submitters danger receiving recommendation that’s much less dependable as a result of it didn’t take all related elements under consideration. Embrace an excessive amount of, and it’d immediate the IRS to train its discretion to say no the convention as a result of conferences are held “solely on the discretion of the IRS, and as time permits.” For extra info, see EBIA’s 401(okay) Plans handbook at Part XXXV.E (“Voluntary Correction Program (VCP) With IRS Approval”).
Contributing Authors: EBIA Employees.
