SECTION 11. WALK-IN CAP AND

TVC

.01 Walk-in CAP requirements . (1) The requirements of this section are satisfied with respect to a Plan Document, Operational, or a Demographic Failure if the submission requirements of section 12 are satisfied, the Plan Sponsor pays the compliance correction fee, and the Plan Sponsor corrects the failures identified in accordance with a closing agreement entered into by the Service and the Plan Sponsor. Payment of the compliance correction fee is generally required at the time the closing agreement is signed.

(2) A determination letter application does not satisfy the submission requirements under Walk-in CAP.

(3) Depending on the nature of the failure, the Service will discuss the appropriateness of the plan’s existing administrative procedures with the Plan Sponsor. Where current administrative procedures are inadequate for operating the plan in conformance with the qualification re

February 7, 2000 530 2000–6 I.R.B.

quirements of the Code, the closing agreement may be conditioned upon the implementation of stated administrative procedures.

(4) In addition, the Plan Sponsor is required to obtain a Favorable Letter before the closing agreement is signed unless the Service determines that it is unnecessary based on the facts and circumstances (for example, because the plan already has a Favorable Letter and no significant amendments are adopted). If a Favorable Letter is required, the Plan Sponsor would be required to pay the applicable user fee for obtaining the letter.

.02 Failures discovered after initial submission . (1) A Plan Sponsor that discovers additional, unrelated failures after its initial submission may request that such failures be added to its submission. However, the Service retains the discretion to reject the inclusion of such failures if the request is not timely, for example, if the Plan Sponsor makes its request when processing of the submission is substantially complete.

(2) If the Service discovers an unrelated plan failure while the request is pending, the failure generally will be added to the failures under consideration. However, the Service retains the discretion to determine that a failure is outside the scope of the voluntary request for consideration because it was not voluntarily brought forward by the Plan Sponsor. In this case, if the additional failure is significant, all aspects of the plan will be examined, and the rules pertaining to Audit CAP will apply.

.03 Failure to reach resolution . If the Service and the Plan Sponsor cannot reach agreement with respect to the submission, all aspects of the plan may be examined, and the rules pertaining to Audit CAP will apply.

.04 Effect of closing agreement . The closing agreement is binding upon both the Service and the Plan Sponsor with respect to the specific tax matters identified therein for the periods specified, but does not preclude or impede an examination of the plan by the Service relating to matters outside the closing agreement, even with respect to the same taxable year or years to which the closing agreement relates.

.05 TVC . The provisions in section 11.01 through .04 above apply to TVC except that TVC applies to Operational, De

mographic, and Eligibility Failures with respect to a 403(b) Plan. In addition, there is no requirement that the employer obtain a private letter ruling from the Service covering its 403(b) Plan.