SECTION 12. VCP FEES

.01 VCP fees . The compliance fees for all submissions under VCP are determined under this section 12. All fees must be submitted by check made payable to the U.S. Treasury and, except for the special fees described in sections 12.04 and 12.05(2), must be included with the initial submission.

.02 VCP fee for Qualified Plans and 403(b) Plans . (1) Except as otherwise provided in this section 12, the compliance fee for a submission under VCP for Qualified Plans and 403(b) Plans (including Anonymous Submissions) is determined in accordance with the following chart.

in section 6.05, is determined in accordance with the chart in section 12.02(1). The applicable fee for a VCP submission that contains only nonamender failures is reduced by 50% if it is submitted within a one-year period following the expiration of the plan’s remedial amendment period for complying with such changes. Notwithstanding the above, the compliance fee for a submission that contains only a failure to adopt timely interim amendments or amendments required to

(2) If (a) a VCP submission involves the failure to satisfy the minimum distribution requirements of § 401(a)(9) for 50 or fewer participants, (b) such failure is the only failure of the submission, and (c) the failure would result in the imposition of the excise tax under § 4974, the compliance fee is $500.

(3) If (a) a VCP submission involves the failure of participant loans to comply with the requirements of § 72(p)(2), (b) the failure does not affect more than 25% of the Plan Sponsor’s participants in any of the

year(s) in which the failure occurred, and (c) the failure is the only failure of the submission, the applicable fee for a VCP submission determined under the provisions of section 12.02(1) is reduced by 50%.

(4) At the discretion of the Service, the VCP fee may be waived in the case of a terminating Orphan Plan. In such cases, the submission must include a request for a waiver of the VCP fee.

.03 VCP fee for nonamender failures . In general, the compliance fee for plans with a nonamender failure, as described

2008–35 I.R.B. 492 September 2, 2008

plies if the Service identifies a participant loan that did not comply with the requirements of § 72(p)(2) (other than a loan failure that is corrected in accordance with SCP or VCP) upon an Employee Plans or Exempt Organizations examination of a Qualified Plan or 403(b) Plan.

.02 Payment of sanction . Payment of the sanction under section 14 generally is required at the time the closing agreement is signed. All sanction amounts should be submitted by certified check or cashier’s check made payable to the U.S. Treasury.

.03 Additional requirements . Depending on the nature of the failure, the Service will discuss the appropriateness of the plan’s existing administrative procedures with the Plan Sponsor. If existing administrative procedures are inadequate for operating the plan in conformance with the applicable requirements of the Code, the closing agreement may be conditioned upon the implementation of stated procedures. In addition, for Qualified Plans, pursuant to section 6.05, the Plan Sponsor may be required to obtain a Favorable Letter before the closing agreement is signed. If a Favorable Letter is required, the Plan Sponsor is required to pay the applicable user fee for obtaining the letter.

.04 Failure to reach resolution . If the Service and the Plan Sponsor cannot reach an agreement with respect to the correction of the failure(s) or the amount of the sanction, the plan will be disqualified or, in the case of a 403(b) Plan, SEP, or SIMPLE IRA Plan will not have reliance on this revenue procedure.

.05 Effect of closing agreement . A closing agreement constitutes an agreement between the Service and the Plan Sponsor that is binding with respect to the tax matters identified therein for the periods specified.

.06 Other procedural rules . The procedural rules for Audit CAP are set forth in Internal Revenue Manual (“IRM”) 7.2.2, EPCRS.