SECTION 2. EFFECT — Internal Revenue Bulletin 2016-42

REVENUE PROCEDURE ON PROGRAMS

.01 Effect on programs . This revenue procedure modifies and supersedes Rev. Proc. 2013–12, 2013–4 I.R.B. 313, the prior consolidated statement of the correction programs under EPCRS. This revenue procedure also incorporates certain modifications set forth in Rev. Proc. 2015–27, 2015–16 I.R.B. 914 (correction of overpayments and certain other topics), and Rev. Proc. 2015–28, 2015–16 I.R.B. 920 (correction of failures with respect to automatic contribution features and encouraging the early correction of employee elective deferral failures), two prior revenue procedures modifying Rev. Proc. 2013–12. In addition, this revenue procedure incorporates modifications to Rev. Proc. 2013–12 set forth in Rev. Proc. 2016–8, 2016–1 I.R.B. 243 (fees for VCP submissions generally moved to annual Employee Plans (EP) revenue procedure on user fees).

.02 Modifications relating to changes in the determination letter program . (1) In general . Effective January 1, 2017, the staggered 5-year remedial amendment cycles for individually designed plans will be eliminated, and the scope of the determination letter program for individually designed plans will be limited to initial plan qualification, qualification upon plan termination, and certain other circumstances. For further information, see Rev. Proc. 2016–37, 2016–29 I.R.B. 136. EPCRS is being modified to take into account the changes in the determination letter program. For information on how to submit comments regarding changes made in EPCRS to take into account changes in the determination letter program, see section 17.

(2) Changes to Audit CAP . Section 14 of Rev. Proc. 2013–12 sets forth guidance on determining the sanction under Audit CAP. This revenue procedure provides a revised approach for determining Audit CAP sanctions. Section 14.01 no longer provides that the sanction will be a negotiated percentage of the Maximum Payment Amount, but instead will be determined based on the facts and circumstances, including the relevant factors described in section 14.02. The Maximum Payment