SECTION 2. EFFECT — Internal Revenue Bulletin 2018-42

REVENUE PROCEDURE ON PROGRAMS

.01 Effect on programs . This revenue procedure modifies and supersedes Rev. Proc. 2016–51, 2016–42 I.R.B. 465, the most recent prior consolidated statement of the correction programs under EPCRS. This update to Rev. Proc. 2016–51 is a limited update and is published primarily to set forth new VCP submission procedures, including the required use of the www.pay.gov website. See the discussion of the new VCP submission procedures in section 2.02 and 2.03. The IRS and the Department of the Treasury (Treasury Department) are currently developing guidance on other issues relating to EPCRS. See the general discussion in section 2.04(2). .02 Modifications relating to VCP sub- mission procedures . (1) In general . Beginning April 1, 2019, Plan Sponsors must use the www.pay.gov website when filing a VCP submission and paying applicable user fees. To ease the transition to the new submission procedures, from January 1, 2019, through March 31, 2019, Plan Sponsors may file VCP submissions with the IRS either by using www.pay.gov in accordance with sections 10 and 11 of this revenue procedure or by filing paper VCP

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submissions in accordance with the procedures in sections 10 and 11 of Rev. Proc. 2016–51. However, the IRS will not accept paper VCP submissions postmarked on or after April 1, 2019.

(2) Modifications to section 10 . Section 10.01 is revised to modify and clarify the requirements for satisfying the VCP procedures, including new procedures for filing a VCP submission and paying applicable user fees on the www.pay.gov website. Although the Plan Sponsor is responsible for filing the VCP submission and paying the user fee using the www.pay.gov website, section 10.01 clarifies that a Plan Sponsor may designate an authorized representative to file the VCP submission if certain requirements are satisfied.

(3) Modifications to section 11 . Section 11 sets forth filing procedures for VCP submissions. These procedures have been modified to reflect electronic filing of VCP submissions and payment of applicable user fees using the www.pay.gov website. An electronic VCP submission filed using the www.pay.gov website must include many of the same documents as a VCP submission filed on paper pursuant to Rev. Proc. 2016–51; however, there are procedural differences. First, 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. Second, 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 are not permitted to submit a paper version of Form 8950. Third, documents relating to the VCP submission, including the description of failures, Form 14568 (Model VCP Compliance Statement), Schedules 1 through 9 of Form 14568, and any other applicable items (as set forth in section 11.04) for a VCP submission generally must be converted into a single PDF (Portable Document Format) document and then uploaded onto the www.pay.gov website. However, there is a 15 MB size limitation for uploading a PDF document onto the www.pay.gov website; thus special instructions are provided for PDF files that exceed that limitation. Fourth,

section 11 provides new procedures relating to the payment of user fees using the www. pay.gov website, including the generation of a payment confirmation. For submissions made using the www.pay.gov website, the IRS will no longer mail an acknowledgment letter to the applicant. 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. A Plan Sponsor may designate an authorized representative to file a VCP submission with the IRS using the www.pay.gov website. Section 11.08(2) sets forth specific instructions on how to designate an authorized representative using the Form 2848, Power of Attorney and Declaration of Representation.

.03 Description of other modifications . The Treasury Department and the IRS also made modifications to Rev. Proc. 2016–51 to reflect recent changes in certain Employee Plans programs, including changes to the Pre-approved Plan program for Qualified Plans and the Pre-Approved 403(b) plan program, and to make certain other changes. The modifications to Rev. Proc. 2016–51 that are reflected in this revenue procedure include the following changes

Revising section 4.03 to clarify that the provisions of SCP for significant Operational Failures are available for a 403(b) Plan if the 403(b) Plan satisfies the conditions for being treated as having a Favorable Letter in section 6.10(2), and to make other minor modifications.
Revising section 4.09 to reflect that applicants of submissions for § 457(b) plans must use the www.pay.gov website to file submissions.
Revising section 4.12 to remove references to an “IRS Employee Plans Tax Shelter Coordinator.”
Revising the definition of the term “Favorable Letter” in sections 5.01(4)(b) and (8) and 5.02(8) to reflect modifications made to the IRS Pre-approved Plan program for Qualified Plans.
Revising section 6.02(5)(d)(ii) to clarify why the IRS Letter Forwarding Program is no longer used as a means to search for participants and benefi

ciaries and to remove the transition rules in section 6.02(5)(d)(iii).

Revising section 6.05(2)(a) and (b) to apply to 403(b) Pre-approved Plans.
Revising section 6.09(6) to clarify that 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 section 72(t) is a sanction, not an additional fee.
Updating a reference in section 6.10(3).
Revising section 10.06(2) to clarify that, in certain cases, the IRS reserves the right to not issue a compliance statement and to set forth the circumstances under which a user fee may or may not be refunded.
Revising section 10.06(3) to clarify that, if the IRS determines that a submission is complete and agrees with the proposed correction method, a compliance statement may be issued without the IRS contacting the Plan Sponsor (or its authorized representative).
Revising section 10.06(8)(c) to clarify procedures for including a penalty of perjury statement in a submission, including the procedures if a submission is subsequently modified.
Updating a reference in section 10.07(2)(d).
Revising section 10.09 to update the procedural requirements for Anonymous Submissions to reflect changes for submissions made using the www. pay.gov website, including procedures for including a penalty of perjury statement in a submission.
Revising section 10.10 to update special rules for Group Submissions to reflect changes to the IRS Pre-approved Plan programs, and to make other minor modifications.
Revising section 10.11 to remove former paragraph 10.11(2) relating to calculating the user fee with respect to a multiemployer or multiple employer plan and to clarify that the plan administrator of such a plan must file the VCP submission with respect to any plan failures, but that the plan administrator may designate an authorized representative to file a VCP submission with the IRS using the www.pay.

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gov website as described in section 11.08.

Revising section 11.01(2) to provide that, beginning January 1, 2019, an applicant (generally, either a Plan Sponsor or a representative authorized pursuant to a valid Form 2848) is permitted to use the www.pay.gov website when filing a VCP submission and paying the applicable user fee. This electronic submission process becomes mandatory April 1, 2019. For a general description of the changes in section 11, see section 2.02.
Revising section 12 to reflect that changes to the VCP user fees are included in annual revenue procedures issued by the IRS.
Revising section 13.02 to clarify that the sanction under Audit CAP may be paid using the payment methods available on the www.pay.gov website.
Revising section 13.06 to reflect that the procedural rules for Audit CAP are provided in Internal Revenue Manual (“IRM”) 4.71.3.3, EPCRS Closing Agreements, and IRM 7.11.8, EP Determinations Closing Agreement Program.
Revising section 14.04 to reflect that changes to the VCP user fees (on which certain Audit CAP sanctions are based) are included in annual revenue procedures issued by the IRS.
Correcting various citations, cross references, and typographical errors and making stylistic changes to improve clarity. .04 Future enhancements . (1) In general . It is expected that the IRS and the Treasury Department will continue to update the EPCRS revenue procedure, in whole or in part, from time to time, including further improvements to EPCRS based on comments received. Accordingly, the IRS and Treasury Department continue to invite further comments on how to improve EPCRS. For information on how to submit comments, see section 17.

(2) Recoupment of Overpayments and potential modifications to SCP . The Treasury Department and the IRS requested comments in Rev. Proc. 2015–27, 2015–16 I.R.B. 914, on potential changes to EPCRS relating to the recoupment of Overpayments. The Treasury Department and the

IRS received and are reviewing responsive comments, and are in the process of developing further changes to modify the EPCRS rules on the correction of Overpayments. In addition, the Treasury Department and the IRS have received comments relating to expanding SCP and are in the process of reviewing the comments received. The Treasury Department and the IRS are considering changes to the program based on those comments.