SECTION 10. VCP PROCEDURES

.01 VCP requirements . The requirements of VCP are satisfied with respect to a failure if, on the www.pay.gov website, the Plan Sponsor files a VCP submission and pays the applicable user fee set forth in Appendix A of Rev. Proc. 2018–4 (and its annual successors), in accordance with the requirements of this section 10 and section 11, and implements the corrective actions and satisfies any other conditions set forth in the compliance statement described in section 10.07. As provided in section 11.08, a Plan Sponsor may designate an authorized representative to file a VCP submission with the IRS on its behalf, if specific requirements are satisfied.

.02 Identification of failures . VCP is not based upon an examination of the plan by the IRS. Only the failures raised by the Plan Sponsor or failures identified by the IRS in processing the submission are addressed under VCP, and only those failures are covered by a VCP compliance statement. The IRS will not make any investigation or finding under VCP concerning whether there are other failures.

.03 Effect of VCP submission on exam- ination . Because VCP does not arise out of an examination, consideration under VCP does not preclude or impede (under § 7605(b) or any administrative provisions adopted by the IRS) a subsequent examination of the Plan Sponsor or the plan by the IRS with respect to the taxable year (or years) involved with respect to

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matters that are outside the compliance statement. However, a Plan Sponsor’s statements describing failures are made only for purposes of VCP and will not be regarded by the IRS as an admission of a failure for purposes of any subsequent examination. See section 5.08 for the definition of Under Examination.

.04 No concurrent examination activ- ity . Except in unusual circumstances, a plan that has been properly submitted under VCP will not be examined while the submission is pending. However, a plan that is included in a Group Submission under section 10.10 may be examined while the Group Submission is pending with respect to issues not identified in the Group Submission at the time such plan comes Under Examination. Also, if it is determined that either the plan or the Plan Sponsor was, or may have been, a party to an abusive tax avoidance transaction (as defined under section 4.12(2)), the IRS may authorize the examination of the plan, even if a submission pursuant to VCP is pending. In addition, this practice regarding concurrent examinations does not extend to other plans of the Plan Sponsor. Thus, any plan of the Plan Sponsor that is not pending under VCP could be subject to examination.

.05 Determination letter applications not related to a VCP submission . (1) The IRS may process a determination letter application (including an application requested on Form 5310) submitted under the determination letter program (as set forth in Rev. Proc. 2018–4 (and its annual successors) and Rev. Proc. 2016–37, and any subsequent guidance issued in the Internal Revenue Bulletin) while separately processing a VCP submission for the same plan. Generally, issuance of the determination letter in response to an application made on a Form 5310 will be suspended pending the closure of the VCP submission.

(2) A submission of a plan under the determination letter program does not constitute a submission under VCP. If the Plan Sponsor discovers a failure, the failure may not be corrected as part of the determination letter process. The Plan Sponsor may use SCP and VCP instead, as applicable. If the IRS, in connection with a determination letter application, discovers failures, the IRS may issue a

closing agreement with respect to the failures identified or, if appropriate, refer the case to Employee Plans Examinations. In such a case, the VCP user fee does not apply. Instead, except as provided in section 10.05(3), the sanction in section 14.01 relating to Audit CAP applies. See section 5.08 for a description of when a plan submitted for a determination letter is considered to be Under Examination for purposes of EPCRS.

(3) If the IRS in connection with a determination letter application discovers the plan has not been amended timely for tax legislation changes, the fee structure in section 14.04 applies.

.06 Processing of submission . (1) Screening of submission . Upon receipt of a VCP submission, the IRS will review the submission to determine whether the eligibility requirements of section 4 and the submission requirements of section 11 are satisfied.

(2) Eligibility of submission . If, at any stage of the review process, the IRS determines that a VCP submission is seriously deficient or that issuing a compliance statement with respect to the VCP submission would be inappropriate or impracticable, the IRS reserves the right to not issue a compliance statement. If no substantive processing of the case has occurred, the IRS will refund the user fee submitted with the request. Otherwise, the user fee will not be refunded.

(3) Review of submission . Once the IRS determines that the submission is complete under VCP, the IRS may contact the Plan Sponsor or the Plan Sponsor’s authorized representative to discuss the proposed corrections and the plan’s administrative procedures. However, if the IRS determines that the submission is complete and sets forth an acceptable correction method, the IRS may issue a compliance statement without contacting the Plan Sponsor or the Plan Sponsor’s authorized representative.

(4) Additional information required . If additional information is required, an IRS representative generally will contact the Plan Sponsor or the Plan Sponsor’s authorized representative and explain what is needed to complete the submission. The Plan Sponsor will have 21 calendar days from the date of this contact to provide the requested information. If the information

is not received within 21 days, the matter will be closed, the user fee will not be returned, and the case may be referred to Employee Plans Examinations. Any request for an extension of the 21-day time period must be made in writing within the 21-day time period and must be approved by the IRS (by the applicable group manager).

(5) Additional failures discovered after initial submission . (a) A Plan Sponsor that discovers additional unrelated failures after its initial submission may request that such failures be added to its submission. However, the IRS 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) or the application of VCP would be inappropriate or impracticable.

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

(6) Conference right . If the IRS initially determines that it cannot issue a compliance statement because the parties cannot agree upon correction or a change in administrative procedures, the Plan Sponsor (generally through the Plan Sponsor’s authorized representative) will be contacted by the IRS representative and offered a conference with the IRS. The conference can be held either in person or by telephone and must be held within 21 calendar days of the date of contact. The Plan Sponsor will have 21 calendar days after the date of the conference to submit additional information in support of the submission. Any request for an extension of the 21-day time period must be made in writing within the 21-day time period and must be approved by the IRS (by the applicable group manager). Additional conferences may be held at the discretion of the IRS.

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(7) Failure to reach resolution . If the IRS and the Plan Sponsor cannot reach agreement with respect to the submission, the matter will be closed, the user fee will not be returned, and the case may be referred to Employee Plans Examinations.

(8) Issuance of compliance statement . (a) In general . If agreement has been reached and all applicable user fees have been paid, the IRS will send to the Plan Sponsor a compliance statement signed by the IRS specifying the corrective action required. However, the IRS reserves the right to require the Plan Sponsor to sign the compliance statement. In such a case, the IRS will send to the Plan Sponsor an unsigned compliance statement. Within 30 calendar days of the date the compliance statement is sent, the Plan Sponsor must sign and return the compliance statement and pay any outstanding user fee that may be required (see sections 4.08 and 11.06). The IRS will then issue a signed copy of the compliance statement to the Plan Sponsor. If the Plan Sponsor does not return the compliance statement (and pay any outstanding user fee) within 30 calendar days, the VCP submission will be closed, and no further action will be taken with respect to the submission. In appropriate circumstances, the plan may be referred to Employee Plans Examinations.

(b) Model VCP Compliance Statement . If the Plan Sponsor included a completed Form 14568, Model VCP Compliance Statement with its VCP submission, then the IRS will sign and send to the Plan Sponsor the compliance statement specifying the corrective action required. The format and content of the Form 14568 as set forth by the IRS may not be modified or changed in any way. In appropriate circumstances, the IRS reserves the right to issue an individually drafted compliance statement in lieu of the Form 14568. See section 11.02.

(c) Modifications to VCP Submission . If a Plan Sponsor materially modifies a VCP submission that was previously filed with the IRS, the Plan Sponsor should include the penalty of perjury statement set forth in section 11.04(16) with respect to such subsequent modifications. If the Plan Sponsor does not submit a penalty of perjury statement, the Plan Sponsor will be required to sign and return the compli

ance statement under the general procedures described in section 10.06(8)(a). See section 11.03(8) for information concerning submission of any such modification prior to the assignment of the case to an IRS representative.

(9) Timing of correction . (a) In gen- eral . The Plan Sponsor must implement the specific corrections and administrative changes set forth in the compliance statement within 150 days of the date of the compliance statement. Any request for an extension of this correction period must be made in writing prior to the expiration of the correction period and must be approved by the IRS.

(b) Interim Amendments and Non- amender Failures . Correction of the failure to timely adopt Interim Amendments or other required amendments, as described in section 5.01(2)(a)(ii)(B) and (C), must be made by the date of the submission. Thus, the submission must include the executed amendments that would correct this failure.

(c) Other plan amendments . If a corrective plan amendment is required as part of a VCP submission, the corrective plan amendment must be adopted no later than 150 days after the date of the compliance statement. However, for a governmental plan (within the meaning of § 414(d)), the corrective amendment must be adopted by the later of 150 days after the date of the compliance statement or the close of the first regular legislative session of the legislative body with the authority to amend the plan that begins on or after 91 days after the date of the compliance statement.

(10) Modification of compliance state- ment . Once the compliance statement has been issued (based on the information provided), the Plan Sponsor cannot request a modification of the compliance terms except by a new request for a compliance statement, accompanied by a new user fee, submitted in accordance with the submission procedures set forth in section 11. (11) Verification . Once the compliance statement has been issued, the IRS may require verification that the plan has complied with the correction methods and that any plan administrative procedures required by the compliance statement have been implemented. This verification does not constitute an examination of the books

and records of the employer or the plan (within the meaning of § 7605(b)). If the IRS determines that the Plan Sponsor did not implement the corrections and procedures within the stated time period, the plan may be referred to Employee Plans Examinations.

.07 Compliance statement . (1) General description of compliance statement . The compliance statement issued for a VCP submission only addresses the failures identified in the submission, the terms of correction (including any revision of administrative procedures), and the time period within which proposed corrections must be implemented (including any changes in administrative procedures). The compliance statement also provides that the IRS will not treat the plan as failing to satisfy the applicable requirements of the Code on account of the failures described in the compliance statement if the conditions of the compliance statement are satisfied. The reliance provided by a compliance statement is limited to the specific failures and years specified and does not provide reliance for any other failure or year.

(2) Correction through plan amend- ment . (a) Interim Amendment Failures . With respect to a failure to amend a plan timely for Interim Amendments, as described in section 5.01(2)(a)(ii)(B), the issuance of a compliance statement will result in the corrective amendments being treated as if they had been adopted timely for the purpose of determining the availability of the remedial amendment period in Rev. Proc. 2007–44 and Rev. Proc. 2016–37. However, the issuance of such a compliance statement does not constitute a determination as to whether the Interim Amendment, as drafted, complies with the change in qualification requirement, or whether the terms of the plan, including the corrective plan amendment, satisfy the qualification requirements in form.

(b) Nonamender Failures . With respect to a failure to amend a plan timely for disqualifying provisions or a failure to timely adopt applicable required amendments provided on the Required Amendments List, as described in section 5.01(2)(a)(ii)(C) (the definition of Nonamender Failure), the issuance of a compliance statement will result in the corrective amendments being treated as if they

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had been timely adopted during the applicable remedial amendment period. However, the issuance of such a compliance statement does not constitute a determination as to whether the corrective plan amendment as drafted complies with the change in qualification requirement, whether the corrective plan amendment conforms the terms of the plan to the plan’s prior operations, or whether the terms of the plan, including the corrective plan amendment, satisfy the qualification requirements in form.

(c) Operational Failures . If a Plan Sponsor submits a VCP filing correcting an Operational Failure through a plan amendment and the plan amendment is accepted as a proper correction of the Operational Failure, then the compliance statement issued under VCP constitutes a determination that the Operational Failure has been corrected, but is not a determination that the terms of the plan, including the corrective plan amendment, satisfy the qualification requirements in form.

(d) Failure to adopt 403(b) Plan timely . A failure to adopt a 403(b) Plan timely in accordance with the final regulations under § 403(b) and Notice 2009–3 may be corrected under VCP. The issuance of a compliance statement will result in the 403(b) Plan being treated as if it had been adopted timely for the purpose of making available the extended remedial amendment period set forth in Rev. Proc. 2017–18. However, the issuance of a compliance statement does not constitute a determination as to whether the written plan, as drafted, complies with the applicable requirements of § 403(b) and the final § 403(b) regulations.

(3) Administrative procedures re- quired . Where current procedures are inadequate for operating the plan in conformance with the applicable requirements of the Code, the compliance statement will be conditioned upon the implementation of stated administrative procedures. The IRS may prescribe appropriate administrative procedures in the compliance statement.

(4) Compliance statement conditioned upon timely correction . The compliance statement is conditioned on (i) there being no misstatement or omission of material facts in connection with the submission, and (ii) the implementation of the specific

corrections and satisfaction of any other conditions in the compliance statement.

(5) Authority delegated . Compliance statements (including relief from any excise tax or other penalty as provided under section 6.09) are authorized to be signed by managers within Employee Plans Rulings and Agreements, under the Tax Exempt and Government Entities Operating Division of the IRS.

.08 Effect of compliance statement on examination . The compliance statement is binding upon both the IRS and the Plan Sponsor or Eligible Organization (as defined in section 10.10(1)) 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 IRS relating to matters outside the compliance statement, even with respect to the same taxable year or years to which the compliance statement relates.

.09 Special rules relating to Anony- mous Submissions . (1) The Anonymous Submission procedure in this section 10.09 permits submission of a Qualified Plan, 403(b) Plan, SEP, or SIMPLE IRA Plan under VCP without initially identifying the applicable plan, the Plan Sponsor, or the Eligible Organization. The requirements of this revenue procedure relating to VCP, including sections 10, 11, and 12, apply to these submissions. Information identifying the plan or the Plan Sponsor may be redacted. If the submission is made by an individual who is authorized to represent the Plan Sponsor, such individual must satisfy the power of attorney requirements described in section 11.08. As part of the submission filed on the www.pay.gov website, the authorized representative must, under penalty of perjury, assert that the authorized representative complies with the power of attorney requirements described in section 11.08, and that the authorized representative will submit an executed copy of a Form 2848, Power of Attorney and Declaration of Representation , upon the disclosure of the identity of the Plan Sponsor to the IRS. Once the IRS and the authorized representative reach agreement with respect to the submission, the IRS will contact the authorized representative in writing indicating the terms of the agreement. The Plan Sponsor will have 21 calendar days from the date of the letter of agreement to iden

tify the plan and Plan Sponsor and to submit to the IRS the executed Form 2848 and the penalty of perjury statement set forth in section 11.04(16). If the Plan Sponsor does not submit the identifying documents (including the executed Form 2848 and the penalty of perjury statement) within 21 calendar days from the date of the letter of agreement, the matter will be closed and the user fee will not be returned.

(2) Notwithstanding section 10.04, until a plan and Plan Sponsor is identified to the IRS, a submission under this subsection does not preclude or impede an examination of the Plan Sponsor or its plan. Thus, a plan submitted under the Anonymous Submission procedure that comes Under Examination prior to the date the identifying documents of the plan and Plan Sponsor are received by the IRS will no longer be eligible under VCP.

.10 Special rules relating to Group Submissions . (1) Eligible Organizations . For purposes of a Group Submission, the term “Eligible Organization” means either (a) a sponsor (as that term is defined in section 4.07 of Rev. Proc. 2015–36) of a master or prototype plan, (b) a volume submitter practitioner (as that term is defined in section 13.05 of Rev. Proc. 2015– 36), (c) a mass submitter (as that term is defined in sections 4.08 and 13.06 of Rev. Proc. 2015–36 and section 4.04 of Rev. Proc. 2017–41), (d) a provider (as that term is defined in section 4.08 of Rev. Proc. 2017–41), (e) an insurance company or other entity that has issued annuity contracts or provides services with respect to assets for 403(b) Plans, or (f) an entity that provides its clients with administrative services with respect to Qualified Plans, 403(b) Plans, SEPs, or SIMPLE IRA Plans. An Eligible Organization is not eligible to make a Group Submission unless the failures in the submission result from a systemic error involving the Eligible Organization that affects at least 20 plans and results in at least 20 plans implementing correction. If, at any time before the IRS issues the compliance statement, the number of plans falls below 20, the Eligible Organization must notify the IRS that it is no longer eligible to make a Group Submission. Under these circumstances, the user fee may be retained by the IRS.

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(2) General rules . An Eligible Organization may submit a VCP request for a Qualified Plan, a 403(b) Plan, a SEP, or a SIMPLE IRA Plan under a Group Submission for Plan Document, Operational, and Employer Eligibility Failures. A separate user fee must be submitted for each plan submitted. For this purpose, in the case of a plan that consists of a basic plan document and adoption agreements, the number of plans submitted is determined by reference to the number of basic plan documents submitted.

(3) Special Group Submission proce- dures . (a) In general, a Group Submission is subject to the same procedures as any VCP submission in accordance with sections 10 and 11, except that the Eligible Organization is responsible for performing the procedural obligations imposed on the Plan Sponsor under sections 10 and 11. See section 11.04(13) for a special submission requirement with respect to Group Submissions.

(b) The Eligible Organization must provide notice to all Plan Sponsors of the plans included in the Group Submission. The notice must be provided at least 90 days before the Eligible Organization provides the IRS with the information required in section 10.10(3)(c). The purpose of the notice is to provide each Plan Sponsor with information relating to the Group Submission request. The notice should explain the reason for the Group Submission and inform the Plan Sponsor that the Plan Sponsor’s plan will be included in the Group Submission unless the Plan Sponsor responds within the 90-day period requesting that the Plan Sponsor’s plan be excluded from the Group Submission.

(c) When an Eligible Organization receives an unsigned compliance statement on the proposed correction and agrees to the terms of the compliance statement, the Eligible Organization must return the signed compliance statement and any additional user fee required under Appendix A of Rev. Proc. 2018–4 (and its annual successors) to the IRS within 120 calendar days, in accordance with section 11.06. In addition, the Eligible Organization must submit a list containing (i) the employer tax identification numbers for the Plan Sponsors of the plans that have consented to be included in the Group Submission and to which the compliance statement

may be applicable, (ii) the plans by name, plan number, type of plan, and number of plan participants, (iii) a certification that each Plan Sponsor received notice of the Group Submission, and (iv) a certification that each Plan Sponsor timely filed the Form 5500 series return for the most recent plan year for which the Form 5500 series return was required to have been filed. This list can be submitted at any stage of the submission process provided that the requirements of section 10.10(3)(b) have been satisfied. If the Eligible Organization submits this list with the initial submission, the list must be included in the PDF file described in section 11.03(2). If the list is not submitted with the initial submission, then once the submission has been assigned to an IRS representative, the Eligible Organization must submit the list on a USB drive in Microsoft Word or Excel to the IRS representative. Only those plans for which correction is actually made within 240 calendar days of the date of the signed compliance statement (or within such longer period as may be agreed to by the IRS at the request of the Eligible Organization) will be covered by the compliance statement.

(d) Notwithstanding section 4.02, if a Plan Sponsor of a plan that is eligible to be included in the Group Submission and has not requested to be excluded from the Group Submission pursuant to section 10.10(3)(b) is notified of an impending Employee Plans examination after the Eligible Organization filed the Group Submission with the IRS, the Plan Sponsor’s plan will be included in the Group Submission. However, with respect to such plan, the Group Submission will not preclude or impede an examination of the plan with respect to any failures not identified in the Group Submission at the time the plan comes Under Examination.

.11 Multiemployer and multiple em- ployer plans . In the case of a multiemployer or multiple employer plan, the plan administrator (rather than any contributing or adopting employer) must file a submission under VCP with respect to any plan failures. The plan administrator may designate an authorized representative to file a VCP submission with the IRS using the www.pay.gov website as described in section 11.08. The request must be with

respect to the plan, rather than a portion of the plan affecting any particular employer.