Since 2002, the Internal Revenue Service has allowed plan sponsors to voluntarily identify and correct certain various types of operational and document errors related to required filings.
Officially known as the Employee Plans Compliance Resolution System (EPCRS), it offers three programs for correcting plan errors, each available under specific circumstances, according to The Wagner Law Group:
- Self-Correction Program (SCP),
- Voluntary Correction Program (VCP) through a submission to IRS, and
- Audit Closing Agreement Program (Audit CAP).
“Since its inception, the IRS has updated EPCRS from time to time,” it notes. “On September 28, 2018, with the release of Revenue Procedure 2018-52, the IRS modified and superseded the most recent prior consolidated iteration of EPCRS, which was set forth in Revenue Procedure 2016-51.”
In a nod to paperless, the new EPCRS means that applicants will no longer be permitted to file paper submissions for the Voluntary Correction Program.
Generally effective on January 1, 2019, plan sponsors must use the www.pay.gov website to create a pay.gov account beginning on April 1, 2019.
Between January 1, 2019 and March 31, 2019, applicants will have the option of either mailing under the procedures set forth in Rev. Proc. 2016-51 or using the www.pay.gov website.
While the same type of documents that are submitted under the current program will continue to be required, there are procedural differences under the new electronic filing procedure:
- This account will be used when filing a VCP submission and the appropriate user fees.
- After a pay.gov account has been established, the applicant must complete Form 8950 using the www.pay.gov website.
- Documents relating to the VCP submission, including a description of the failures, must be converted into a single PDF document and then uploaded to the www.pay.gov website. However, there is a 15 MB size limit and there are special instructions for VCP submissions in excess of that limit, which will likely apply to many submissions.
- New procedures are established relating to the payment of user fees, including the generation of a payment confirmation. Specific instructions are provided on how to designate an authorized representative using form 2848.
“We note that the new EPCRS does not address concerns that VCP user fees, which were recently increased effective January 2, 2018, are a barrier to small employers from taking advantage of the program, who may choose to utilize the SCP component of EPCRS instead,” Wagner adds. “Other modifications were made to reflect changes in IRS programs, such as the Pre-Approved Plan Program for Qualified Plans and Pre-Approved 403(b) plans. A number of technical changes and clarifications were also made.”