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Notice to Interested Parties not sent timely


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I prepared a determination letter application for a client. I prepared the Notice to Interested Parties and sent it to the client. I instructed them to send it to participants on the date I was filing the application.

Well, the client forgot to send the Notice. It should have been sent 2 1/2 weeks ago. Does anyone know what the proper procedure is for this?

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The proper procedure is to restart the termination process. I think the notices have to be sent 10 to 21 days BEFORE the application is filed with the IRS.

This is for a new plan, not a plan termination. And I already sent the determination letter application. I had told the client that I was sending the application on X date and that they should send the Notice before that date. They assured me that they would. Now they tell me that they forgot to send it.

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Well for pity's sake, send the darn notices, don't delay. And hope no one questions it.

I hesitate to just send it. We are jammed up against due dates for comments (and in the case of when a request to the DOL to comment on behalf of the participants, we are past the due date).

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Here's what I would do.

1. I would research the NIP requirements. I think it may be a requirement only if the plan sponsor/employer wishes to contest an adverse determination in Tax Court. If I am correct, I would advise the employer of that, but it may be a reasonable approach just to forget about it. If I am wrong, then forget this point #1.

2. Assuming the filing is invalid, I would try to reach someone fairly high up in EP and ask "what should we do?"

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The following line 3c of Form 5300 asks for a representation that interested parties have been given the required notice: "Have interested parties been given the required notification of this application?"

The issue here is not merely that this is troublesome. One of the important issues for you is losing your ability to practice before the IRS if you are involved in misleading the IRS about whether the required notice was given.

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You should talk to the reviewer, if one has been assigned. They will most likely say that you should send something to them clarifying the record, indicating exactly when the Notice was distributed. Obviously, you would need to have the Notice distributed if you haven't at that point. It has been a while since this has happened to me, but when it did I seem to recall that the reviewer wanted the Notices to reflect the proper dates with respect to a later distribution of the Notice and that is all. As speculated earlier, the reviewer indicated that the primary purpose of the notice is to ensure that all parties can make comments to the governmental agencies on a timely basis. To that end, the reviewer said the clarified record would ensure that the governmental agencies would allow a comment to be considered as long as it was sent within the appropriate comment period as measured from the actual date the notices went out. The net effect, theoretically, is that the reviewer said he/she would ensure the determination would not be issued until the comment periods had run. As most of us have experienced, determinations usually take far longer than the comment periods, so re-issuing (or, as in this case, issuing them for the first time) the Notices and clarifying the record has no practical effect on the timing of the determination.

I suppose it is possible that a out of sorts reviewer would suggest that the entire process be restarted, but better to know that is the suggested course earlier rather than later.

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