Can you get vcp relief without a vcp filing?

[jpod]

A Cycle E filer is preparing a determination letter application for Jan. 31, 2011. In the course of preparing the application, it is discovered that plan was not timely amended for some interim amendments. The restated plan document will be amended to reflect the changes retroactive to their respective effective dates. Do you have to file a separate VCP submission to ensure yourself of the modest $375 compliance fee, or can you skip the separate VCP filing if you specifically identify the interim amendment non-amender failures in your determination letter application (i.e., in the transmittal letter)? Stated differently, if you don't undertake a separate VCP submission, are you at risk for Audit Cap treatment and a significantly greater compliance fee even though you have highlighted the non-amender failures in your determination letter application?

[Kevin C]

I would file for VCP before you submit for the determination letter. When you file for a determination letter, you are considered "under examination" [Rev. Proc. 2008-50, Section 5.07(3)] and are not eligible for VCP [section 4.02]. Under Section 6.05(3), it looks like you are not required to submit for a determination letter as part of the VCP filing since only interim amendments were late. So, it would be your regular Cycle E filing.

I hope you have better luck getting the $375 fee for a filing with only late interim amendments and amendments needed to implement optional law changes than I did on my last filing. The filing included only interim and optional law changes starting with the automatic rollover amendment and going forward. The agent insisted the $375 fee only applies if the remedial amendment period for the amendment has not ended. Then, she asked me if I knew what a remedial amendment period was. After some correspondence, she decided that all of the late amendments except for one due in 2007 adopting some items from the 2006 cumulative list would be covered by the $375 fee, but if we wanted the 2007 amendment included, the fee would be half of the regular VCP filing fee. She never explained why that amendment was a problem, but the two older amendments were not. When I did not agree that she was telling me the correct filing fee, she gave me three choices: 1) drop the 2007 amendment from the filing, 2) send her another $625, or 3) she would reject the filing and they would keep the filing fee. Hopefully, you won't get the same agent.

[jpod]

Kevin C (and others), here is a paragraph from the definition of "Under Examination" in the EPCRS Rev. Proc. Insofar as my original question is concerned, what does the last sentence mean?

(3) An Employee Plans examination also includes a case in which a Plan Sponsor has submitted any Form 5300, 5307 or 5310 and the Employee Plans agent notifies the Plan Sponsor, or a representative, of possible Qualification Failures, whether or not the Plan Sponsor is officially notified of an “examination.” This would include a case where, for example, a Plan Sponsor has applied for a determination letter on plan termination, and an Employee Plans agent notifies the Plan Sponsor that there are partial termination concerns. In addition, if, during the review process, the agent requests additional information that indicates the existence of a Qualification Failure(s) not previously identified by the Plan Sponsor, the plan is considered to be under an Employee Plans examination. If, in such a case, the determination letter request under review is subsequently withdrawn, the plan is nevertheless considered to be under an Employee Plans examination for purposes of eligibility under SCP and VCP with respect to those issues raised by the agent reviewing the determination letter application. The fact that a Plan Sponsor voluntarily submits a determination letter application does not constitute a voluntary identification of Qualification Failures to the Service. In order to be eligible to perfect a determination letter application into a VCP submission, the Plan Sponsor (or the authorized representative) must identify each Qualification Failure, in writing, to the reviewing agent before the agent recognizes the existence of the Qualification Failure(s) or addresses the Qualification Failure(s) in communications with the Plan Sponsor (or the authorized representative).

[Kevin C]

I think what it is saying is that if you file for a determination letter and you disclose, in writing, all of the qualification failures in the initial filing (or at least before the agent realizes there are problems) then you can still be eligible for VCP. But, looking at it another way, if the agent thinks there is an undisclosed possible qualification error, you lose the ability to file under VCP for the disclosed failures.

I still think the best option is to file under VCP first and then file for the determination letter a few days later.