Audit CAP and VFCP re: defaulted loans

[TPSreports]

VFCP generally provides, to correct defaulted participant loans, the plan sponsor must make a voluntary correction of the loan failures using VCP before submitting under VFCP...

Question is - if loan failures are discovered during an IRS audit and subsequently corrected through Audit CAP (instead of VCP), can the sponsor still submit under VFCP to prevent 502 civil penalties or does a sponsor's receipt of a Closing Agreement somehow preclude submitting the loan failures under VFCP because the submission under EPCRS wasn't voluntary? And if VFCP is unavailable, how can the sponsor clear up the fiduciary violations with the DOL?

Thanks in advance..

[ETA Consulting LLC]

I would use VCP and Audit Cap interchangeably in this instance. Why? Because we know that the IRS and DOL do not share information on their audits. As illogical as it seems, when the DOL audits for Employee Rights issues and encounter tax issues that falls within the IRS's purview, they will not disclose this to the IRS. So, just because the IRS found it in audit cap doesn't mean the DOL will automatically know it; making it a voluntary disclosure to the DOL.

Good Luck!