VCP Compliance Fee for Late Amenders

[rocknrolls2]

I have a client with a qualified plan who is about to submit a VCP application that did not timely make interim amendments and optional amendments adopting certain optional qualified plan changes, including EGTRRA changes. The most recent determination letter was issued in 2002 under GUST. I have the following issue:

1) For purposes of the compliance fee, the general fee based on the participant count would apply. However, if amendments adopting certain interim and/or optional plan changes are adopted within one year of the remedial amendment period for adopting such changes, then there is a 50% reduction in the compliance fee. If the plan is being submitted solely due to late amendment of certain interim and optional plan qualification changes and the amendment is application is submitted on the streamlined VCP application, especially, Appendix F, Schedule 1, the compliance fee is $375. If the only error covered by the VCP submission involves the late adoption of certain interim amendments and/or discretionary plan qualification changes, if one or more of the amendments made changes other than interim amendments and adoption of certain discretionary qualification changes, such as plan design changes or any other change not impacting plan qualification, has anyone had the experience of having the IRS bounce them out of Appendix F, Schedule 1 and require the payment of a higher fee? How strictly does the IRS interpret or apply this in your experience?

Thanks for your insights on this. I feel comfortable that we can submit the VCP filing under the F1. I just need to hear people's real world experiences in dealing with this.

[Kevin C]

has anyone had the experience of having the IRS bounce them out of Appendix F, Schedule 1 and require the payment of a higher fee?

Unfortunately, I have. The agent handling the filing insisted the $375 fee only applies if the VCP filing is submitted before the end of the remedial amendment period. Yes, I have that in writing. She ignored me when I pointed out the cite saying VCP is not available if the remedial amendment period has not ended. This filing consisted of some interim amendments that were missed between the timely GUST and EGTRRA restatements. After much discussion, she finally informed me that one of the interim amendments in the middle time-wise was the amendment that caused them to be ineligible for the $375 filing. I wasn't comfortable removing that amendment from the filing, so she gave us two choices. Either pay up, or she would reject the filing and keep the $375. The client paid the extra $625.

My suggestion is that if you meet the requirements in Rev. Proc. 2008-50 for the $375 fee, submit it using Appendix F, Schedule 1 and send $375. If the agent it is assigned to doesn't want to do it that way, he/she will contact you for more $$$. You might get lucky. But, I would advise the client, the IRS may want the higher fee.

I've heard at conferences that the IRS has changed the way they interpret eligibilty for the $375 fee, but the Rev. Proc. is pretty clear when it applies. You just have to track down definitions of the various terms used. And it is still the current published EPCRS guidance.