Non-Amender

[Randy Watson]

A plan was submitted for a favorable determination letter (not part of a VCP submission). The reviewing agent discovered that an interim amendment was missing from the submission and suggested that we would have to go to closing agreement if the amendment is not located. I believe the "fee" for the failure to adopt this interim amendment (which for the record is literally a 4 sentence amendment) would be based on Section 14.04 of Rev. Proc 2008-50. Has anyone ever been through this before? Are they really going to impose this ridiculously high fee or are they generally willing to negotiate based on mitigating factors?

[John Feldt ERPA CPC QPA]

Six or seven years ago when I first started here, a very small terminated plan had been sent in for a D letter request - I worked on the response, not the submission. The IRS requested a copy of the signed 401(a)(9) amendment (I think). The plan was not on a prototype document since it was cross-tested, and back in those days volume submitter plans had to have their interim amendments signed by each plan sponsor/employer. We showed the IRS our records that we had sent a 401(a)(9) amendment for the employer to sign, but the employer could not find a signed copy (nor could we). The IRS explained they had no choice but to go to audit cap without that signed amendment, and the sanction would be $2,000. Then they explained something to me that sounded like a limited time sale opportunity where a 50% discount applied, and they only charged $1,000. Some deal. By Grabthar's hammer, what a savings.

[Randy Watson]

Six or seven years ago when I first started here, a very small terminated plan had been sent in for a D letter request - I worked on the response, not the submission. The IRS requested a copy of the signed 401(a)(9) amendment (I think). The plan was not on a prototype document since it was cross-tested, and back in those days volume submitter plans had to have their interim amendments signed by each plan sponsor/employer. We showed the IRS our records that we had sent a 401(a)(9) amendment for the employer to sign, but the employer could not find a signed copy (nor could we). The IRS explained they had no choice but to go to audit cap without that signed amendment, and the sanction would be $2,000. Then they explained something to me that sounded like a limited time sale opportunity where a 50% discount applied, and they only charged $1,000. Some deal. By Grabthar's hammer, what a savings.

Ugh. 50% off of the fees set forth in 2008-50 certainly helps, but is still way too high for the violation (IMHO).

BTW, I've never seen a Galaxy Quest quote before. Nice!

[John Feldt ERPA CPC QPA]

Maybe it should be "Buy" instead of "By" since he was doing a gig for a hardware store when he said that. Gotta love Mr. Rickman.

[Randy Watson]

Maybe it should be "Buy" instead of "By" since he was doing a gig for a hardware store when he said that. Gotta love Mr. Rickman.

Could have sworn it was an electronics store. Either way, good quote and under rated movie.

[John Feldt ERPA CPC QPA]

You're right, it was Tech Value Electronic Superstore, so "by" is more likely. To me it's a classic like The Princess Bride.

[Trekker]

We submitted a Plan in 2010 for an updated D-letter. The Plan (a takeover for us) had not timely adopted its EGTRRA good faith addendum. Had to go through Audit Cap, sanction was $3000.

Ah, the classics. Galaxy Quest and Princess Bride - seen them both at least four times. They never get old.

[GMK]

On, Teb. On.

[J. Bringhurst]

We went through this twice (two different clients with different participant counts) and were able to negotiate a $5,000 fee each time. This appears to be somewhat standard.

[Randy Watson]

We went through this twice (two different clients with different participant counts) and were able to negotiate a $5,000 fee each time. This appears to be somewhat standard.

Yup....I was informed it's going to be $5,000.

[Belgarath]

Question - if these had been submitted through VCP first as nonamenders for a clean-up, would the reduction in penalties be sufficient to offset the added expense of the separate filing?

I second the Princess Bride comments. I often refer to the IRS or DOL as ROUS when they do something particularly vexing.

[J. Bringhurst]

In our case, the nonamender filing would have been on Schedule 1 of Appendix F and cost only $375, plus the expense of completing the submission. It would have been much cheaper if the VCP submission had been done prior to the IRS discovering the late amender issue during the determination letter process. So, while $5,000 is not overly burdensome for some clients, they would have much rather paid $375+.