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Who's the Employer?

Answers are provided by S. Derrin Watson, JD, APM

No More ASG Determination Letters

(Posted January 13, 2017)

Question 336: After the release of Rev. Proc. 2017-4, is it possible to receive a ruling on whether two particular companies constitute an affiliated service group within the meaning of Code section 414(m)?

Answer:

No. In the immortal words of Goodbye, My Coney Island Baby: "So goodbye, so long, farewell forever..."

For years employers have been able to request a determination letter on whether their plan was part of an affiliated service group. The only way to do so was by filing Form 5300, but the route was open. Rev. Proc. 2017-4 is very clear that the IRS will no longer issue determination letters on whether two companies are part of either a traditional ASG or a management function ASG.

More than ever, careful examination of affiliated service group status is crucial, because there is no safety net. Chapter 13 of my book, Who's the Employer, discusses ASGs in detail.

Fortunately, it is still possble to request a determination letter on leased employee status. The employer must file Form 5300, specifically request the ruling, and provide some additional information, as outlined in Section 17 of Rev. Proc. 2017-4. Unfortunately, if the plan has ever received a determination letter via Form 5300, that option no longer available under the new "one and done" rule.

Important notice:

Answers are provided as general guidance on the subjects covered in the question and are not provided as legal advice to the questioner or to readers. Any legal issues should be reviewed by your legal counsel to apply the law to the particular facts of this and similar situations.

The law in this area changes frequently. Answers are believed to be correct as of the posting dates shown. The completeness or accuracy of a particular answer may be affected by changes in the law (statutes, regulations, rulings, court decisions, etc.) that occur after the date on which a particular Q&A is posted.