New pension plan self-correction programs.The IRS An abbreviation for the Internal Revenue Service, a federal agency charged with the responsibility of administering and enforcing internal revenue laws. consolidated four correction programs for tax qualified plans into a single Employee Plans Compliance Resolution System (EPCRS EPCRS Employee Plans Compliance Resolution System (IRS) EPCRS European Pharmacopoeial Commission of Reference Substances ). Self-correction programs allow employers that sponsor tax-qualified pension plans to correct failures or defects that otherwise might threaten a plan's qualification. Revenue procedure 98-12 provides a uniform set of correction principles that clarify the use of EPCRS. It also ensures that EPCRS is consistently administered. The new procedure has a graduated sanction sanction, in law and ethics, any inducement to individuals or groups to follow or refrain from following a particular course of conduct. All societies impose sanctions on their members in order to encourage approved behavior. schedule that takes into account the nature, extent and severity of the violation. The administrative programs that were consolidated into EPCRS include * Administrative Policy Regarding Self-Correction (APRSC APRSC Administrative Policy Regarding Self-Correction (IRS) ), which permits a plan sponsor with established compliance practices and procedures to correct "insignificant" operational failures without IRS approval, or a fee, and to amend "significant" failures within a two-year period with IRS approval. * Voluntary Compliance Resolution (VCR VCR: see videocassette recorder. VCR in full videocassette recorder Electromechanical device that records, stores on a videotape cassette, and plays back on a TV set recorded images and sound. ), which allows a plan sponsor prior to audit and with IRS approval (and for a limited fee) to rectify rec·ti·fy v. 1. To set right; correct. 2. To refine or purify, especially by distillation. operational defects that do not qualify for APRSC. * Walk-In Closing Agreement Program (Walk-In CAP), which enables a sponsor to voluntarily disclose and correct qualification defects that do not qualify under the VCR program, with the payment of a compliance correction fee based on a new fee schedule. * Audit Closing Agreement Program (Audit CAP), which allows a plan sponsor to negotiate the monetary sanctions Sanctions is the plural of sanction. Depending on context, a sanction can be either a punishment or a permission. The word is a contronym. Sanctions involving countries: Observation. The IRS has exacted hefty monetary penalties from sponsors whose plans did not Comply with the extensive legislative and regulatory qualification rules. EPCRS brings needed clarity to the self-correction process and provides for more reasonable sanctions. Plan sponsors and their advisers should familiarize themselves with the programs that fall under the EPCRS umbrella. --Tracy Hollingsworth, Esq., staff director of tax councils at Manufacturers Alliance, Arlington, Virginia. |
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