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Common Procedural Errors in VCP Applications |
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The application for the compliance statement is submitted to Washington DC and the application for a determination letter is submitted to Cincinnati. If the determination letter application is related to the Voluntary Compliance application, both submissions should be made to Washington DC.
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The application encloses one check for the compliance fee for the Voluntary Compliance submission and for the user fee for the determination letter application. Separate checks need to be remitted for each submission.
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The application under the Voluntary Compliance application should include a copy of the applicant’s latest Form 5500. The Form 5500 is used to verify the fee for the Voluntary Compliance application.
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The applicant does not submit a valid Power of Attorney form (Form 2848). Without a valid Form 2848, a representative of the Service cannot discuss your Voluntary Compliance application with your authorized representative. Another common error associated with the Form 2848 is that it is executed by someone other than an eligible person such as an officer of the plan sponsor. This also prevents the Service from discussing the submission with the authorized representative of the plan sponsor.
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The signature on the perjury statement required with every submission is executed by an ineligible person rather than an officer of the employer. This will require another penalty of perjury statement to be obtained by the Service prior to the case being closed.
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The Voluntary Compliance application is submitted under the plan sponsor’s Social Security number instead of the Employer Identification Number. A Social Security number cannot be used for a Voluntary Compliance submission. The plan sponsor should apply for an Employer Identification Number on Form SS-4 prior to submitting the Voluntary Compliance application.
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The applicant submits the incorrect compliance fee with the application. The correct compliance fee is based upon the number of participants on line 7f of the plan sponsor’s latest Form 5500. The fee schedule for a Voluntary Compliance application is set forth in section 12.02 of Revenue Procedure 2008-50.
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The Voluntary Compliance submission does not state a qualification failure or the failure disclosed is not a qualification issue. The applicant is required to disclose the failure in the Voluntary Compliance submission. It is not the Service’s responsibility to review the submission and identify the failure for the plan sponsor. A submission that does not include a failure will be rejected and returned to the plan sponsor.
Section IRC 401(a) sets forth the qualification rules for tax-qualified retirement plans. If the failure listed in the submission does not relate to one of these qualification rules, the submission will be rejected and returned to the plan sponsor.
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