IRS Announces Reduced VCP Compliance Fees

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Overview


The Internal Revenue Service (IRS) has announced significantly reduced compliance fees for VCP submissions.

In Depth


The Internal Revenue Service (IRS) has announced new general compliance fees for voluntary correction program (VCP) submissions under the Employee Plans Compliance Resolution System (EPCRS), effective February 1, 2016. EPCRS is the comprehensive system for correction of retirement plan failures (See Revenue Procedure 2016-8). In almost every case, general compliance fees for VCP submissions made on or after February 1, 2016, are significantly reduced. VCP fees for other types of plan submissions, such as certain nonamender and plan loan failures, remain unchanged by the new guidance.

The table below compares the current user fees under Revenue Procedure 2013-12, as amended, against the new user fees that are effective beginning February 1, 2016.

Current Fee

Fee Effective February 1, 2016

Number of Participants

Fee

Fee

Number of Participants

20 or fewer

$750

$500

20 or fewer

21 to 50

$1,000

$750

21 to 50

51 to 100

$2,500

$1,500

51 to 100

101 to 500

$5,000

$5,000

101 to 1,000

501 to 1,000

$8,000

1,001 to 5,000

$15,000

$10,000

1,001 to 10,000

5,001 to 10,000

$20,000

More than 10,000

$25,000

$15,000

More than 10,000

The IRS also announced that it will revise Form 8951, Compliance Fee for Application for Voluntary Correction Program (VCP), but until the revised form is released, plan sponsors should continue to use the current Form 8951. For general compliance submissions made on or after February 1, 2016, plan sponsors should ignore the fee amounts on line 7 of that form, and attach a check for the new fee amount. The IRS will not apply the reduced fees or issue refunds for VCP submissions made prior to February 1, 2016, even if those submissions are withdrawn and then resubmitted under the reduced fee schedule.

For further information about applying the new IRS user fees or for questions about VCP submissions, contact your regular McDermott lawyer or one of the contacts listed to the right.