Advisory Committee on Tax Exempt and Government Entities (ACT ...

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Improving the Employee Plans Compliance Resolution System: A Roadmap For Greater CompliancePPA requires the Service to continue updating and improving EPCRS by giving specialattention to the following:• Increasing the awareness and knowledge of small employersconcerning the availability and use of EPCRS;• Taking into account special concerns and circumstances facingsmall employers with respect to compliance and correction ofCompliance Failures;• Extending the duration of the self-correction period under the Self-Correction Program for significant Compliance Failures;• Expanding the availability to correct insignificant Compliance Failures under the Self-Correction Program during audit; and • Assuring that any tax, penalty or sanction that is imposed byreason of a Compliance Failure is not excessive and bears areasonable relationship to the nature, extent and severity of thePlan Failure.Congress mandated that the Service pay more attention to the needs of smallemployers and to improve and expand the relief available under EPCRS.The ACT understands that some officials in the Service and Treasury Departmentbelieve that the specific areas of concern referred to in section 1101(b) are suggestivein nature rather than a directive for required changes. The ACT understands that thebasis for this opinion is the express prefatory language of the section which providesthat“The Secretary of Treasury shall continue to update and improve theEmployee Plans Compliance Resolution System (or any successorprogram), giving special attention to …” (emphasis added).Apparently, some believe that the use in section 1101(b) of the language “giving specialattention to” rather than the use of more specific, direct language requiringimprovements in the five specified categories, supports their interpretation.While it would be presumptuous of the ACT to offer a legal opinion on the issue, webelieve that there are strong arguments to support a position that section 1101(b)requires improvements in the specific identified areas. More importantly, we wouldhope that the Service respond to the specific areas of concern referred to insection 1101(b)(1)-(5) rather than rely on legal interpretation. This would respond to theCongressional intent.ADVISORY COMMITTEE ON TAX EXEMPT AND GOVERNMENT ENTITIES (ACT) June 11, 2008 16
Improving the Employee Plans Compliance Resolution System: A Roadmap For Greater ComplianceIV. DUE DILIGENCE PROCESSWhile the members of the ACT each brought with them extensive experience in dealingwith the EPCRS, there was still a belief that more knowledge of the program wasnecessary. To that end, the ACT devoted its working sessions of August 13-14, 2007,October 22-23, 2007, January 14-15, 2008 and April 7-8, 2008 to gathering additionalbackground information. As more fully described below, the ACT primarily focused itsattention on two sources (i) interviews with officials in EP, and (ii) collecting informationfrom the practitioner community. The ACT extends its appreciation to all of theindividuals who participated.A. The IRS and the Treasury DepartmentAt the outset, the ACT wishes to expressly thank Steven T. Miller, Commissioner,TE/GE, and his entire team for providing exceptional cooperation during the preparationof this report. The conversations with Service officials were open, candid andproductive. All of the conversations were held in a spirit of cooperative problem solving.Both Joseph Grant (former Director, Employee Plans) and Michael Julianelle (currentDirector, Employee Plans) were extremely generous with their time as well as the timeof their team. The conversations with Directors Grant and Julianelle were particularlyhelpful in providing valuable insight into the policy background of EPCRS and thepracticality of the ACT’s recommendations.The administrative enforcement of EPCRS is divided between the Manager, EPVoluntary Compliance, who essentially maintains jurisdiction over VCP, and theDirector, Examinations, who essentially maintains jurisdiction over Audit CAP. The twooffices generally work closely together to ensure a harmonized application of the rules.The ACT spent significant time at its August, October, January and April meetings withMonika Templeman, Director, EP Examinations, regarding the Audit CAP aspect ofEPCRS. Discussions were held about the relationship between Audit CAP and selfcorrection,potential improvements to Audit CAP, and policy issues in general.Additionally, the ACT had open discussions with Joyce Kahn, Manager, EP VoluntaryCompliance, extensively at its August, January and April meetings regarding theoperation of the VCP and self-correction program. Detailed discussions were hadregarding policy issues and specific technical methods by which EPCRS could beimproved.The ACT also spoke with a number of other Service officials including AndrewZuckerman, EP Director, Rulings and Agreements; Martin Pippins, EP Manager,Technical Guidance and Quality Assurance; Mark O’Donnell, Director, CustomerEducation and Outreach; Maxine Terry, EP Tax Law Specialist; Bill Hulteng, EP TaxLaw Specialist; Marjorie Taylor, EP Tax Law Specialist; and Rhonda Migdail, EPSupervisory Tax Law Specialist, all of whom provided valuable insight into EPCRS.ADVISORY COMMITTEE ON TAX EXEMPT AND GOVERNMENT ENTITIES (ACT) June 11, 2008 17
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ADVISORY COMMITTEE ONTAX EXEMPT AND
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PROTECTING PLAN BENEFITS:IMPROVING
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Tax Treatment Of Cellular Telephone
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15. Special Rules for Various Types
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Withholding RequirementsACCOUNTING
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