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

Improving the Employee Plans Compliance Resolution System: A Roadmap For Greater ComplianceAt its April meeting, the ACT met with William Bortz, Associate Benefits Tax Counsel,United States Department of Treasury. Mr. Bortz provided background into the policyconsiderations behind the Service’s future efforts to update and improve EPCRS.A few basic themes emerged regarding EPCRS from the interviews with governmentpersonnel, including the following:• EPCRS is a valuable program which addresses the needs of PlanSponsors to deal with Plan Failures. The program is considered asuccess by both the Service and the practitioner community andshould continue to be improved and updated.• Voluntary compliance, through self-correction and the VCP, shouldbe encouraged. Accordingly, it is important to sufficiently penalizeoffenses discovered during audit so as to reward voluntarycompliance and penalize non-compliance.• Self-correction is perceived to be an important tool to enable PlanSponsors to comply. However, there are no current statisticsregarding the use of the self-correction program and, therefore, theextent to which the program is used and its effectiveness issomewhat speculative.B. The Practitioner CommunityThe ACT determined that the most effective means of surveying the practitionercommunity regarding improvements to EPCRS would be to survey practitioners througha posted survey on the BenefitsLink website. 47 BenefitsLink is a website that caters tothe employee benefits community. It is a widely recognized source of benefitsinformation and also offers a forum for discussion and analysis of various retirementplan related issues. The site is generally frequented by professionals who provide legalcounsel or administrative and testing services to sponsoring organizations as well asemployers maintaining qualified retirement plans. In order to survey this group, the ACTposted an invitation to comment on EPCRS: 48 The link was posted between October 4,2007 and October 18, 2007 and produced 25 responses. A detailed summary of thoseresponses is attached as Exhibit B.47 The ACT extends its gratitude to Dave Baker of BenefitsLink who assisted with the publication of the survey and the report of itsresults.48 The letter provides as follows: “The IRS <strong>Advisory</strong> <strong>Committee</strong> on Tax Exempt and Government Entities is undertaking toformulate recommendations on how to improve the Employee Plans Compliance Resolution System, which recommendations willaddress, but not be limited to, the directive to the Secretary of the Treasury under the Pension Protection Act of 2006, section1101, requiring EPCRS be modified as follows: (1) increasing the awareness and knowledge of small employers concerning theavailability and use of the program; (2) taking into account special concerns and circumstances that all employers face withrespect to compliance and correction of compliance failures; (3) extending the duration of the self-correction period under theSelf-Correction Program for significant compliance failures; (4) expanding the availability to correct insignificant compliancefailures under the Self-Correction Program during audit; and (5) assuring that any tax, penalty, or sanction that is imposed byreason of a compliance failure is not excessive and bears a reasonable relationship to the nature, extent, and severity of thefailure. If you have any suggestions, kindly forward them by December 31, 2007 to Marcia Wagner.”ADVISORY COMMITTEE ON TAX EXEMPT AND GOVERNMENT ENTITIES (ACT) June 11, 2008 18