The Inside Income Service’s Worker Plans perform is pilot-testing a brand new pre-examination retirement plan compliance program, beginning this month, as a option to shorten the size of time wanted for exams.
The IRS mentioned in an e-mail Friday it might notify plan sponsors by letter if their retirement plan was chosen for an upcoming examination. The letter will give a plan sponsor a 90-day window to assessment their plan’s doc and operations and see in the event that they meet present tax legislation necessities. If a plan sponsor doesn’t reply inside 90 days, the IRS will then contact them to schedule an examination.
Retirement plan sponsors may have a chance to right any errors on their very own. If the assessment reveals errors within the plan’s paperwork or operations, they can self-correct the errors utilizing correction ideas within the IRS’s voluntary compliance program (EPCRS), described in Income Process 2021-30.
IRS headquarters in Washington, D.C.
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“Should you discover errors throughout your assessment that aren’t eligible to be self-corrected, you possibly can request a closing settlement,” mentioned the IRS. “We’ll use the Voluntary Correction Program payment construction to find out the sanction quantity you pay underneath a closing settlement.”
The IRS mentioned it might assessment the plan’s documentation and decide whether or not it agrees with the sponsor’s conclusions and that it appropriately self-corrected any errors. It would then problem a closing letter or conduct both a restricted or full-scope examination.
“Our objective with this program is to scale back taxpayer burden and cut back the period of time spent on retirement plan examinations,” mentioned the IRS. “On the finish of this pilot, we’ll consider its effectiveness and decide if it ought to proceed to be a part of our total compliance technique.”