The IRS Voluntary Correction Program, or VCP, generally must be used by plan sponsors who need to fix certain errors in their retirement plans, including document errors such as missed amendments, and “significant” errors in operation of the plan going back more than two years. VCP is a component program of the Employee Plans Compliance Resolution System, the terms of which are outlined in a Revenue Procedure that the IRS updates every few years. As previously reported, the most recent update, set forth in Revenue Procedure 2018-52, mandates online filing of VCP submissions starting April 1, 2019. The IRS opened the online filing system for voluntary use starting January 1 of this year. Paper filing is optional through March 31, 2019. This post reports on first experiences with the online filing system.
- First, you file online at www.pay.gov, which is also how the applicable VCP user fee is paid electronically. You must have an account established in order to file. The online filing portal at pay.gov is titled “Application for Voluntary Correction Program.” Note that there is a different link at pay.gov called “Additional Payment for Open Application for Voluntary Correction Program” that should not be used for an initial filing. This link is only to be used to make an additional user fee payment for an existing VCP case, which generally would only be at the instruction of an IRS employee. Plan sponsors and preparers should exercise caution because, when you enter “Voluntary Correction Program” into the pay.gov search engine, this alternative link for the additional payment tends to pop up before the correct link for an initial filing.
- Form 8950, Application for Voluntary Correction Program, is completed online at www.pay.gov. This version of the form dates to January 2019. Note that the prior version of Form 8950 from November 2017 should not be used as part of the online submission. It can continue to be filed in hard copy through March 31, 2019. Preparers should be careful to follow the Instructions for whatever version of Form 8950 they are working with, as there are differences between them.
- Any attachments to Form 8950, such as the statement required of Section 403(b) plans, should be part of a single PDF file that contains all portions of the submission (other than Form 8950) that formerly were filed in hard copy (e.g., Form 2848 Power of Attorney, Form 14568 Model VCP Compliance Statement, Schedules thereto, sample corrective calculations, relevant portions of the plan document). The application link at www.pay.gov lists the proper order in which items should go (as does Section 11.11 of Revenue Procedure 2018-52).
- Items unique to the online filing process that must be included in the PDF file include a signed and dated Penalty of Perjury Statement from an authorized representative of the plan sponsor (formerly this was part of Form 8950), and an optional cover letter to the IRS.
- Complications ensue when the PDF file exceeds 15 MB. If that is the case, you are to file online and upload as much of your application as fits within 15 MB limit. You and your Power of Attorney then will receive email confirmation of filing from pay.gov. Locate the Tracking ID number that is listed on the confirmation. You then need to prepare one or more fax transmittals that bear the Tracking ID number on the fax coversheet, as well as the EIN, applicant name, and plan name, and fax in the balance of your application to the IRS at (855) 203-6996. Note that the fax (or multiple faxes, if necessary), must be 25MB or smaller to go through the IRS system. Larger files will fail to transmit and no notice of failure will be provided.
- Either the preparer can provide the PDF to the plan sponsor to upload at www.pay.gov (together with online completion of Form 8950 and payment of the VCP user fee), or the preparer can obtain written authorization from the plan sponsor to use the plan sponsor’s credit card to pay the VCP user fee online, and upload the submission itself. (Hat tip to Alison J. Cohen of Ferenczy Benefits Law Center for input on this latter method, and for other assistance with this post).
Other than the unfortunate need to separately fax portions of larger VCP applications, the online system operates smoothly and is fairly user-friendly. Time will tell as to whether online filing allows the IRS to process the VCP applications more swiftly than has been possible with paper filings.