Form 8950 (Application for Voluntary Correction Program (VCP)) and Instructions (2022)
The IRS has revised Form 8950 (Application for Voluntary Correction Program (VCP)), and its instructions, to accommodate anonymous pre-submission conference requests under the Voluntary Correction Program (VCP) portion of the Employee Plans Compliance Resolution System (EPCRS). In its most recent restatement of EPCRS, Revenue Procedure 2021-30, the IRS eliminated anonymous submissions under VCP and added the option to request anonymous, no-fee, pre-submission conferences under VCP for certain specified corrections (see our Checkpoint article). Such requests must be made by submitting Form 8950 (Application for Voluntary Correction Program (VCP)) on the pay.gov website. In its description of the information that must be provided when requesting a pre-submission conference (such as a description of the failure and proposed correction), Revenue Procedure 2021-30 indicated that more specificity regarding the required information would likely be provided in revised instructions for Form 8950.
The IRS has now updated both Form 8950 and its instructions, making various changes to implement the procedure for anonymous pre-submission conferences. Here are highlights:
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Form 8950. The revised form deletes references to anonymous submissions and adds “VC pre-submission conference request” as a submission type. A new item asks submitters to indicate whether an application is “the result of a specific recently closed VC Pre-submission conference request” and, if so, requires entry of the IRS control or work unit number assigned to that request. Also, the penalty of perjury statement has been split into three parts, the first applicable to submissions by a plan sponsor, the second applicable to submissions made by a representative on behalf of a plan sponsor, and the third applicable to pre-submission conference requests. Regardless of which part applies, the penalties of perjury box must be checked.
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Representatives. The instructions require that the representative requesting a pre-submission conference must be designated on a power of attorney by the employer (or the plan administrator in the case of a multiple employer plan), and the representative must be willing to submit a signed Form 2848 (Power of Attorney and Declaration of Representative) with identifying information as part of a subsequent VCP submission.
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Instructions Repurposed. Some of the instructions that previously applied to anonymous submissions have been modified to apply to pre-submission conference requests. For example, when an authorized representative makes its first request for a pre-submission conference, it must enter “401” in lieu of the plan’s three-digit plan code. Each subsequent pre-submission conference request by the same representative’s firm should use the next higher number, creating unique plan numbers for each submission by that firm. A similar procedure previously applied to anonymous submissions.
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Prescribed Entries. When a pre-submission conference is being requested, the form is generally completed as if the representative were the plan sponsor, but the instructions have changed to require that the business code on line 11 be “111111” rather than the representative’s business code. Also, requesters must enter “1.00” as the total dollar value of the plan’s assets on line 4c, and “1” as the number of participants on line 4d.
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Content of Conference Request. In addition to the items that Revenue Procedure 2021-30 states should be included with a pre-submission conference request, the instructions state that a pre-submission conference request should include the number of people impacted and the periods of time when the qualification failure occurred; a detailed narrative that not only proposes a correction but also explains why the correction is consistent with the principles of EPCRS; and an explanation of the method used to compute earnings, if applicable. The instructions acknowledge that some items required for a typical VCP submission may not be needed for a pre-submission conference request.
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Conference Tracking Numbers. When a VCP application is filed following a pre-submission conference, the new Form 8950 for that application must indicate that a conference occurred and provide the applicable control/pay.gov tracking number that was assigned to the closed pre-submission conference request.
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Effect of Conference. The instructions expand slightly on the restatement’s caution about the advisory nature of a conference, noting that any discussion cannot be relied on as a basis for relief under EPCRS or “any federal tax law.”
EBIA Comment: While the IRS has, as promised, provided some additional details regarding the content of pre-submission conference requests, the guidance about what to put in a pre-submission conference request remains, perhaps necessarily, broad and non-specific. Representatives requesting conferences will therefore need to think carefully about what to include in their requests. Include too little, and submitters risk receiving advice that is less reliable because it did not take all relevant factors into account. Include too much, and it might prompt the IRS to exercise its discretion to decline the conference because conferences are held “only at the discretion of the IRS, and as time permits.” For more information, see EBIA’s 401(k) Plans manual at Section XXXV.E (“Voluntary Correction Program (VCP) With IRS Approval”).
Contributing Authors: EBIA Staff.
