Insights

IRS Updates Procedures for Letter Rulings, Determination Letters and Other Guidance


<p>On Jan. 2, 2018, the IRS released Bulletin 2018-1 which contains Revenue Procedures 2018-1 and 2018-4, both of which provide guidance related to employee benefit plans.</p> <p>First, Rev. Proc. 2018-1 updates the procedures to determine employment status on Form SS-8 electronically. As background, employers file Form SS-8 to request a determination of the status of a worker under the common law rules for purposes of federal employment taxes and income tax withholding. Rev. Proc. 2018-1 also clarifies the rules regarding user fee refunds and amounts that must be paid when eligibility for a reduced fee depends on the result of the ruling. Further, the procedure says that www.pay.gov has become the exclusive means for paying fees that are required by this revenue procedure.</p> <p>Second, Rev. Proc. 2018-4 applies to determination letters for different types of employee benefits plans (including 401(k) plans) and transactions, and for private letter rulings on various issues. This procedure has been updated to include changes made to the pre-approved plan program. Also, it provides guidance for pre-approved plans that are still subject to the procedures in previous Rev. Proc. 2015-36 since they are being submitted for cycles before their third six-year remedial amendment cycle. The procedure gives the user fees for submissions under the revised pre-approved plan program, adjusts the user fee structure for the IRS’s Voluntary Correction Program (VCP) and increases the fee for determinations as it relates to terminating plans. Changes have been made which affect requests for relief from retroactive disqualification, including a requirement that requests be submitted to the agent or specialist assigned to the case, as well as the removal of some procedural protections.</p> <p>In addition, retirement plan sponsors should be aware that Rev. Proc. 2018-4 changes the way VCP user fees are calculated. Previously, these fees were based on the number of plan participants. Now they will be based on plan assets.</p> <p>Therefore, plan sponsors should familiarize themselves with these IRS Revenue Procedures and make any necessary changes to applicable plans. Due to the complex nature of these procedures, outside counsel is recommended for employers with specific questions.</p> <p> <a href="https://www.irs.gov/pub/irs-irbs/irb18-01.pdf" target="_blank">IRS Bulletin 2018-1 »</a> </p>