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WOMAN: As Director of Employee Plans Examinations, my overall goal is for the Examinations function to have more impact on compliance in the retirement-plans community.

I'm deeply committed to promoting voluntary compliance and to rooting out problems so that legitimate plans continue to stay strong and healthy.

In Employee Plans Examinations, we do this through our compliance contacts, specifically by examining plans and maintaining a very vigorous enforcement program.

People who play by the rules should be validated and commended, but those who choose to break the rules must be stopped.

Let me stop here and say that the majority of the community does comply with the tax laws.

We encourage all plan sponsors to review their plans regularly and to self-correct when plan mistakes are found.

On our webpage at, you'll find under the Examinations/Enforcement topic that we've posted EP compliance trends and tips on the most common mistakes that IRS Employee Plans agents see in examining plans during their compliance activities.

We offer tips on how to identify, correct, and avoid such plan mistakes.

If my agents find mistakes or defects while examining qualified plans, employers, the plan sponsors, are able under the Audit Closing Agreement Program, which we'll refer to as Audit CAP, to preserve the tax benefits associated with properly maintained retirement plans.

Thus, under Audit CAP, we offer a non-Draconian way to keep legitimate retirement plans qualified.

Instead of disqualifying the plan, we allow the employers, the plan sponsors, to correct the defects, ensuring that all participants receive the benefits due under the plan.

They pay a sanction based on the amount that is directly related to the amount of the tax benefits preserved.

The sanction imposed will bear a reasonable relationship to the nature, extent of the severity of the defects that are found, taking into account the extent to which correction occurred before the audit.

Also, we look at the plan's size, the number of participants, and other factors, and, finally, enter into a closing agreement with the Service.

Of course, Audit CAP costs a lot more than a submission under the Voluntary Correction Program called VCP.

Remember that, unlike VCP, where the plan sponsor goes to the effort and expense to find the defects, bring them to our attention, and fix them, in Audit CAP, we expend the time and resources to find the disqualifying defects.

And these are discovered as a result of an examination.

Now, if the IRS and the plan sponsor cannot reach an agreement under Audit CAP with respect to either the correction of the mistake or the amount of the sanction, then we'll have to pursue disqualification of the plan.

Let me also discuss that there are a number of individuals out there who are promoting what we call "abusive schemes" or "tax avoidance transactions.”  My office supplied significant resources to stop these activities which undermine public confidence in our voluntary tax system.

It's important that everyone play by the rules.

We do not view tax-evasion schemes as retirement plans, and as such, they're not eligible for Audit CAP because they're not intended as qualified plans.

Accordingly, there is no qualification status to preserve.

Visit our webpage to find out more about EP Abusive Tax Avoidance Transactions, also known as ATAT.

EP Examinations will continue to work with the community to increase voluntary compliance and to find the rule breakers.

We all share a vested interest in the success of the private-retirement system.

Resolving plan mistakes that are found during an IRS examination by using Audit CAP is one very important way to help keep plans compliant.

And keeping a plan qualified allows sponsoring employers to enjoy tax incentives, such as deductible contributions, and it ensures that participants receive the benefits that they're entitled to so that they can truly enjoy their golden years.