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5500 Preparer's Manual for 2012 Plan Years
The premier resource in the field of Form 5500 preparation, 5500 Preparer's Manual will help you handle the required annual Form 5500 filings for both pension benefits and welfare benefit plans.
The IRS Employee Plans (EP) Division will heighten its enforcement activities against abusive tax schemes, according to the EP fiscal year 2007 Work Plan, unveiled on September 19, 2006. The work plan sets forth EP's major strategies, operating priorities, and objectives for the new fiscal year and is designed to be a point of reference. EP also intends to process determination letter applications for cash balance conversions during the 2007 fiscal year and plans to analyze and improve the focused examination concept for EP examinations.
Among the EP's operating priorities are to detect and deter abusive tax schemes through accelerated enforcement actions, educational strategies and the identification of new abusive schemes. EP plans an aggressive stance toward all identified abusive tax avoidance transactions (ATAT). FY 2007 efforts to combat ATAT will include:
Continuance of examinations on S Corporation ESOPs that violate Code Sec. 409(p) and Code Sec. 412(I) plans that take deductions for excessive insurance,
Examination or other compliance activity with respect to taxpayers that did not elect to participate in the settlement initiative described in Announcement 2005-80 (CCH Pension Plan Guide ¶17,097S-80), and
Development of other potentially abusive issues for enforcement action.
The EP will also continue to inform stakeholders about abuses involving retirement plans using both internal and external web sites.
The EP plans to coordinate information and processes with the Department of Labor (DOL) and Pension Benefit Guaranty Corporation (PBGC) to monitor pension funding. Interagency coordination on pension funding issues has escalated in the wake of several prominent bankruptcies which have resulted in failures to fund pension plans. EP will continue to try to improve interagency coordination with the PBGC and DOL. The focus will be on large companies in the airlines and automotive industries that have filed for bankruptcy protection. Technical guidance will also be issued reflecting recent pension legislation.
Approximately 1,250 determination applications for cash balance conversion plans have been held in suspense for up to six years due to pending legislative proposals and various court decisions. The Pension Protection Act of 2006 (P.L. 109280), enacted on August 17, 2006, provided statutory guidance for the processing of determination applications that had been held up for cash balance conversions. The EP plans to process these applications during FY 2007. The goal is to issue determination letters on 90% of the cash balance plans that have been held in abeyance. IRS Rulings & Agreements will work jointly with the Chief Counsel and Treasury to issue timely technical guidance on the applicable provisions of the new statute.
Another priority for EP is to analyze and improve the focused examination concept for all examinations. The focused examination concept allows agents to more efficiently perform examinations by focusing on key issues, rather than examining employee plans comprehensively as was done in the past. Mandatory pre-determined issues are identified for audit by considering plan type and other criteria based upon historical information and local knowledge, while allowing agents the flexibility to expand the audit scope if necessary.
EP expects this approach to save compliant taxpayers both time and money. In addition, agents will spend less time on examinations, which will allow closing letters to be issued earlier. This initiative began in January 2006 and will be analyzed for possible improvement in FY 2007, including full implementation for EP Team Audit cases.
EP also plans to reduce the inventory backlog of voluntary compliance submissions and provide timely disposition of defined contribution pre-approved plan applications, as well as provide more plain language guidance.
For more information on this and related topics, consult the CCH Pension Plan Guide.
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