IRS Updates Procedures for Determination Letter Requests

The Internal Revenue Service (IRS) has issued Revenue Procedure 2017-4 explaining how the IRS provides advice to taxpayers on issues under the jurisdiction of the Commissioner, Tax Exempt and Government Entities Division, Employee Plans Rulings and Agreements Office. It also details the types of advice available to taxpayers, and the manner in which such advice is requested and provided.

Procedures for requesting determination letters were modified to reflect the elimination of the five-year remedial amendment cycles for individually designed plans and other changes as described in section 4 of Rev. Proc. 2016–37. To the extent that employers that maintain individually designed plans may still request a determination letter under the third Cycle A, the procedures described in sections 6 and 7 of Rev. Proc. 2016–6 continue to apply.

Rev. Proc. 2016-37 says a plan can request a determination letter only if any of these apply:

• It has never received a letter before;
• The plan is terminating; or
• The IRS makes a special exception. IRS anticipates making exceptions based on program capacity to work on additional applications, and the need for rulings in certain areas. The agency said it will measure need in a variety of ways including annual input from the Employee Plans (EP) community.

In Rev. Proc. 2017-4 the IRS says procedures for requesting determination letters were modified to reflect that employers may request determination letters on whether covered employees are leased employees only to the extent the employer is otherwise eligible to apply for a determination letter under Rev. Proc. 2016–37.

Procedures for requesting determination letters were modified to reflect that employers that maintain individually designed plans may no longer request determination letters on whether a plan sponsor is part of an affiliated service group.

Procedures for requesting a minimum funding waiver, as described in section 3 of Rev. Proc. 2004–15, 2004–1 C.B. 490, have been modified to eliminate the alternative of requesting a determination letter in conjunction with a minimum funding waiver request. Requests for minimum funding waivers may still be submitted to the Office of Associate Chief Counsel (Tax Exempt and Government Entities) as requests for private letter rulings. See section 5.15(2) of Rev. Proc. 2017–1.

Procedures for requesting determination letters were modified to reflect that determination letters on partial terminations issued to individually designed plans will be limited in scope to whether a partial termination has occurred, unless the employer is otherwise eligible to apply for a determination letter under Rev. Proc. 2016–37.

The IRS says a favorable determination letter does not constitute a determination with respect to the federal tax consequences of a lump sum risk-transferring program as described in Notice 2015–49, 2015–30 I.R.B. 79. 

Procedures for describing the types of advice provided by Employee Plans Rulings and Agreements were revised to reflect that revenue rulings, information letters, and waivers of the minimum funding standard are no longer issued by Employee Plans Rulings and Agreements, but instead are issued by the Office of Associate Chief Counsel.

Procedures for requesting § 7805(b) relief were modified to reflect delegation of authority to Division Counsel (TEGEDC) to limit retroactive revocation or modification of a determination letter or letter ruling issued by Employee Plans Rulings and Agreements.

Procedures for user fees were modified to reflect the elimination of the five-year remedial amendment period, as well as changes in the Employee Plans Compliance Resolution System (EPCRS) as described in Rev. Proc. 2016–51.