IRS Issues Update to EPCRS Income Process – Employment & HR

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United States: IRS issues update to EPCRS income process

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The Internal Revenue Service released updates to its Employee Plan Compliance Resolution System (“EPCRS”) in the 2021-30 Tax Proceedings. The main changes to the EPCRS include:

  • Extend the self-correction period for significant operational failures from two to three years, starting July 16, 2021;
  • Eliminate the requirement that retroactive plan changes for self-correction benefit all plan members, effective July 16, 2021;
  • Eliminate the ability to make anonymous submissions but allow free anonymous pre-submission conferences to discuss potential VCP submissions, effective January 1, 2022;
  • Extension of the safe harbor correction method expiration date for missed deferral failures in automatic contribution plans from December 31, 2020 to December 31, 2023, effective January 1, 2021;
  • Increase the threshold from $ 100 to $ 250 for some de minimis amounts that plan sponsors are not required to correct;
  • Require that audit CAP sanctions be paid through the Pay.gov website effective January 1, 2022; and
  • Expand guidelines on the recovery of overpayments.

The 2021-30 tax procedure is generally in effect as of July 16, 2021, but, as noted above, some changes take effect on other dates.

The content of this article is intended to provide a general guide on the subject. Specialist advice should be sought regarding your particular situation.

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