The IRS established the Employee Plans Compliance Resolution System or EPCRS to help qualified retirement plan sponsors correct technical and administrative problems with their plans thereby retaining tax favorable status. This basically gives business the opportunity to stay in compliance with the IRS in regard to their qualified retirement plan and not have to run into unnecessary penalties.
There are three components of EPCRS, these include:
1. The Self Correction Program or SCP – This permits plan sponsors to correct certain failures of their plan without having to contact the IRS directly.
2. The Voluntary Correction Program or VCP – This permits plan sponsors to pay a fee to the IRS and receive the Service’s approval for correction of plan failures prior to an IRS audit.
3. The Audit Closing Agreement Program or (Audit CAP) – This permits plan sponsors to pay a fee to the IRS and correct a failure of the plan while the plan is under audit by the IRS.
You can find out more information including eligibility, definitions, and general principles about the EPCRS by reading Rev. Proc. 2008-50.