Changes. The key changes to EPCRS include:

• providing that if a plan sponsor corrects the failures in accordance with the requirements of Rev Proc 2006-27, the plan will be treated as satisfying qualification requirements for purposes of the FICA and FUTA taxes;

• revising the requirements for submitting a determination letter application when correcting certain qualification failures by plan amendment;

• clarifying that an egregious failure includes providing more favorable benefits to an owner based on a purported collective bargaining agreement, where there has in fact been no good faith bargaining;

• providing rules relating to the availability of programs under EPCRS in cases where the plan or plan sponsor is a party to an abusive tax avoidance transaction;

• updating the definition of "favorable letter";

• revising provisions affecting Code Sec. 403(b) plans by revising the definition of "excess amounts";

• updating the definition of "under examination";

• expanding the VCP and the Audit Closing Agreement Program ("Audit CAP") to terminating orphan plans and, with respect to those plans, providing for a possible exception to the requirement for full correction and a waiver of the VCP fee in appropriate circumstances;

• adding a correction method for certain plan loan failures, including for a plan that permits plan loans operationally but does not have the appropriate plan loan language;

• revising the correction method for a failure to include an eligible employee in a Code Sec. 401(k) plan;

• adding an alternative correction method for a failure to obtain spousal consent;

• revising provisions affecting Code Sec. 403(b) plans by eliminating the term "total sanction amount and replacing it with the term "maximum payment amount," and eliminating correction by retention of excess amounts;

• providing that, under both VCP and Audit CAP, IRS will waive the Code Sec. 4974 excise tax requirements in appropriate cases for failures to satisfy the minimum required distribution requirements of Code Sec. 401(a)(9);

• expanding the excise taxes that IRS may not pursue;

• clarifying the scope of a compliance statement issued with respect to certain nonamender failures;

• clarifying submission procedures for anonymous and group submissions;

• revising the acknowledgement procedures of receipt of a submission (and providing a new acknowledgement letter);

• providing a submission assembly procedure;

• reducing the compliance fee for a plan where the sole failure is the failure to satisfy the minimum distribution rules for 50 or fewer employees;

• reducing the compliance fee for a plan where the sole failure is the failure to timely adopt certain plan amendments;

• reducing the general compliance fee for SEPs and SIMPLE IRAs;

• adding a fee schedule in the determination letter process for plans found to be nonamenders of tax law changes;

• providing that if a nonamender failure is discovered during an employee plan examination, then it is expected that the applicable sanction will be greater than the applicable fee; and

• providing a streamlined submission procedure for certain nonamender failures.

Rev Proc 2006-27 stresses that EPCRS remains unavailable in cases where either the plan or the plan sponsor has been a party to an abusive tax avoidance transaction, and the plan failure is directly or indirectly related to it.