A lawsuit brought against the IRS over its handling of a company’s application to fix errors under the agency’s Voluntary Compliance Program (VCP) is advancing.
According to Bloomberg BNA, U.S. District Court for the District of Columbia Judge Richard J. Leon on March 2 in Information Systems and Networks Corporation v. IRS, No. 14-2019, denied the IRS’ motion to dismiss the suit.
The Department of Labor had a dispute with Information Systems and Networks Corporation (ISN) over whether its fiduciaries had made required plan contributions. In July 2002, the District Court for the District of Maryland, on a DOL motion, removed ISN and ISN’s chief executive officer as plan fiduciaries and appointed an independent fiduciary to administer the plan.
ISN made a VCP submission in 2012 in an attempt to correct mistakes it says that the plan’s court-appointed independent fiduciary made. ISN further says that after it filed for VCP review, the IRS agreed to review mistakes the independent fiduciary serving the ISN pension plan made as long as ISN had a consultant analyze the errors. ISN met that condition, but then the IRS would not review or address the mistakes, nor consider the VCP submission further.
ISN says that the IRS refused to “meaningfully consider, and issue a ruling in connection with,” its VCP submission concerning the ISN pension plan. The IRS refused, ISN says, because it believes that problems related to the plan’s independent fiduciary should be addressed to the DOL. ISN adds that the IRS believed that the independent fiduciary was appointed by, and therefore was answerable to, the DOL. But the DOL does not control or exercise oversight of the independent fiduciary, ISN says.
The end result is that its plan could lose its qualified status, the company says.
ISN is asking the court to find that the IRS broke the law in refusing to consider and rule on the VCP submission, and issue any writs necessary to compel the IRS to perform duties it has not rewarding the VCP submission.
