Compliance March 9, 2016

Senate Bill Aims to Amend ERISA

Senator Johnny Isakson has introduced legislation designed to foil the fiduciary rule and amend the Employee Retirement Income Security Act.
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The Affordable Retirement Advice Protection Act (HR 4293) introduced by Senator Johnny Isakson (R-Georgia) takes aim at the Department of Labor’s (DOL’s) fiduciary proposal. Now at the Office of Management and Budget (OMB), the DOL rule is expected to be finalized in the first half of this month.  

Isakson, chairman of the Senate Health, Education, Labor and Pensions Subcommittee on Employment and Workplace Safety, contends the fiduciary rule would limit workers’ access to low-cost financial education and guidance services with “dire consequences for retirement savers, particularly low- and middle-income families.”

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According to statements on Isakson’s website, the legislation would raise the investment advice standards outlined in ERISA by adding language to sections 3(21) and 408(b) for the definitions of investment advice and for exemptions relating to the giving of investment advice. Isakson’s site says the amendments would strengthen protections for retirement savers, and require prior approval by Congress of any investment advice rule proposed by the Obama administration.

The proposed legislation describes the fiduciary rule as “costly and cumbersome regulations” that would limit investment advice for lower-income families.

The text of the bill is here.

Compliance March 9, 2016

Court Moves Along IRS Voluntary Compliance Program Suit

The IRS has been accused of mismanagement of its VCP program.
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In a lawsuit filed in 2014, Information Systems and Networks Corporation (ISN) brought action against the Internal Revenue Service under the Administrative Procedure Act, saying the IRS arbitrarily refused to meaningfully consider, and issue a ruling in connection with, ISN’s Voluntary Correction Program (VCP) submission related to its pension plan. 

A federal district court has moved he lawsuit along by denying the IRS’ motion to dismiss the case. 

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Specifically, the compliant says that after ISN filed for VCP review, the IRS agreed to review certain errors committed by the plan’s independent fiduciary on the condition that ISN engage a consultant to perform specific analyses related to these errors. But after ISN supplied the requested analyses, the IRS “arbitrarily and capriciously” refused to review or address the errors in the plan’s administration and declined to consider the VCP Submission further.  

In addition, the lawsuit says, with respect to other errors in the administration of the plan, the IRS refused to consider the VCP Submission on the erroneous grounds that problems related to the plan’s independent fiduciary should be addressed to the Department of Labor (DOL). “The Service mistakenly believed that the independent fiduciary was appointed by (and was therefore answerable to) the DOL. DOL does not control or exercise oversight of the independent fiduciary,” the complaint states. 

In its motion to dismiss, the IRS said ISN lacks standing, and its “claims are barred by the Anti-Injunction and Declaratory Judgment Acts.” It also moved to dismiss because there has been no final agency action, and the agency action at issue has been committed to the discretion of the Internal Revenue Service. 

On March 2, the U.S. District Court for the District of Columbia denied the IRS’s motion to dismiss without issuing an opinion. 

The lawsuit seeks relief including, but not limited to, issuing preliminary and permanent injunctions; issuing non-monetary declaratory relief; holding unlawful and setting aside the IRS’ action as arbitrary and capricious, an abuse of discretion, or otherwise not in accordance with law; and compelling the IRS to perform its duty.

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