Delinquent Filer Voluntary Compliance Program

[[Page 16505]]

DEPARTMENT OF LABOR

Office of the Secretary

Delinquent Filer Voluntary Compliance Program

AGENCY: Office of the Secretary, Labor.

ACTION: Expedited review of the information collected pursuant to the

Delinquent Filer Voluntary Compliance Program under the Paperwork

Reduction Act.

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SUMMARY: The Pension and Welfare Benefits Administration, Department of

Labor, in carrying out its responsibilities under the Paperwork

Reduction Act (44 U.S.C. Chapter 35, 5 CFR 1320 (53 FR 16618, May 10,

1988)), is submitting the information collection required under the

Delinquent Filer Voluntary Compliance Program (Program) for review. The

information collected is required to be reported by pension and welfare

benefit plan administrators under Title I of the Employee Retirement

Income Security Act of 1974. Plan administrators who choose to

participate in this Program, which offers a substantial reduction in

penalties, are required to submit minimal documentation along with

payment to verify plan information and facilitate Federal record

keeping.

DATES: Pension and Welfare Benefits Administration has requested an

expedited review of this submission under the Paperwork Reduction Act

due to the time-sensitive nature of the collection and the penalties

that accumulate daily due to late filing or failure to file annual

reports; this Office of Management and Budget (OMB) review has been

requested to be completed by April 14, 1995.

FOR FURTHER INFORMATION CONTACT:

Comments and questions regarding the Delinquent Filer Voluntary

Compliance Program should be directed to Mr. Kenneth A. Mills,

Departmental Clearance Officer, Office of Information Resource

Management Policy, U.S. Department of Labor, 200 Constitution Avenue,

N.W., Room N-1301, Washington, D.C. 20210, 202 219-5095. Comments

should also be sent to OMB, Office of Information and Regulatory

Affairs, Attn: OMB Desk Officer for PWBA, NEOB Room 10235, Washington,

D.C. 20503, 202 395-7316.

Any member of the public who wants to comment on the information

collection request which has been submitted to OMB should advise Mr.

Mills of this intent at the earliest possible date.

Average Burden Hours/Minutes Per Response: 21 minutes

Frequency of Response: Annual

Number of Respondents: 10,000 (year 1); 7,000 in following years

Total Annual Burden Hours: 3,500

Total Annual Responses: 10,000

Affected Public: Business and other for-profit; Not-for-profit

institutions

Respondents Obligation to Reply: Voluntary.

Signed at Washington, D.C. this 24th day of March 1995.

Kenneth A. Mills,

Departmental Clearance Officer.

Supporting Statement For Paperwork Reduction Act Submissions

Delinquent Filer Voluntary Compliance Program 1210-AA49

A. Justification

1. Explain the circumstances that make the collection of

information necessary. Identify any legal or administrative

requirements that necessitate the collection.

Attach a copy of the appropriate section of each statute and of

each regulation mandating or authorizing the collection of information.

The Secretary of Labor has the authority, under section 502(c)(2)

of ERISA, to assess civil penalties of up to $1,000 a day against plan

administrators who fail or refuse to file complete and timely annual

reports (Form 5500 Series Annual Return/Reports) as required under

section 101(b)(4) of ERISA and the Secretary's regulations codified in

29 CFR part 2520. Pursuant to 29 CFR 2560.502c-2 and 2570.60 et seq.

PWBA has maintained a program for the assessment of civil penalties for

noncompliance with the annual reporting requirements. Under this

program, plan administrators filing annual reports after the date on

which the report was required to be filed may be assessed $40 per day

for each day an annual report is filed after the date on which the

annual report(s) was required to be filed, without regard to any

extensions for filing. Plan administrators who fail to file an annual

report may be assessed a penalty of $300 per day, up to $30,000 per

year, until a compete annual report is filed. Penalties are applicable

to each annual report required to be filed under Title I of ERISA. The

Department may, in its discretion, waive all or part of a civil penalty

assessed under section 502(c)(2) upon a showing by the administrator

that there was reasonable cause for the failure to file a complete and

timely annual report.

The Department has determined that the possible assessment of the

above described civil penalties may deter certain delinquent filers

from voluntarily complying with the annual reporting requirements under

Title I of ERISA. In an effort to encourage annual reporting

compliance, therefore, the Department has decided to implement the

Delinquent Filer Voluntary Compliance (DFVC) Program, under which

administrators otherwise subject to the assessment of higher civil

penalties will be permitted to pay reduced civil penalties for

voluntarily complying with the annual reporting requirements under

Title I of ERISA, referred to as the ``Program.''

2. Indicate how, by whom, how frequently, and for what purpose the

information is to be used. For revisions, extensions, and

reinstatements of a currently approved collection, indicate the actual

use the agency has made of the information received from the current

collection.

Under Title I of ERISA, the administrator of each welfare and each

pension plan, unless otherwise exempt, is required to file an annual

report with the Secretary containing the information set forth in

Section 103 of ERISA. The statutory annual reporting requirements under

Title I of ERISA, Title IV of ERISA, and the Internal Revenue Code are

satisfied generally by filing, in accordance with the instructions to

the forms and related regulations, the appropriate annual return/report

(the Form 5500 Series). The Form 5500 Series collection has been given

OMB control number 1210-AA16. The Form 5500 Series collection has been

approved under the Paperwork Reduction Act on October 28, 1994.

The DFVC Program is intended to afford eligible plan administrators

the opportunity to avoid the assessment of civil penalties otherwise

applicable to administrators who fail to file timely annual reports for

plan years beginning on or after January 1, 1988. Eligible

administrators may avail themselves of the DFVC Program by complying

with the filing requirements and paying the specified civil penalties,

set out in the Federal Register Notice.

The DFVC Program is available only to a plan administrator who

complies with each of the requirements the Notice prior to the date on

which the administrator:

(a) is notified in writing, pursuant to 29 CFR 2560.502c-2, of the

Department's intention to assess a civil penalty under section

502(c)(2) of ERISA for failure to file a timely annual report; or

(b) is otherwise notified in writing by the Department of a failure

to file a timely annual report under Title I of ERISA. [[Page 16506]]

It is anticipated that the administrator of an employee welfare or

benefit plan would make use of the DFVC Program no more than once per

year, and would avoid use of the Program entirely if the statutory

filing obligation were met in a timely manner.

The only information collection requirement in the Notice is the

requirement of providing data necessary to identify the plan along with

the penalty payment. This data is the only means by which each penalty

payment will be associated with the relevant plan. With respect to most

pension plans and welfare plans, the requirement is satisfied by

sending, along with the penalty payment, a copy of the first page of

the delinquent annual report, which under current procedures is sent to

the IRS.

Under current procedures, certain pension plans for highly

compensated employees, commonly ``top hat'' plans, and apprenticeship

plans may file a one-time statement in lieu of annual reports. With

respect to such plans the information collection requirements of the

Notice are satisfied by sending a completed first page of an annual

report form along with the penalty payment. The one-time statements are

required to be sent to a different address within the Department. The

Program is designed to allow the processing of all penalty payments at

a single location within the Department.

3. Describe any consideration of information technology used to

reduce burden, as well as any technical or legal obstacles to reducing

burden.

The Department, in conjunction with the IRS, PBGC, and OMB, is

currently exploring means by which to enhance the Form 5500 filing

review, processing, and data system. Until that time when an electronic

filing alternative is available, the Department has chosen the least

burdensome collection method for receiving notification of

participation in the Program and correctly accounting for payment of

penalties.

4. Describe efforts to identify duplication. Show specifically why

any similar information already available cannot be used or modified

for use for the purpose(s) described in 2 above.

The Department, IRS, and PBGC utilize a consolidation annual report

(Form 5500 Series) which eliminates the duplicative reporting that

would otherwise result from the separate reporting to each agency.

However, the consolidated report does not accommodate specific

notification of the Department of participation in the Program, nor

does it accommodate recording of payment of penalties. Therefore, the

minimal information collection requirements of this Program were deemed

necessary.

There is no similar information gathered by any state or Federal

agency or other sources that would enable the Department of effectively

monitor participation in the Program.

5. If the collection of information has a significant impact on a

substantial number of small businesses or other small entities (item 15

of the Paperwork Reduction Act Submission form), describe the methods

used to minimize burden.

Not Applicable.

6. Describe the consequence to Federal program or policy activities

if the collection is not conducted or is conducted less frequently.

If the collection is not conducted, it may not be possible to

institute the Program because the Department would be unable to

determine whether persons seeking to take advantage of the reduced

penalties offered under the Program had in fact complied with its

conditions. The purpose of the Program is to encourage delinquent plan

administrators to come forward and file delinquent reports. Lack of

compliance with existing filing requirements impairs the administration

and enforcement of the statute by the Department, as well as the IRS

and the PBGC. The collection used in the Program creates a minimal

burden on plan administrators who are already in breach of ERISA's

filing requirements while giving them access to reduced penalties.

7. Explain any special circumstances that require the collection to

be conducted in a manner inconsistent with the general information

collection guidelines in 5 CFR 1320.6 (e.g., payment to respondents,

disclosure of proprietary information, etc.).

There are no special circumstances that require the collection to

be conducted in a manner inconsistent with the guidelines in 5 CFR

1320.6.

8. Describe efforts to consult with persons outside the agency to

obtain their views on the availability of data, frequency of

collection, the clarity of instructions and recordkeeping, disclosure,

or reporting format (if any), and on the data elements to be recorded,

disclosed, or reported.

Consultation with representatives of those from whom information is

to obtained or those who must compile records should occur at least

once every 3 years--even if the collection of information activity is

the same as in prior periods. There may be circumstances that mitigate

against consultation in a specific situation. These circumstances

should be explained.

The employee benefit plan community is aware that the Department

has been considering institution of a reduced penalty program for

persons who voluntary file delinquent reports, and is generally

supportive of the Program. The minimal information collection

associated with the Program will not dissuade participation by

delinquent play administrators.

The Form 5500 Series was developed in coordination with the IRS and

PBGC, and the DFVC Program has been reviewed by these agencies as well.

In addition, PWBA regularly requests comments from the ERISA Advisory

Council with respect to suggestions for reducing paperwork.

9. Describe any assurance of confidentiality provided to

respondents and the basis for the assurance in statute, regulation, or

agency policy.

The annual reports are required by law to be made available for

inspection at the Department and at the offices of the plan

administrators. Accordingly, since this collection is merely one page

of the annual report, the Department provides no assurance of

confidentiality to respondents.

10. Provide additional justification for any questions of a

sensitive nature, such as sexual behavior and attitudes, religious

beliefs, and other matters that are commonly considered private. This

justification should include the reasons why the agency considers the

questions necessary, the specific uses to be made of the information,

the explanation to be given to persons from whom the information is

requested, and any steps to be taken to obtain their consent.

There are no questions of a sensitive nature pertaining to sexual

behavior and attitudes, religious beliefs, or other matters that are

commonly considered private.

11. Provide estimates of annualized cost to the Federal Government

and to the respondents. Also, provide a description of the method used

to estimate cost, which should include quantification of hours,

operational expenses (such as equipment, overhead, printing, and

support staff), any other expense that would not have been incurred

without this collection of information.

Based on expense estimates, the annual cost to the Department

attributable to the receipt and maintenance of the Program is estimated

to be approximately $150,000. This figure includes estimated costs to

the Department for lockbox maintenance, computer services, and other

[[Page 16507]] operational expenses such as equipment, overhead, and

support staff.

As reflected in item 12 below, the burden hours attributable to the

collection by the universe of respondents is estimated to be 3,500

hours. It is estimated that the cost to plans to complete the

collection will range from $20 to $25 per hour. Therefore, the

estimated aggregate cost to respondents is approximately $70,000 to

$87,500 in the first year, and $49,000 to $61,250 in succeeding years.

12. Provide estimates of the burden of the collection of

information including both recordkeeping and reporting requirements.

The statement should:

Provide number of respondents, frequency of response,

annual burden, and an explanation of how the burden was estimated.

Unless directed to do so, agencies should not make special surveys to

obtain information on which to base burden estimates. Consultation with

a sample of potential respondents is desirable. If the burden on

respondents is expected to vary widely because of differences in

activity, size or complexity, show the range of estimated burden and

explain the reasons for the variance.

An estimated 10,000 delinquent employee benefit plan administrators

are expected to file under the Program in the first year, and an

estimated 7,000 filings are expected in subsequent years. Participation

in the Program is voluntary, and filing under the Program would not be

necessary more often than annually, and most participants would

probably participate one time only. The annual burden per filing is

estimated to be approximately 21 minutes, based on a pilot pretest of

not more than nine people from both Federal employment and the private

sector. The burden on respondents is not expected to vary widely

because of differences in activity, size or complexity.

If the request for approval is for more than one form,

provide separate burden estimates for each form for which approval is

sought and aggregate the burdens on the Paperwork Reduction Act

Submission form. If only one form is submitted, you need not duplicate

the information entered on the Paperwork Reduction Act Submission form.

Not applicable.

13. For amendments to existing collections, explain reasons for

changes in burden, including the need for any increase.

Not applicable.

14. For collections of information whose results are planned to be

published, outline plans for tabulation and publication. Address any

complex analytical techniques that will be used. Provide the time

schedule for the entire project, including beginning and ending dates

of the collection of information, completion of report, publication

dates, and other actions.

The Form 5500 Series collection, and by extension, this DFVC

Program collection, are not a collection of information for statistical

use. Once collected, however, the information is available to the

Department and the public, and it is used for purposes other than

enforcement and disclosure.

[FR Doc. 95-7742 Filed 3-29-95; 8:45 am]

BILLING CODE 4510-22-M