June 07, 1995
IRS Expedites Resolution of Pension Actuarial Cases
WASHINGTON - The Internal Revenue Service announced today that
it will expedite resolution of the more than 2,000 pending small
pension plan cases involving actuarial assumptions. IRS will concede
issues it has lost at the appellate level and try to quickly resolve
any other remaining issues.
The announcement follows the Solicitor General's decision that
the government will not seek to bring to the Supreme Court the
Citrus Valley Estates case it lost in the Ninth Circuit Court of
Appeals in March.
The cases arose from IRS audits of small defined benefit
pension plans with large deductions for plan contributions. The IRS
believed these deductions, which resulted from the use of
conservative actuarial assumptions, to be abusive. For example,
while the mid-1980s often saw double-digit interest rates, some
actuaries assumed plan earnings of only five percent annually -a
figure that seemed unreasonably low. However, the courts concluded
that Congress intended to defer to the professional judgments of
plan actuaries and upheld their assumptions.
The IRS is maximizing its efforts to speedily resolve these
disputes and expects to contact taxpayer representatives soon about
the disposition of their cases.
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