What This Letter Means
Letter 3431 relates to Form 8802, Application for United States Residency Certification. Employee benefit plans file Form 8802 to get Form 6166, the certification foreign countries ask for before granting tax treaty benefits.
Before certifying a plan, the IRS has to verify that it's a valid employee plan and that it has filed its annual return (Form 5500 series) or isn't required to. The IRS sends Letter 3431 to the plan sponsor or employer when it can't make that verification or when the application doesn't meet the requirements.
Why You Got It
- The plan couldn't be found. The application had a valid taxpayer identification number, but the IRS couldn't locate a valid plan number. The letter asks for a signed and dated copy of the original Form 5500 that identifies the plan. The point is to confirm the TIN and the plan number.
- The plan couldn't be verified. If the IRS can't verify the plan, it can't certify it. This can happen when a plan never applied for a determination letter and never filed a return, so it isn't on any IRS database.
What to Do
- Read exactly what the letter requests and send it by the date on the letter.
- Make sure the plan named on the Form 5500 matches the plan named on your Form 8802.
- Send copies, keep a record, and include a copy of the letter.
If the plan is newly formed and hasn't filed a Form 5500 yet, its application may be declined. A plan in that position that believes it is entitled to benefits under a specific treaty article can ask for Competent Authority assistance under the IRS's revenue procedure for that process.
If your plan's residency certification is stuck, call us at (813) 229-7100.