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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