The IRS Form 8951 Guide: VCP Additional User Fee Payment

Introduction – What Is Form 8951?

IRS Form 8951, titled Additional User Fee Payment for Open Application for Voluntary Correction Program (VCP), is a specialized financial reporting and payment document administered by the Internal Revenue Service (IRS) Tax Exempt and Government Entities (TE/GE) division. It operates under the Employee Plans Compliance Resolution System (EPCRS), which governs tax-qualified retirement plans.

While Form 8950 is the primary application used to enter the Voluntary Correction Program, Form 8951 serves as the electronic payment bridge when an existing, open VCP case requires supplemental funds. Whether an initial payment was declined by a bank or an IRS reviewing specialist determined that a higher fee tier applies, Form 8951 ensures the additional fee is credited directly to your active case file.

Purpose of the Form – Why Does Form 8951 Exist?

When an employer sponsors a retirement plan—such as a 401(k), 403(b), SEP, or SIMPLE IRA—any operational or documentation mistakes must be resolved under EPCRS to prevent plan disqualification. Plan sponsors use VCP to voluntarily disclose errors, propose corrections, and receive a binding IRS compliance statement.

Historically, Form 8951 was a paper form used to calculate and submit the initial user fee alongside Form 8950. However, when the IRS modernized the VCP process onto the federal Pay.gov portal, initial fee payments were integrated directly into the digital Form 8950. Form 8951 was repurposed as a dedicated electronic tool on Pay.gov to resolve open-case fee discrepancies, allowing employers to remit additional fees without canceling their case or starting the application process over.

Who Needs to File This Form?

You must complete Form 8951 if your organization has an active, open VCP application currently under review with the IRS and needs to submit an additional or replacement user fee. Common situations requiring this filing include:

• Returned Bank Payments: Your initial electronic ACH payment submitted with Form 8950 was rejected, returned, or classified as “retired” by your financial institution.
• IRS Fee Adjustments: An IRS Employee Plans specialist reviewed your submission (often issuing Letter 5345) and determined that higher plan asset values or additional plan features place your plan into a higher fee bracket.
• Expanded Case Scope: You amended your original submission to include additional operational failures, multiple plans, or complex group correction requests that carry higher statutory fees.
• Compliance Statement Modifications: You requested a formal modification to a previously issued compliance statement, which requires an additional administrative fee.

Who Is Exempt / Not Required to File?

Most employers navigating retirement plan corrections will never need to handle Form 8951. You are exempt or not required to use this form if:

• Submitting an Initial Application: You are submitting a brand-new VCP application. Your initial user fee is automatically calculated and paid directly through Form 8950 on Pay.gov.
• Self-Correction Program (SCP) Users: You are correcting plan errors under the Self-Correction Program. SCP is completely free, requires no IRS notifications, and involves no user fees.
• Fully Paid Submissions: Your initial VCP fee was accepted, processed, and confirmed as correct by the assigned IRS agent.
• Plans Under Audit: Plans under active IRS examination cannot use VCP and must resolve errors through the Audit Closing Agreement Program (Audit CAP).
• Fee-Exempt Entities: Terminating orphan plans that requested and received an official IRS fee waiver.

When to File Form 8951

Form 8951 is an event-driven payment submission rather than a recurring annual tax return. It is submitted only when an open case develops an outstanding balance or payment failure.

If the IRS requests an additional fee, they will typically issue an official inquiry (such as Letter 5345). This letter specifies a strict response deadline—usually 30 calendar days from the date of the notice. If you are replacing a declined ACH payment, you should submit Form 8951 immediately upon discovering the bank rejection to prevent the IRS from administratively closing your case.

Where and How to File

Form 8951 must be filed electronically through the federal Pay.gov website. Physical paper versions of Form 8951 and paper checks sent through the mail are no longer accepted by the IRS.

To complete the filing, log into Pay.gov, search for “Form 8951,” and complete the online submission dialogue. You can remit payment electronically using a corporate credit card, debit card, or direct ACH debit from a business checking or savings account. If an IRS agent requests supplementary paper documentation or proof of payment, mail those materials to the IRS address as per instructions outlined in your agent’s correspondence letter.

Step-by-Step Instructions to Fill Form 8951

Because Form 8951 is completed entirely online through Pay.gov, the interface guides you through verifying your plan details and connecting the payment to your existing IRS case file.

Section Breakdown on Pay.gov

Field Name	Information Required	Filing Tips
Plan Sponsor Details	Legal business name and Employer Identification Number (EIN)	Must match the exact sponsor information entered on the original Form 8950 submission.
Plan Information	Three-digit Plan Number (e.g., 001) and legal Plan Name	Ensure the plan number matches the number reported on your Form 5500 filings.
IRS Control Number	VCP Case Control Number or original Pay.gov Tracking ID	This is the most critical field. It links the new payment directly to your assigned IRS examiner.
Reason for Payment	Description of why additional fees are being remitted	Select whether this payment replaces a returned check, satisfies Letter 5345, or covers an expanded filing.
Payment Amount	Exact dollar amount owed	Enter the specific outstanding balance requested by the IRS specialist.
Representative Details	Contact details for Power of Attorney (if applicable)	Include the attorney, CPA, or actuary authorized under Form 2848 to manage the case.

Required Documents and Information Needed Before Filling

Before accessing Pay.gov to complete Form 8951, assemble the following records to ensure your payment is properly routed:

• IRS Notice or Request Letter: A copy of Letter 5345 or written correspondence from your assigned IRS Employee Plans specialist detailing the exact fee amount owed.
• VCP Case Control Number: The unique multi-digit case identifier assigned by the IRS to your open submission.
• Original Pay.gov Tracking ID: The digital confirmation receipt received when your initial Form 8950 was submitted.
• Banking or Card Details: Valid bank routing and account numbers for ACH transfers, or a commercial credit card with sufficient limits.
• Form 2848: An active Power of Attorney form if a third-party representative is submitting the payment on the employer’s behalf.

Common Mistakes to Avoid

Submitting fees for an open IRS case requires precision. Avoid these frequent mistakes:

• Submitting a New Form 8950 Instead: If your initial payment fails, do not submit another Form 8950 application. Submitting a duplicate Form 8950 creates confusion and may open an unwanted second case file. Use Form 8951 instead.
• Entering an Incorrect Case Control Number: Mistyping the IRS case control number will prevent payment processing systems from crediting your file, leading the agent to believe the fee was never paid.
• Mailing a Physical Check: Sending a paper check to an IRS service center will result in the payment being rejected or significantly delayed. All VCP user fees must be processed through Pay.gov.
• Missing the 30-Day Response Window: Failing to submit Form 8951 within the timeframe specified in Letter 5345 can lead to an automatic case closure.
• Failing to Notify Your Examiner: Forgetting to email or fax your new Pay.gov payment confirmation receipt to your assigned IRS specialist once the transaction is complete.

Penalties for Non-Filing or Errors

Form 8951 does not impose independent tax penalties, but failing to submit an owed user fee carries severe administrative consequences for your retirement plan:

• Administrative Case Closure: If the required user fee is not paid within the specified deadline, the IRS will close your VCP application without issuing a compliance statement.
• Forfeiture of Prior Payments: In many cases, fees already paid toward the submission are treated as non-refundable administrative processing costs.
• Loss of Audit Protection: Without a finalized compliance statement, the plan’s qualification failures remain legally uncorrected, leaving the plan vulnerable to an IRS Employee Plans audit.
• Audit CAP Sanctions: If the uncorrected errors are subsequently discovered during an IRS examination, the employer faces negotiated sanctions that are substantially higher than voluntary VCP fees.

Related Forms and Schedules

Form 8951 functions within a specialized group of retirement plan correction forms:

• Form 8950: Application for Voluntary Correction Program (VCP) (the primary application form).
• Form 14568: Model VCP Compliance Statement (the master resolution document).
• Forms 14568-A through 14568-I: Standardized schedules detailing specific operational and document failures.
• Form 2848: Power of Attorney and Declaration of Representative.
• Form 5500 / Form 5500-SF: Annual Return/Report of Employee Benefit Plan.

Frequently Asked Questions

Why would the IRS request an additional user fee on an open VCP case?

An additional fee is usually requested because the original bank payment was declined, the IRS determined that total plan assets were higher than reported (placing the plan in a higher fee bracket), or the employer expanded the submission to cover additional plans or complex failures.

What should I do if my bank returned the initial ACH payment?

Do not file a new Form 8950 application. Go directly to Pay.gov, complete Form 8951, enter your original Pay.gov tracking number or IRS control number, and submit the replacement payment.

Can an employer mail a paper check with Form 8951?

No. Under IRS electronic submission rules, all VCP user fees and supplemental payments must be submitted online through Pay.gov. Paper payments will be returned.

Where can I find our VCP Case Control Number?

Your case control number is located at the top of any formal correspondence, fax, or email sent by your assigned IRS Employee Plans specialist (such as Letter 5345).

Do I need to send proof of payment to the IRS specialist?

Yes. Once you complete the transaction on Pay.gov, you will receive a payment tracking ID and confirmation receipt. You should promptly email or fax this confirmation to your assigned specialist so they can immediately resume work on your case.

Can a third-party administrator or attorney submit Form 8951 for us?

Yes. An authorized representative listed on a valid Form 2848 (Power of Attorney) can log into Pay.gov and submit the payment on behalf of the plan sponsor.

Conclusion – Key Takeaways Summarized

IRS Form 8951 is an essential administrative tool on Pay.gov designed to resolve fee discrepancies on active Voluntary Correction Program submissions. It ensures that replacement payments and supplemental fee adjustments are accurately credited to your existing IRS case file.

If you receive an IRS notice requesting additional fees or experience a returned bank payment, act quickly. Gather your VCP case control number, submit the exact fee amount via Pay.gov using Form 8951, and forward the payment confirmation to your assigned examiner to keep your plan’s compliance statement on track.