Companies that have invested in legacy corporate retirement systems can now apply to recover their money through the Federal Employees Retirement System, an independent agency that helps companies deal with their legacy corporate assets.
In addition to the government, private companies can also apply for money through private companies in their name.
The agency said it has received more than 1,200 requests from legacy corporate companies to apply for $1.3 billion in recovery funds.
The Federal Employees Recovery Act of 1999 gives employees the ability to request money from the government in order to address their retirement savings.
But many companies have had trouble finding a qualified business partner who would help them recover.
“When a legacy company is able to recover money in the form of a retirement plan, the recovery can be the difference between a full recovery and a full tax return,” said Scott Taylor, a partner at law firm Taylor & Woodrow LLP in Washington.
Taylor said the agency has been working to expand the definition of “legacy corporate” to include more types of companies, including “sole proprietorships.”
But, the agency said, a company can still be considered a legacy corporate entity if it has at least $2.6 billion in assets at the end of its last tax year.
“It’s a tough one because it’s not always clear what that money is going to be used for,” Taylor said.
The FERS Act, signed into law in April 2000, allows companies to recover up to $1,300 in taxes paid each year if they are a sole proprietorship or partnership, but the agency only allows for recovery if they had assets in excess of $2,6 billion at the time of the last tax return.
Companies can also receive recovery funds if they have an investment of at least 50 percent of their assets in a “retirement savings product.”
The FERS rule allows the agency to provide $300 in recovery for each of these types of products.
Taylor & ; Woodrow has represented clients who have applied for $3.2 billion in relief under the FERS program.
The agency said more than 6,000 companies have applied.FERS has been a boon to businesses and small businesses, Taylor said, because it helps them avoid having to pay more taxes.
“In a few years, the majority of these companies will be in this category,” he said.
Taylor has helped clients recover $1 billion in taxpayer-funded tax refunds.