Wrong EIN on Form 5500-SF

[thepensionmaven]

This has happened on a few occasions, and has taken up to 3 months for IRS to correct on their end. 

Form 5500 was filed using the Trust ID # instead of the Sponsor ID#.  IRS sent the client their usual CP-403 Notice, we immediately noticed the error and filed an amended return using the correct EIN and showed the incorrect EIN in Box 3b.  We attached the EFAST Acknowledgement.

As a response, IRS issued a penalty for the late filing of Form 5500-SF that reflected the correct EIN, the Sponsor EIN.

Sound familiar?  Anyone have a sample letter to the IRS in this regard, or we just have to "wait it out" and hope IRS makes the correction on their end?

[thepensionmaven]

I would have thought others have had a similar issue.

[ESOP Guy]

The CP-403 Notice have instructions on how to reply to them the last time I checked?  You didn't reply to that notice?  If not, that was your mistake.   I would have sent a reply to the CP-403 notice explaining we did file and sending a copy of the EFAST2 5500 with that long number proving it was filed.  Filing the amended return was not enough.  That notice demands a reply in the body of the notice.  It gives clear instructions on what they want in that reply.  The IRS' instructions on their website talk about the reply deadlines and what they expect back.

https://www.irs.gov/retirement-plans/understanding-your-cp-403-or-cp-406-notice

If am I understanding what you are saying you need to stop being so passive and assuming the IRS will figure out it out on their own.  Write a letter to the IRS proving you filed a return on time with the wrong EIN but it was on time.  Prove you filed with the right EIN as soon as you knew there was a problem.   And ask for a wavier of penalties.  Make it clear it was an innocent mistake and a one time problem.  So it won't happen again.   There is a good chance you will get a penalty waiver letter.  And once again they will send a letter saying they have waived the penalty. 

Next time don't let it get to the penalty phase of things.  Reply to the IRS with the first notice they send you.

I would add most of their letters come with instructions on how to fax a reply to them.  Fax the reply to them.  Fax replies get the best replies back from the IRS.  Since there are now penalties being talked about send the reply also by a method you can prove it got there.  

But "hoping" the IRS will correct it on their end is a terrible plan on your part in my mind.

Sorry, if I am being harsh.  Someone in our firm makes this kind of error now or then.  We never let any IRS letter/notice go with no reply when it happens.   Change your procedures to stop being passive when you get IRS letters/notices.   The expect a direct reply to the letter/notice within days of sending it meet or beat their expectations.

[thepensionmaven]

Obviously, I was not clear as you missed my point; and we are certainly not passive. If anything, this has proven to be tedious at best.  Over the years, this has occurred many times - there has to be a much simpler way to handle, besides, obviously doing the filing correctly and check specifically the EINs are the same as the prior year.

Of course we respond to the CP-403, complete all items in and the "other" box, explain that the Form 5500 was filed with the Trust ID and not the Sponsor ID, and DOL advised to amend the return showing the opposite - use the correct EIN and put the prior EI (the incorrect EIN of the trust ).

We attached copies of the original return as well as the amended return, on each circling the two different EINs showing we had corrected the problem and ask that they change their records.

About a month later, client gets a bill for a late filing of the 5500 with the correct EIN, we go through the whole process over again, respond to their Notice and bill in exactly the same way as previously done - in fact, send copies of every attachment from CP-403.

After another month, the client gets a letter abating any penalty.

Three months for IRS to change their records.  Years ago (I'm going back at least 10 years), we just called an EP person, he went into their system and connected the two EINs.  End of story.

My question was - once an error with EINs is noticed by staff, is there some way to notify Ogden of the mix-up so they can make the change before the client gets letters like this.

Of course ll this is un-billable time.

 

 

[Bill Presson]

I don't mean to seem like an @$$, but why is this happening many times?

[ESOP Guy]

I am sorry if my reply was too harsh.   In a bit of my defense go back and re-read your original comment.   You make it sound like your whole strategy is hope so I replied to that. 

In regard to your 2nd reply.  No, I don't know if any good way to do it other than several letters.  Yes, the days of calling someone and fixing it with a simple call are gone.  

[thepensionmaven]

Thanks guys, could be as we get on in years, the less patient we become.

This happens all the time whenever there is a change of EINS or an inadvertent look on the wrong computer screen.

 A few years ago, it took IRS 11 months (no kidding) to straighten out an 1099R filing.

After that one, patience is being stretched!