Never Reported as a MEWA

[5500Nerd]

I have a group that was a MEWA for seven years. They never filed as a Multiple Employer although on their 5500 (they marked multiemployer by mistake). We will be amending. However, as a MEWA they were also to have filed the Form M1. They are petrified of dealing with penalties. We thought to attach a letter to explain. Has anyone witnessed a group paying hefty fines for not filing the Form M1? Did they go through an audit for amending the 5500 to be a Multiple Employer? Many thanks in advance for your help.