DFVC POST IRS PENALTY NOTICE

[Guest draper]

Has anyone tried to eliminate an IRS 5500 late filing fee by filing under DFVC post receipt of an iRS penalty notice. I was informed by a DOL official that such a gambit would be reviewed by the IRS on a facts and circumstances basis. Any input would be appreciated.

[jaemmons]

Waiver of IRS related penalties for a late 5500 is not covered under the DFVC program. Only penalites imposed by ERISA (DOL penalties) are covered. The DOL agent was correct in their assessment, that in order for the plan administrator to get the IRS penalties waived, they need to draft a letter and attach it to the late 5500, which illustrates the "facts & circumstances" that attributed to the late filing. The IRS will review and make a decision as to whether or not the penalities will be enforced or waived.

Good luck.

[E as in ERISA]

I've seen lots of IRS notices but only one actual penalty notice (I think $15,000?). After providing a letter of explanation of the circumstances, the penalty was fully abated. And if I recall correctly, the explanation was primarily employee turnover, lack of a qualified person handling the matters for a time, etc. The process had been improved and some action taken in the meantime. (It's always a good idea to describe how things have been improved in order to ensure that the same doesn't happen in the future). Anyway, the IRS was very reasonable in abating the penalties. (Compared to the DOL, which now typically abates most but not all of the penalties -- and clients end up paying $5,000 if they don't fix in advance of the Notice to Assess).

[Guest anonymous coward]

The IRS' official position can be seen here (Notice 2002-23).

If I remember correctly there are two IRS letters that a late filer would receive. If I have the terminology right, the first is an "Intent to Assess," and the second is "Notice of Assessment."

But judging by the wording of this Notice, there would be no penalties on the IRS side--if the late filer satisfies the DOL's DFVC program.

[mbozek]

I have written several letter to the IRS to abate the penalties. Never had one denied.