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Tax on Prohibited Transactions


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Guest Hartnett123
Posted

More on this saga . . .

So the guy's contribution was due May 15, 2003. It was not made.

It was not made by May 15, 2004 either.

In paying the excise tax on this a prohibited transaction, one which has now crossed two corporate tax return due dates, have we now moved into a "tier two" tax situation, where the company not only owes 15% of the delinquent contribution, but now 100% as well? Or can we just do the 15%?

Also, regarding the 2002 tax return, if it's amended because the employer did not make the contribution when it was due, then it also means the 5500 needs to be amended, and then they flunk coverage because the guy didn't get what he was due . . . and we spiral into a nightmare over $650.

Is there a way to do appropriate corrections without this turning into a frenzy of papers and penalties?

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