QSLOB late filing

[Guest waltz52]

I have a plan that should have filed a Form 5310-A a few years ago, to be considered a QSLOB. They just realized they did not file it though. If they file it now, will it cause a red flag or penalties?

[could be me maybe not]

Uh, yes.

[Guest waltz52]

The instructions for the 5310 do not say anything about penalties for late QSLOB filings, what does?

[could be me maybe not]

Nothing requires a QSLOB claim.

Isn't a late filing a non-filing?

If so, you needed to pass coverage and nondiscrimination without regard to the QSLOB status, right. That is my impression.

Is that an option?

If not, it sounds like the sponsor has lots of exposure.

Maybe I'm cynical, but I have recently seen bogus QSLOB claims that had non-filings. And people (who are occassionally-not regularly) on these Boards were responsible for the bogus work.

[Guest Ned Ryerson]

Heavens to Betsy, but who could you be referring too???

In any event, Waltz, you need QSLOB insurance. I have a sale on it.

[could be me maybe not]

Do a lot of those at the yacht club, Ned?

touche

[Guest waltz52]

I'm not sure I understand your "maybe I'm cyncial " comment. Do you mean that other people have said that they have submitted forms to be considered a QSLOB, but really haven't? Do you have any suggestions for my client? Thanks for your help!

[could be me maybe not]

Do you mean that other people have said that they have submitted forms to be considered a QSLOB, but really haven't?

Yes, and it is presently undergoing IRS audit. I don't suspect that would be much fun to be part of, but I'd pay to read a transcript.

Suggestions for your client? Try to pass without the QSLOB rules.

Want more advice? Much more information needed. What are the facts and why is this coming to light now?

[Guest waltz52]

Oh boy! Thanks for your help. I told my client it is his call what risk he wants to take. I told him I could have our lawyers do extensive research if he needs it, but they charge.

Again, thanks!

[Effen]

I thought this might be helpful. From CCH:

NEWSLETTER, PENSIONPLANGUIDE, Letter No. 1603, October 24, 2005, Showing of good cause for failure to make timely election allowed IRS to consider Form 5310-A to be timely filed for 2002

Showing of good cause for failure to make timely election allowed IRS to consider Form 5310-A to be timely filed for 2002

A corporation's Form 5310-A, Notice of Qualified Separate Lines of Business, was considered to be timely filed, and the corporation was treated as operating separate lines of business for purposes of passing the ADP test because the corporation showed good cause for its failure to make the timely election, the IRS has privately ruled. A consulting firm had suggested that the corporation, which was engaged in a diversified agribusiness and retailing business, make a qualified separate line of business (QSLOB) election, and advised it of its need to file Form 5310-A. The consulting firm, however, which did not yet have the responsibility to prepare the company's Form 5500, failed to further advise the corporation to file the Form when the consulting firm ran an ADP test on the plan. When the corporation realized that the Form 5310-A had not been filed, it filed immediately, in 2004, long after the required filing date.

The IRS reviewed the corporation's affidavit describing the events leading up to its failure to timely file notice of its intended 2002 plan year QSLOB election, and based its conclusion that the corporation had shown good cause for its delay in filing on the fact that the failure could partly be attributed to the corporation's unusually high turnover rate in its tax department, as well as to a split in tax-related responsibilities between the corporation's department and outside firms that assisted the corporation in dealing with the IRS. Because the Form 5310-A will be considered by the IRS to be timely filed, the company will be treated by the IRS as operating qualified separate lines of business under Code Sec. 414®.

IRS Letter Ruling 200534027 is reproduced at ¶17,422I.

[could be me maybe not]

Wow.

A kindler and gentler IRS.

Thanks.