Statement of Reasonable Cause

[ombskid]

Non profit ps plan with over 100 participants filed 2004 5500 without audit. 45 day correction notice was received but they couldn't get the audit done - one firm dropped out and another couldn't do it timely. It is being worked on now. They received a Notice of Intent to Assess a Penalty - a rather large one.

Does anyone have experioence with writing a Statement of Reasonable Cause? In the old days, there was language that almost always worked with IRS in similar situations.

Any input would be appreciated.

[Guest Laura A Anderson]

Non profit ps plan with over 100 participants filed 2004 5500 without audit. 45 day correction notice was received but they couldn't get the audit done - one firm dropped out and another couldn't do it timely. It is being worked on now. They received a Notice of Intent to Assess a Penalty - a rather large one.

Does anyone have experioence with writing a Statement of Reasonable Cause? In the old days, there was language that almost always worked with IRS in similar situations.

Any input would be appreciated.

Hi - not to be the black cloud of doom or anything, but I don't think a reasonable cause letter will work at this point. The DOL is not as friendly as the IRS, especially when it gets to the point of a 45-day letter. (In my experience, if they get a 45-day letter, they have already received at least 3 other notices/opportunities to respond). The letter is also pretty clear that there is no extension time to respond - very rigid!

I'd recommend getting on the phone with the DOL (and it would probably be good to have counsel present) to explain the situation and discuss next steps. Good luck!

[WDIK]

My experience with lack of accountant's audit and the DOL - http://benefitslink.com/boards/index.php?showtopic=20201

[jpod]

I had the same situation for a client at the end of 2006. Client did not read the 45-day letter carefully. After the 45-day period expired, DOL proposed assessing $80,000. We responded with a statement of reasonable cause and the client's promise to cooperate with the auditor to do all it could to complete the audit within 60 days. We filed the auditor's report within 60 days. Shortly thereafter DOL dropped the assessment down to $3,000.

[Guest erisamelissa]

I agree about reading those notices carefully. DOL will not hand out extensions like they are candy, and to keep your administrative options alive, you better be on time with those responses.

The Statement of Reasonable Cause doesn't need to be an epic memo.... just a brief statement of why the audit wasn't done and an estimate of when it will be done should be enough to keep things going.