DFVCP or Reasonable cause letter?

[PAL]

A co-worker and I were discussing how to help a client in getting a delinquent 5500 filed. It is the final filing due for a plan that was merged after acquisition and apperantly everyone forgot about that final 5500 (oops!). I like the DFVCP approach because it is a fixed fee but my co-worker thought that doing a reasonable cause letter might work. I haven't done one of those in a long time and was wondering what type of experience people are having if they take that route. Is all forgiven and any penalties waived?

[Guest Sieve]

Take the DFVCP route. It's pretty cheap (especially for a small plan), and risk-free. I personally don't think using the reasonable cause approach is a good alternative when DFVCP is still available, but others may disagree. I'd save reasonable cause for when the client really needs it (e.g., after trying to sneak in a filing after the due date without telling you beforehand).

[SLuskin]

I always try to get the client to go the DFVC route. If they balk, I make them sign something saying that they understand that they were advised to go this route before trying the reasonable cause letter.

However, so far, only 1 of the clients has ever had to pay a penalty with the letter, and that penalty was reduced from $75,000 to $2,500.

[Guest naveen]

How would one approach a similar situation where a 5500EZ is required to be filed?

DFVCP is not available for EZ filers.

[Guest Sieve]

Reasonable cause is all that works in that case--and crossed fingers.

[K2retire]

I've found that groveling is also helpful in similar cases.