IRS requesting signed 5500 - that was EFILED

[Guest jsample]

Client received an IRS letter stating that the IRS was unable to locate the 2007 Form 5500, could they file their return again. Even though they are refiling their 2007 form, it must now be filed electronically since they are no longer accepting paper returns. We prepared the 2007 Form, converted it to Efile format and the 2007 form was Efiled by the client and received an "Accepted" status.

The client has just received a Proposed Penalty Notice ($15,000) because the 5500 "Return was not signed". I thought that when a client Efiled, their User ID and PIN were their signature. Other than have the client sign a form, I attach it as a PDF and EFile as Preparer, I do not know what the IRS is looking for. Has anyone else run into this situation?

[EBDI]

Do you think the IRS is sending the proposed penalty because the 5500 was not received timely in 2008? You may want to have the client call the IRS or write to them providing proof that it was signed and mailed on time. Also, did you electronically file using a 2007 form? When one of my clients electronically filed a late 2007, I used a 2009 form and entered the 2007 plan year dates.

[Lou S.]

We have run into similar in the past. Fees have always been waived when we sent in copy of the acknowledgement file and an explaintion of what happened. Some times it took a few phone calls as well as a couple of letters but it was always fixed in the end. It's kind of a pain.

[Guest jsample]

Thank you for the responses. I called the IRS and was informed by the Agent that there is a "bug" between IRS computers and Department of Labor computers. The missing signature letter may potentially be generated on efiled returns other than 2009 returns (for example refiling a 2007 return as I did). I was instructed to write a letter, show the "Accepted" status on the filing, and any penalty will be waived - just as Lou S. noted.