Late 5500, 5558 was missed

[Guest TomV]

A client of ours just received a letter from the IRS that their 5500-SF is late. We bulk mailed our 5558s in July but have discovered that this one was erroneously not included. Should I have the client send a reasonable cause letter? Is our excuse of "we thought we did but actually didn't" going to be considered "reasonable"?

Any input is appreciated.

[Guest Sieve]

Either (i) try reasonable cause (& a TPA error, such as this, may be sufficient), or (ii) file under the DFVCP, pay the $750 (if a small plan), and forget about it. Take your pick, based on your comfort level. Personally, I'm a wimp, so I'd file under DFVCP.

[Andy the Actuary]

Question: Was the "automatic extension" box check under Item C on 5500-SF?

If so, suggest sending a copy of the form along with a copy of the 5558 and indicate by reason of clerical omission, the 5558 though thought to be submitted was not but that clearly the intent as reported on the 5500-SF was to extend the filing deadline. I'd skip the mea culpas and detailed explanation. (As my old pappy used to say, being honest doesn't mean you have to volunteer unrequested information.) If the IRS is requesting money, then indicate that client has demonstrated a history of submitting forms in a timely manner (assuming this is true) and ask that the penalty be forgiven. I've yet to see the IRS rule disfavorably on such a request.

If the "automatic extension" box was not checked, then borrow $750 from Sieve.

[Bill Presson]

With all the electronic filing issues this, the IRS has been pretty reasonable in abating penalties.