5500-EZ Late Notices

[JAY21]

We've had a number of clients (all 5500-EZ filers so far) getting an IRS late notice proposed penalty of $1900 (all of them have been the same $1900 amount) which seems to equate to $25 per day for the 2.5 months from original due date to extended due date.

However, several of these people sent their 5500-EZ in months before the deadline.

Seems like a potential IRS glitch to me, anyone else seeing any of these late notices ??

[Belgarath]

GROAN... Not again! No, we have not (yet) seen these. What year's forms? I want to know what to look forward to...

[Bird]

We got one (so far?) for a return sent before 7/31, with proof of mailing.

C'mon people, let's all admit that we are looking for something to do right about now!

[Belgarath]

So these are 2009 forms? Bird, did yours also have a $1900 penalty amount?

[SoCalActuary]

Inform ASPPA of your facts.

Also, make a cc to your congressional rep when you send your protest back to the IRS.

[JAY21]

The two we've received so far were for 9/30/09 and 12/31/09 plan year ends.

[Bird]

So these are 2009 forms? Bird, did yours also have a $1900 penalty amount?

$725.

[carrots]

One of our clients has just received a Proposed Penalty Notice for $3,275, for the 12/1/2008-11/30/2009 plan year. The odd thing with this case is that the IRS had previously sent a notice of approval of the application for extension!

[SoCalActuary]

One of our clients has just received a Proposed Penalty Notice for $3,275, for the 12/1/2008-11/30/2009 plan year. The odd thing with this case is that the IRS had previously sent a notice of approval of the application for extension!

Nothing odd about it in my mind. Do you know how many people are at the IRS, and how many departments they have? The right hand does not know what the left hand has done.

Complain. Kick it up to supervision. Tell ASPPA. Copy your congressional representative.

[JBones]

We received 3 this week the amounts were $2,325, $2,350 and $2,375.

At ASPPA's LABC, one of the sessions discussed the issue about these notices going out. Apparently, firms were sending their 5558's in batches and when received, the IRS would scan the top form only and the rest of the forms in the stack would not be entered. So to the original question, yes it is a glitch.

[Dougsbpc]

We file them for our clients. So when penalty notices appear they just think we dropped the ball.

We received 23 late notices so far. All EZ's. The proposed penalties are mostly $2,375.

It is a lot of work calming down clients and preparing responses.

I think SoCal has a great suggestion in copying your congressional rep. It sure couldn't hurt, and they need to know about problems like this.

[Bird]

Another possibility is that some of us were sending the EZs to the old Lawrence KS address and not to Ogden UT. The DOL was forwarding them but apparently the IRS wasn't recognizing them until received. I have to confess to missing the address change.

$1,900 makes sense if the IRS botched the 5558 processing. But $2,300+ indicates the form was received well after the extended due date. But that could be some new and different IRS error too, who knows?

[mwyatt]

Another possibility (and I've had this happen with a couple of clients already) is if two plans were entered on the 5558. Form instructions state to list multiple plans with common year ends on one form, rather than filing separate 5558 filings. In both cases the first listed plan received approval notice back from IRS on extension, but moot on the second plan. In both cases the second plans listed received late filing penalties for filing after July 31, 2010.

[carrots]

Another possibility is that some of us were sending the EZs to the old Lawrence KS address and not to Ogden UT. The DOL was forwarding them but apparently the IRS wasn't recognizing them until received. I have to confess to missing the address change.

$1,900 makes sense if the IRS botched the 5558 processing. But $2,300+ indicates the form was received well after the extended due date. But that could be some new and different IRS error too, who knows?

Bird: Yes, that is part of our problem. The instructions for the 2008 Form 5500-EZ gave the Lawrence KS address but, when the extended 12/1/2008-11/30/2009 form was filed in September, 2010, it was eventually returned (not forwarded) with a note that the address was incorrect! We forwarded everything to the Ogden UT address, but are now dealing with a proposed late filing penalty.

[SoCalActuary]

The IRS can do a "fine" job of making money by just losing a batch of mail and claiming the filings were late.

Now they have another trick, change the mailing address.

Yes, if you did not follow instructions on the mailing address, you are already wrong. But this is also bad IRS policy that should be addressed by ASPPA.

[Belgarath]

And yesterday, in a bizarre turnaround of the normal screw-ups, a client received notification that the IRS had received their extension request, when in fact no 5558 was ever filed!

I'm speculating that perhaps someone else filed one using an incorrect number that happened to be our client's number...

[Dougsbpc]

We received a bunch of late notices from clients. We then wrote the IRS for each one and included a copy of the certified mail receipt and the tracking proving they received.

So far one client received a response to our response saying thank you for your reply but we received your return on January 18 and we have assessed you the penalties. We have no idea how they randomly came up with January 18 as it was filed before October 15. And they must have just ignored the certified mail receipt.

[JBones]

We received a bunch of late notices from clients. We then wrote the IRS for each one and included a copy of the certified mail receipt and the tracking proving they received.

So far one client received a response to our response saying thank you for your reply but we received your return on January 18 and we have assessed you the penalties. We have no idea how they randomly came up with January 18 as it was filed before October 15. And they must have just ignored the certified mail receipt.

We were responding to the same type of situation, 5558 filed timely, 5500 filed prior to 10/15 but received a notice and when I called the 5500 help liine to check on the date of receipt, I was told it was received on January 18 as well.

[Belgarath]

Have you brought this up to a supervisor? (I realize that talking to anyone at the IRS in the last couple of weeks was pretty nearly impossible)