The dog ate the 5500

[richard]

Plan sponsor forgot to file 5500C/R in time. Filing was due July 31, and extended to October 15.

1. Is the $25 per day penalty measured from July 31 or from october 15?

2. Is the penalty supposed to be paid along with the 5500C/R, or will the IRS send a bill? Are there advantages of either approach?

3. What success do plan sponsors have in avoiding the $25 per day penalty. In this case, the plan sponsor put it under a pile of papers, and ...

Oops!

[Guest Ray Williams]

The penalty is from July 31, the original due date. Send in the form and wait for a bill, it may not come. We have not heard on much sucess in having the penalty waived once imposed in recent years. Good luck!

[Guest derek]

When filing your return, you should include a letter/statement of reasonable cause - if there is any. Generally, reasons such as change in personnel, reliance on TPA, acquisition, etc. could be excepted by IRS. In any event, filing the return with some sort of explanation is generally better that not doing so. Ray is right, once the penalty is assessed, it is less likely that it will be waived. Consequently, get your response in with the return before you receive a notice.

[Guest Mike Kimball]

I agree with Derek.

[Guest Do]

You should include with the delinquent 5500 the Form 4571, Explanation for Filing Return Late or Paying Tax Late. You might want to consider the DOL/PWBA's Delinquent Filer Voluntary Compliance Program. In addition to the $25/day penalty by the IRS, a delinquent annual return is subject to a DOL penalty that can be up to $1000/day.