Late letters from the IRS

[Guest 4Kicks]

We are a TPA firm and over the last couple of days we have received over 15 IRS Proposed Penalty Notices on 5500 filings from different clients. All CP 213N notices and the date of the notice is 10/29/2012. All clients have filed an extension and all clients had filed timely (before 10/15) - no problems there. We know from previous IRS "notice glitch" experience that a faxed response is necessary to stop the notices, but I was curious if others have had a similar experience. If so, any insight on if the IRS has fixed the issue or will our staff have unnecessary task responses for the next week or so?

Wonder how many more of these we will receive..........

[Belgarath]

Who is your software provider? Is it possible that the glitch was specific to your provider? (doubtful... ) We have not yet received any such incorrect notices, but that could change in a hurry!

[Guest 4Kicks]

Not a software provider issue (Ft. William - love 'em. And we have all confirm/submitted detail from their site). While I was writing the original post I was on hold with the IRS (it was only a 20 minute wait! yay!). I reached an agent who was actually helpful and nice. She explained that they have received similar calls from taxpayers on the notice.

She explained that their system may take up to 3 months to "post" a form/return to a client file. As a result, if a subsequent return/form is completed and they have not finished posting previously sent forms the system would generate an automatic notice that it is deemed "late". Even though it is not late. So it is a timing issue. She mentioned she would address it with her supervisors as well. Whether that is the whole truth or not, not sure. Either way, we know (and she confirmed the same) that a written response is necessary to close the issue and that the filer must include the extension confirmation. It's unnecessary response work for us and anxiety for our clients, but in the end we have to follow the IRS process.

Hopefully it is just only a handful more and then it will stop.

[austin3515]

Pathetic. Really.

[TPAMan]

So it takes 3 months for the 5558 extension to get posted giving the plan sponsor an additional 2 1/2 months to file. However, the EBSA is able to send out a late notice within days of your 'extended' filing. Yes, that could be a problem. Good news is that there are numerous easy solutions. What would be your favorite? Be nice!

[austin3515]

Oh yes, because all of our clients put the extension acceptance letter in a safe place that is at the tip of the fingers...

[Bill Presson]

Oh yes, because all of our clients put the extension acceptance letter in a safe place that is at the tip of the fingers...

Probably only 1 out of 5 of our clients actually received an extension acceptance letter.

[WhoLetTheDogsOut]

We have seen about three of these recently. One common factor is that the extension requests were for two plans. However, the notice appears to be for the plan listed as the second plan on the 5558. In at least one case, an acknowledgement of the extension request was received for the plan listed as the first plan on the 5558 and a notice of a proposed penalty was recevied for the second plan listed. We have faxed a copy of the notice of proposed penalty along with the 5558 that included both plans. Still waiting for a response.

[SoCalActuary]

To all concerned with the continued aggravation over 5500 filings, please note that ASPPA's Govt Affairs Committee has a Reporting and Disclosure subcommittee working to document IRS errors. If you have documented examples of penalty assessments or inquiries over proposed late filing issues, please collect the evidence and forward information to me at:

bob.mitchell@nrservices.com

so we can work with the rest of the industry in correcting the problems in Ogden.

Note that you will still have to respond directly to the IRS with protests or appeals over incorrect IRS penalties.

[goldtpa]

This is my 5th notice in two days.

[SheilaD]

This is my 5th notice in two days.

I have a really fun one today. The client received two notices both from the IRS and both with the same date. The first confirmed the extension to 10/15. The second said the form was received late and assessed a penalty. The form is on EFAST as accepted 9/15. (I checked and all notices had the same EIN, Plan Number etc..).

Luckily my client has a sense of humor.

[pmacduff]

What if the client didn't (or says they didn't) receive the "approved extension notification" and did not send the extension request certified?

Any ideas?

[austin3515]

Send em what you got. The IRS knows this is going on so they'll believe your story. As logn as your telling the truth you have nothing to lose. I think it is especially helpful coming from the TPA as an independent 3rd party with no incentive to lie.