5500-EZ not filed

[Cynchbeast]

We have encountered this problem a few times. ER in a one-person plan finally contacts us after a few years of not responding and we find that a 5500-EZ should have been filed for one or more past years (assets over $250,000). As an EZ filer, he is not eligible for DFVC.

Any suggestions on how to properly correct this without incurring horrendous late filing penalties? Although we could probably file a 5500-SF and use DFVC, this is probably not the right way to do it.

[Cynchbeast]

So I've gotten no responses so far. Does anyone have a creative idea for getting around the exorbitant fees for filing a 5500-EZ late?

[Tom Poje]

Best I can come up with is straight from the "hoIRSes" mouth (IRS newsletter)

http://www.irs.gov/Retirement-Plans/Employee-Plans-News---October-12,-2011---EPCU-Project:-Form-5500-Non-Filers-and-Late-Filing-Penalty-Awareness

there is a note on there that says

However, Form 5500-EZ filers may attach an explanation for filing late to their return to provide information they wish the IRS to consider before assessing penalties.)

[Doghouse]

The DOL guidance indicates that eligibility for the DFVC program is not available to one person 5500-SF filers who are not covered under Title I. So the beg-for-mercy letter is probably the best approach.

DOG

[TPApril]

I noticed on the 'DFVCP E-Payment Data Collection' website, page 2, that when you are asked to select 'Type of Filing', that 5500-EZ is an option (in addition to 5500 and 5500-SF). Could this mean we are close to being able to file DFVC's for EZs?

Unfortunately this dropdown box does not allow you to select more than one filing in the event your DFVC includes more than one form type (ie 5500 for prior to 2009 and 5500-SF for 2009-2011).

[Effen]

I have had luck sending in the EZ's with a cover letter explaining the situation. If/when they send you a letter with a big fine, tell them again what happened, mention the DFVC program, offer to pay the maximum DFVC fine, and see what happens. Usually, you don't hear anything further. I have done it two or three times and have never had to pay a fine.

This assumes they have a "valid" reason for not filing. Something other then they just didn't file them.