Late 5500 - Penalty charged

[52626]

client received a notice from the IRS the 12/31/2012 return was filed late and accessed a penalty of $6,175.00

The return was filed late - not sure why.

Question, even though the penalty has been accessed, can the plan sponsor still file under the Delinquent Filer Program, or does the letter prevent the use of the program. The Delinquent Filer program is not addressed in the IRS penalty letter.

thanks

[Lou S.]

http://www.dol.gov/ebsa/faqs/faq_DFVC.html

Q2: Who is eligible to participate in the DFVCP?

Plan administrators are eligible to pay reduced civil penalties under the program if the required filings under the DFVCP are made prior to the date on which the administrator is notified in writing by the Department of Labor (Department) of a failure to file a timely annual report under Title I of the Employee Retirement Security Act of 1974 (ERISA).

I don't they are eligible after they are notified but this specifically mentions DOL and does not mention IRS so there may be an out.

[Flyboyjohn]

There probably a "missing" first notice from IRS talking about the penalty possibility and offering the DFVC option that the client failed to respond to.

I suspect DFVC is still an option but your're going to have to get farther into the weeds in dealing with IRS personnel.

[ESOP Guy]

Does this notice talk about getting the penalty waived? You can also simply ask the IRS to waive the penalty and I have found they are willing to do so if you can show a good cause and there isn't a pattern of late filings.

I have found the good cause can be simple miscommunications and so forth if you can show this is an aberration. These IRS people tend to not be the kind of revenue collectors other parts of the IRS like to think of themselves as being.

[Kevin C]

From a little farther down on the link above:

Q12: May plans participate in the DFVCP if they have already received correspondence from the Department or the IRS?

Plan administrators are eligible to pay reduced civil penalties under the program if the required filings under the DFVCP are made prior to the date on which the administrator is notified in writing by the Department of a failure to file a timely annual report under Title I of ERISA.

An IRS late-filer letter will not disqualify a plan from participating in the DFVCP.

A Department of Labor Notice of Intent to Assess a Penalty will always disqualify a plan.

http://www.dol.gov/ebsa/FAQs/faq_DFVC.html