5500-EZ Penalty Relief Program - Reasonable Cause

[TPApril]

Seems that the majority of 5500-EZ's that are filed late and then use the IRS Penalty Relief Program have a similar reason in that they simply didn't know they were supposed to file (ie upon reaching $250K in assets).

Anyone have experience with submitting a Reasonable Cause for late filing that they Plan SPonsor did not know of the requirement and is now trying to make good on their obligations?

Another question - when reviewing the IRS instructions, it doesn't seem clear if a 5500-EZ should be submitted to the standard address, as well as to the Penalty Relief address, similar to filing for relief for regular 5500's.

[RatherBeGolfing]

Its not going to fly.  It is part of the reason they created penalty relief program.  

[TPApril]

yeah, I tend to agree.

howabout the second question?

[RatherBeGolfing]

On 5/31/2019 at 11:26 PM, TPApril said:

yeah, I tend to agree.

howabout the second question?

You only file one form, and it should go to the address listed in Rev Proc 2015-32:

Internal Revenue Service
1973 North Rulon White Blvd.
Ogden, UT 84404-0020

[TPApril]

What about this situation:

Employer receives digital signing instruction for 5500-SF (one person plan).  Reviews the form, prints it out, signs it, sends a copy off to TPA prior to the deadline, but never actually clicks submit online. So form is perceived as not filed.  Eligible to submit even though it was formally signed on SF?  Reasonable cause?  I note that you lose Penalty Relief eligibility if you are denied.

[Bird]

On 7/3/2019 at 5:26 PM, TPApril said:

So form is perceived as not filed.

I'm a big fan of distinguishing between perception and reality.  But I think you're mis-using the term here - it was not filed, period.  I haven't tried using a reasonable cause since they extended penalty relief to EZs but I don't think this is a reasonable cause.

[RatherBeGolfing]

10 minutes ago, Bird said:

I think you're mis-using the term here - it was not filed, period.  I haven't tried using a reasonable cause since they extended penalty relief to EZs but I don't think this is a reasonable cause.

Absolutely. It wasn't filed, there is no perception issue here. 

This is not what the IRS will consider reasonable cause, and they will tell you that this is the reason Rev Proc 2015-32 provides relief for a small user fee.  Before we had the penalty relief program, the IRS pretty much rubber stamped any mea culpa letter, but that is not the case anymore.  I know  of one case where a CPA who, prepared 5500-EZs for his clients, passed away in close to the filing deadline, and  whoever took over the clients did not know about the 5500-EZ's until about a year later.  One of those clients contacted the IRS and were told it would most likely not be considered reasonable cause.

My understanding is that the few instances where reasonable cause will be considered (post penalty relief program) is when something that is out of your hands make it impossible to meet your obligation, or if you do not qualify for the penalty relief program. 

[TPApril]

Bird, Ratherbegolfing - agreed 100% on my dismal choice of word - when I came back to this thread and reread it, I was shocked I used that word.

Aside from that, thanks much for your opinions on the situation!

[MF]

So is it ok to show reasonable clause as "was not aware had to file form 5500EZ" to get relief after paying $1500 filing fee. I was not aware that I had to file form 5500ez since 2013. I found out about this when we were considering shutting the business this year due to Covid. Fortunate to have found benefits link forum.

 

Please help.

 

[Bird]

18 hours ago, MF said:

So is it ok to show reasonable clause as "was not aware had to file form 5500EZ" to get relief after paying $1500 filing fee. I was not aware that I had to file form 5500ez since 2013. I found out about this when we were considering shutting the business this year due to Covid. Fortunate to have found benefits link forum.

The prior discussion says there is almost no such thing as a reasonable cause, and not knowing is definitely not a reasonable cause.  Are you asking if you could possibly get the fee back after paying it?  No.  If you pay the fee that is the relief.  (Not sure I understand "to get relief after paying $1500 filing fee.")

[MF]

Thanks for the reply. But here it is.

I am ok with paying the $500 or $1500 fee. I am hoping they will not send me additional penalties, etc. 

Just hoping "If you pay the fee that is the relief." is where it ends. After that in the years to come I will file on time and my worry stops.

Thanks.

[RatherBeGolfing]

45 minutes ago, MF said:

Thanks for the reply. But here it is.

I am ok with paying the $500 or $1500 fee. I am hoping they will not send me additional penalties, etc. 

Just hoping "If you pay the fee that is the relief." is where it ends. After that in the years to come I will file on time and my worry stops.

Thanks.

If you pay the user fee and file as indicated for the program, you have corrected the failure caused by not filing a timely return. No additional penalties for filing late.  

[BG5150]

Make sure you check off the Penalty Relief box in Part I D.  And follow all the instructions:  Don't forget Form 14704!

 

Late Filer Penalty Relief Program

The IRS Late Filer Penalty Relief Program for late annual reporting for non-Title I retirement plans (one-participant plans and certain foreign plans) provides administrative relief to plan administrators and plan sponsors from the penalties otherwise applicable under sections 6652(e) and 6692 for failing to timely comply with the annual reporting requirements imposed under sections 6047(e), 6058, and 6059.

Rev. Proc. 2015-32 provides, in general, that an applicant under the program must print in red letters in the top margin above the Form 5500-EZ’s title on the first page of the return: “Delinquent Return Submitted under Rev. Proc. 2015-32, Eligible for Penalty Relief.” A filer who marks box D and submits the delinquent 2019 Form 5500-EZ under the program is not required to also mark the return as described in Rev. Proc. 2015-32. The return must still be marked as described in Rev. Proc. 2015-32 for delinquent returns for years earlier than 2019 or if box D is not marked on the 2019 return.

Please be aware that each submission under the program must include a completed paper copy of Form 14704 attached to the front of the oldest delinquent return in the submission. Form 14704 can be found at www.irs.gov/pub/irs-pdf/f14704.pdf. See Rev. Proc. 2015-32, 2015-24 I.R.B. 1063, for more information.

[MF]

You guys are so helpful! BenefitsLink is great!!

Please help to confirm the below -

To summarize for those in my situation and me -

form 5500-EZ 2013, 2014, 2015 No Box D available but put on top margin of those forms in RED "“Delinquent Return Submitted under Rev. Proc. 2015-32, Eligible for Penalty Relief.”

form 5500-EZ 2016-2019 check mark Box D and put on top margin of those forms in RED "“Delinquent Return Submitted under Rev. Proc. 2015-32, Eligible for Penalty Relief.”

Along with all these forms include 1 and only 1 form 14704 - (  "Don't forget Form 14704! )

Thanks,

[MF]

There are 2 address for filing. Which is the preferred one. And what is "Private delivery services" meant for?

First class mail

Internal Revenue Service
1973 Rulon White Blvd.
Ogden, UT 84201

Private delivery services

Internal Revenue Submission Processing Center
1973 Rulon White Blvd.
Ogden, UT 84201

[ESOP Guy]

There is typically a bigger difference between the US Postal address and the private delivery service address. 

Many of the IRS service centers get so much mail they have their own ZIP Code (one on the many types of trivia I learned when I worked for the IRS) and in effect the US Postal address acts like a PO BOX to the Post Office.  Since companies like Fedex and UPS can't delver to a PO Box you have to have an actual street address.  

So if you send it by mail use the Post Office address.  If you are going to use a private delivery service use the private delivery services address to make sure it gets to the right plan.  

There is no preference except use the address that matches how you send it.  

[MF]

On 8/5/2020 at 2:44 PM, MF said:

You guys are so helpful! BenefitsLink is great!!

Please help to confirm the below -

To summarize for those in my situation and me -

form 5500-EZ 2013, 2014, 2015 No Box D available but put on top margin of those forms in RED "“Delinquent Return Submitted under Rev. Proc. 2015-32, Eligible for Penalty Relief.”

form 5500-EZ 2016-2019 check mark Box D and put on top margin of those forms in RED "“Delinquent Return Submitted under Rev. Proc. 2015-32, Eligible for Penalty Relief.”

Along with all these forms include 1 and only 1 form 14704 - (  "Don't forget Form 14704! )

Thanks,

Do I have to along with the above any consolidated statements that were provided by financial institution that holds the retirement account e.g. Fidelity. ?

[MF]

I have filed the "Delinquent Return". The check amount sent has not yet shown in (deducted from) my bank. My assumption is that they have not processed it yet.

Any idea how long it takes for the IRS takes to process the “Delinquent Return take after sending in? 

Do we hear back from them of get a confirmation that it was processed?

What to do if you don't hear back and it is time to file the Regular form 5500-EZ, do we file the "Delinquent Return" again?

 

Thanks,

Manuel

[Mike Preston]

Never file the delinquent return more than once, unless specifically instructed to do so by the IRS.  You can follow up with the IRS by telephone at 877-829-5500 once you think you should. The folks there will direct you on what to do.

[ab02]

On 1/17/2021 at 12:27 AM, MF said:

I have filed the "Delinquent Return". The check amount sent has not yet shown in (deducted from) my bank. My assumption is that they have not processed it yet.

Any idea how long it takes for the IRS takes to process the “Delinquent Return take after sending in? 

Do we hear back from them of get a confirmation that it was processed?

What to do if you don't hear back and it is time to file the Regular form 5500-EZ, do we file the "Delinquent Return" again?

 

Thanks,

Manuel

It took seven weeks in my case for the penalty waiver to be processed and penalty waived. Important to follow each listed step correctly.

[HK08]

Thank you for providing the instructions on how to file the delinquent return.

I forgot to file Form 5500-EZ for Tax Year 2018 and 2019.  Since it is a solo 401K, do I need to include any schedules and attachments for each form?

 

(1) A complete Form 5500–EZ return. The submission must include a complete Form 5500–EZ return, including all required schedules and attachments, for each plan year for which the applicant is seeking penalty relief under this revenue procedure. 

Will the following actions be enough without providing any schedules and attachments?

Fill out Form 5500-EZ 2018-2019

Check mark Box D and put on top margin of those forms in RED "“Delinquent Return Submitted under Rev. Proc. 2015-32, Eligible for Penalty Relief.”

Along with all these forms include 1 and only 1 form 14704 

 

Please advise.

[MF]

Hi Everyone,

Did any one hear back from IRS on deliquint filing. I filed in Dec 2020. Still have not heard back or seen the fee deducted.

I know one other person so connected with me to see if I had any update. I have none yet. If anyone has seen any progress let the forum know. I will also update if I see any activity on my case.

Thanks,

Manuel

[Mike Preston]

2 hours ago, MF said:

Hi Everyone,

Did any one hear back from IRS on deliquint filing. I filed in Dec 2020. Still have not heard back or seen the fee deducted.

I know one other person so connected with me to see if I had any update. I have none yet. If anyone has seen any progress let the forum know. I will also update if I see any activity on my case.

Thanks,

Manuel

Have you called the irs? See my previous message above.

[MF]

Thanks Mike. Sorry, My bad. I did call but was out of the office hours. But, on review of my bank receipts I did see that end of February the amount was taken from our account.

So I assume and one should assume, at least from my case, it takes 2 months for the any signs that the case is taken up.

I will keep the forum updated with any more information that I get.

Also, I am very glad to have been here at this forum. It is so very nice to see you have a community that helps each other.

 

Thanks,

Manuel.

[VCH]

All thank you for this very helpful forum. I have a follow-up question. Reading the process outlined on https://www.irs.gov/retirement-plans/penalty-relief-program-for-form-5500-ez-late-filers, I marked Check Box D but did NOT write at the top Delinquent Return Filed under Rev. Proc. 2015-32, Eligible for Penalty Relief based on reading the instructions that say Mark Check Box D, for the IRS Late Filer Penalty Relief Program, on Part I of Form 5500-EZ. You must write in red at the top of each paper return: “Delinquent Return Filed under Rev. Proc. 2015-32, Eligible for Penalty Relief” for years without Check Box D.

Do you all agree with that? I actually already mailed and am now really worried I did something incorrectly but I read it twice and asked my CPA. Thank you in advance