Wrong EIN on 5558

[22su]

Hi.  Company started 3 new welfare plans effective 1/1/2019.  Extensions were filed timely, but it was just discovered that the wrong sponsor/EIN was used on all three.  The Sponsor/EIN of our existing plan (501) was copied over and not corrected when the extensions were filed.  The correct plan numbers were used on the extensions (502/503/504).

I am ready to file the 5500SFs, but unsure how to fix this error.  Should I go ahead and file with the wrong EIN and then amend with the correct EIN?  Or should I file with the correct EIN and wait for the late filing letter?  I hesitate to use line 4 since there are no previous returns/reports filed.  Other options?

Thank you!

[ESOP Guy]

I did this many years ago for one of our ESOP clients.  it might have been around 2012 or 2013.  We sent a letter to the IRS as soon as we found the problem to the place you sent the extensions with a corrected extension and an explanation.  We sent it certified so we could prove we mailed it. 

We filed the 5500 with the correct EIN.  We told the client we expect them to get a letter saying they filed late.  We asked the client to just to send us the letter and we would reply to the IRS.

When the client got that letter we responded by sending the original 5558.  We sent the second 5558 and letter with proof of mailing.  In our letter we made a case that the penalties should be waived because it was extended and a simple one time error happened.   We documented all of this with the above paper trail.   The IRS waived the penalty.

The only other choice you have is to basically act like the forms are late and file under DFVC and pay your client's penalty.   That method would be a sure way to know what will happen and the exact cost will be lower than if the waiver doesn't' get accepted. 

The waiver route is a risk and they are less willing to give them now that DFVC exists unlike in the pre-DFVC days just about any reasonable argument of good faith efforts got you a waiver at least once. The firm I worked for was prepared to pay the penalty that happened when we went this route.  We knew we were going to have to pay any penalty so we decided to go for a zero knowing the risks. 

As long as you and the client understand the risk I would think about the waiver request idea when the fine letter comes. 

Lastly, this was on an ESOP and not a welfare plan and I have no idea if that would make a difference.  I don't know if the people who review wavier requests for retirement plans are the same group as welfare plans.  I don't now how important that difference is but I thought I would point it out. 

 

[22su]

Thank you ESOP Guy.

I finally got through to the IRS (about 1 1/2 hr wait) and was told to file the 5500SF with the correct EIN and attach a PDF of a letter with reasonable cause, quote "so you don't get hit with a penalty".  This guy was very friendly and said it was an honest mistake and since we were trying to do the right thing there shouldn't be a penalty.  Although I agree, I'm surprised.  He didn't mention DFVC, but of course I realize that if the late-filing penalties aren't waived, they would be much steeper than DFVC.  I'm debating what to do...