Jump to content

DFVC Program after late filed 5500


MarkS

Recommended Posts

Accountant filed the 6/30/2021 5500 late to stop the running of penalties. Do you think it can be refiled under DFVC program with outstanding 2022 5500 now since no notice has been received yet? The accountant wants to 

Link to comment
Share on other sites

My understanding of the DOL's position is that once a 5500 is filed it can only be amended (and not re-filed through DFVCP). I guess it doesn't hurt to try, but I'm not sure it will be an airtight defense to any proposed penalties. 

Link to comment
Share on other sites

The 5500 instructions does not link the two check boxes.

"Line B –Box for Amended Return/Report. Check this box if
you have already filed for the 2022 plan year and are now filing
an amended return/report to correct errors and/or omissions on
the previously filed return/report. See instructions on page 6.

Check the line B box for an “amended return/report” if you
filed a previous 2022 annual return/report that was given a
“Filing_Received,” “Filing_Error,” or “Filing_Stopped” status by
EFAST2. Do not check the line B box for an “amended
return/report” if your previous submission attempts were not
successfully received by EFAST2 because of problems with the
transmission of your return/report. "

"Line D –Box for Extension and DFVC Program. Check the
appropriate box here if:

...

You are filing under DOL’s Delinquent Filer Voluntary
Compliance (DFVC) Program."

 

It seems almost certain that some of the information for the filing for the plan year ended 6/30/2021 was changed and hence the filing is an amended filing.  If that filing was incomplete, then it technically was not valid anyway and would not necessarily have stopped penalties from accruing.  It makes sense to include it in the DFVCP and get the bargain rates for multiple filings.

Link to comment
Share on other sites

On 7/19/2023 at 9:43 AM, Tom Veal said:

You should be all right if the accountant files an amended 5500 with the "DFVC Program" box checked and you pay the DFVC penalty.  Instructions are on the DOL web site.

This is exactly what happened with one of our clients.  After the DFVCP filing was received by the IRS, it was apparently ignored and a penalty letter for the late fees was issued - the DFVCP fee that was  paid was credited towards the payment of the penalty amount.  The sponsor and their TPA are currently in the process of explaining their intent to the IRS, as the letter allows for a reasonable explanation to be submitted for review.  It has turned out to be a real mess and I suppose it's possible that the penalties will stick.  So far It appears the sponsor is doing the same thing she would've done if no amended/DFVCP filing was done and the sponsor just waited for the penalty letter to arrive.  

Several months having now gone by without any response from the IRS may be a good sign for the sponsor, though, as the feds seem to be exceptionally disorganized lately.  We've had audits on plans that deserved to be audited, where nothing is heard for quite a few months and then the agent issues a 'no action' letter, almost like they're implying 'it's getting too complicated and I just wanna get it off my desk - I don't have time for this!'  Anyone else experience this?  It's certainly nothing to complain about.

I'll post updates as (if?) they become available.     

Link to comment
Share on other sites

Curious to see how this ends up.  We have done this many times, and no problems.  My understanding is that you can not use DFVC if you get a DOL letter.

File an amended return and check the box DFVC, and pay the $750 as this is much more reasonable than $250 per day.

After having many bad experiences as well as time wasted answering numerous IRS letters for the same client (letter, response, letter saying they never received a response, etc, etc), $750 is worth not having to deal with this.

Link to comment
Share on other sites

Create an account or sign in to comment

You need to be a member in order to leave a comment

Create an account

Sign up for a new account in our community. It's easy!

Register a new account

Sign in

Already have an account? Sign in here.

Sign In Now
×
×
  • Create New...