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8955-SSA Late Penalty Letters


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BTW, the IRS penalty letter lists the old fees.  It says, "We are required by law to charge $1 for each participant for whom a required registration statement is not filed.  The penalty is multiplied by the number of days the failure continues.  The maximum penalty is $5000."

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1 hour ago, Gilmore said:

BTW, the IRS penalty letter lists the old fees.  It says, "We are required by law to charge $1 for each participant for whom a required registration statement is not filed.  The penalty is multiplied by the number of days the failure continues.  The maximum penalty is $5000."

if its the old penalty, it is $1/day/participant.  This should include Code Ds and required Code As (excluding voluntary reporting).  

So if you had 1 A and 1 D with a $660 penalty, thats either 330 days late under the old fees or 33 days late under the new fees. If the 8955-SSA was mailed rather than e-filed, I could see the IRS scanning them 33 days late (we are seeing long delays with physical mail to the IRS).  This of course ignores the the fact that it would have been mailed before the deadline.

Or the system has gone completely wacky and the math doesnt add up all.

 

 

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The IRS said that the erroneous messages were the result of a programming error on their part. The IRS further said it will be announcing in an upcoming newsletter that anyone who received the 8955-SSA late filing letter dated before Sept. 1, 2023 can ignore it. They do not plan to contact the plan sponsor in such cases; rather, they will provide a telephone number for plan sponsors to call for further information.

So it seems they told ASPPA they would be making an official statement, not clear from this when exactly that might be.

Free advice is worth what you paid for it. Do not rely on the information provided in this post for any purpose, including (but not limited to): tax planning, compliance with ERISA or the IRC, investing or other forms of fortune-telling, bird identification, relationship advice, or spiritual guidance.

Corey B. Zeller, MSEA, CPC, QPA, QKA
Preferred Pension Planning Corp.
corey@pppc.co

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From:  Employee Plans News | Internal Revenue Service (irs.gov)

Plan sponsors that filed timely and complete Forms 8955-SSA do not need to respond to penalty notices dated before September 1, 2023

As a result of a programming issue in the IRS system that receives Forms 8955-SSA, the IRS sent out CP 283-C penalty notices to plan sponsors who timely filed complete 2022 Forms 8955-SSA. The notices indicate a late or incomplete filing of Form 8955-SSA.

Plan sponsors that timely filed a complete return do not need to respond to penalty notices dated prior to September 1, 2023. The IRS has resolved the programming issue and is updating its records to reflect the timely and complete filings. If you have any questions, contact the IRS at 877-829-5500.

The IRS also reminds plan sponsors that Form 8955-SSA must be filed with the IRS, not with DOL through the EFAST2 System. If a Form 8955-SSA is filed in EFAST2, it will not be treated as timely filed by the IRS. Go to IRS.gov/5500corner for more information on filing Form 5500 series returns and Form 8955-SSA.

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  • 2 months later...
34 minutes ago, ESOP Guy said:

Anyone else now having clients getting tax refunds garnished becasue of this glitch? 

We have had a few. 

9 minutes ago, RatherBeGolfing said:

Not that I'm aware of, but that is a concerning development...  Large amounts?

We have, too... our client has an ESOP and a 401(k)... the erroneous SSA penalty was $20k for one plan and $13k for the other.  On a $77k refund, the IRS was only going to refund the difference of $44k... pretty significant chunk. To boot, the client responded to the initial error for both plans back in August and the IRS had STILL not fixed it when the client got their refund notice in November.  I recommended my client call the IRS and sit on hold for however long is necessary to set them straight, since sending written communication did no good whatsoever.  Such a waste of time.

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We just received notice from our first client that was charged a penalty. We filed their 8955-SSA timely via the IRS FIRE system. The client responded to the IRS notice in early September. The IRS deducted $1,320 from their corporate tax refund. 

Any updates on this issue?

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29 minutes ago, LauraERPA said:

We just received notice from our first client that was charged a penalty. We filed their 8955-SSA timely via the IRS FIRE system. The client responded to the IRS notice in early September. The IRS deducted $1,320 from their corporate tax refund. 

Any updates on this issue?

UPDATE: Found a number on the IRS website; 877-829-5500.  Client called and advised us:

"WOW, in my 30 years as an accountant that was the easiest call to a government agency that I have ever had. Wait time was less than 4 minutes (as opposed to hours) and the agent actually solved the issue and is sending us a refund check." 

 

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