Audit CAP Maximum Penalty

The IRS states that the Audit CAP correction penalties will not be excessive and will bear a reasonable relationship to the nature, extent and severity of the plan failures. However, Rev Proc. Section 5.01 states that the Maximum Payment Amount would be the tax imposed due to plan disqualification including tax on trust income, failure to file form 1041, income tax due to loss of employer deductions, etc., Has anyone experienced this type of an Audit CAP penalty or a similar severe penalty imposed on a client plan. Typically given my experience with Audit CAP I've seen penalties in the $15,000 range due to multiple plan qualification failure issues. Has anyone had a client that experienced the Maximum Payment Amount penalty, or severe high $  penalties, and if so, what amounts? 

Not a high $ penalty but nonetheless unreasonable due to the circumstances.  Some time ago a tiny plan was audited and found to not be in compliance because it did not have an IRS model amendment in place for sec. 132(f) fringe transportation benefits.  It was a 3-life plan and held a total of $21k in assets, and the deadline for adopting the amendment had passed only a few months before.  Also, sec. 132(f) had absolutely no bearing on either the employer or the plan's operation.  The plan did not have any other issues.  Going through Audit CAP, the IRS consequently assessed a $3k penalty for this oversight.  After months of correspondence with the IRS where they were asked to consider a more reasonable penalty given the size of the plan and the lack of affect sec. 132(f) had on it, they reduced the penalty to $2,500 and made it sound like they were doing the sponsor a monumental favor.  I'm not sure if such decisions are standardized at the IRS, or if they're made on a discretionary basis by whichever audit supervisor has the case, but hopefully they've gained a little more perspective in recent years. 

As for any leniency shown by the IRS, I've never seen an agent assess any penalties for insufficient bond coverage found during an audit, even though it's clearly indicated on the 5500 - sometimes the agent hasn't even mentioned it.  The few times they did, they said "Just make sure a bond/enough coverage is obtained".  Some plans had other issues (some severe) and some didn't.  Yes, these weren't Audit Cap issues, but I thought I'd include something positive.  However, I would guess there are sponsors who've been nailed for insufficient coverage.