IRS Penalizing for "late" amended return

We have a client that amended two previously timely 5500s in December of 2024 (we amended for a system error that caused the wrong plan number to appear on the filing (01 vs 02)). The original 5500s were both filed before their respective deadlines. The client has received letters on both filings with penalties totaling close to $150k. I'm am almost 100% sure that this is an error on the IRS/DOL side. Our solution is to give the clients the original confirm IDs and tell them to go back to the DOL/IRS and explain the situation. However, I wanted to confirm that an amended return is not considered "late" as long as the original filing was in good order and timely filed.

If you were amending anything OTHER than the EIN or Plan number, it probably wouldn’t be an issue. 
 

But those things can cause issues because if you filed a return without the proper identification, did you really file timely? It’s going to take additional correspondence and work to fix but should be resolved. Just not quickly. 

The real problem is you amended one of the key data points that their computers use to track 5500s.  To the computer the amended return look like an amendment to a return that didn't exist.  You should be able to get it fixed once you get the situation in front of a human.  It won't be easy because since Covid working with the IRS has been hard.  However, with persistence this will most likely end with no penalty.   

There is a common practice of companies filing a 5500 without a financial statement (generally because it's not ready yet), and then re-filing an "amended" return with the financial statement attached. I've always wondered if IRS/DOL would at some point crack down on that and treat such filings as late. 

4 hours ago, casey72 said:

There is a common practice of companies filing a 5500 without a financial statement (generally because it's not ready yet), and then re-filing an "amended" return with the financial statement attached. I've always wondered if IRS/DOL would at some point crack down on that and treat such filings as late. 

Yes, they have.  It hasn't happened a lot but we have had clients get caught in this.  We no longer recommend they do this but file late and DFVCP file.  The fines under that program are so small compared to if the 5500 gets declared late.   We will do the file and amend later but they have to give us written direction so we can raise that as a defense if they get hit and come looking to collect from our firm.  

11 minutes ago, ESOP Guy said:

It hasn't happened a lot but we have had clients get caught in this.  We no longer recommend they do this but file late and DFVCP file.

Did they get a 45 day letter from the DOL and not fix it in time?

12 minutes ago, ESOP Guy said:

We will do the file and amend later but they have to give us written direction so we can raise that as a defense if they get hit and come looking to collect from our firm.  

Same.  I recommend DFVCP, but even auditors want us to go the amendment route.  If Im going to do it, it is with written direction from the client.

On 5/23/2025 at 4:18 PM, RatherBeGolfing said:

Did they get a 45 day letter from the DOL and not fix it in time?

 

Same.  I recommend DFVCP, but even auditors want us to go the amendment route.  If Im going to do it, it is with written direction from the client.

It wasn't my client but if my memory was the IRS or the DOL took the position that the first filing wasn't complete and rejected the amendment.  Sorry, I don't recall the details better but that event is what made management here change our somewhat casual willingness to file without an audit report and amend later.