What Happens If You File Late 5500-SF When Exempt From The Need To?

Hello, so quick question regarding a late 5500-SF:

Recently when going through finances I noticed that I forgot to file my 5500-SF on the efast.dol.gov website in 2015 and 2016. (Well, I didn't "forget" but rather I missed a special link in my payroll, which passes the final electronically-filled form to efast...). I have filed 5500-SFs in years prior, and had planned to continue do so. However I am a one participant plan with assets < $250K, so it is my understanding that it is was technically not necessary to file.

The other day out of panic, when I noticed those 2 years weren't filed in efast I submitted them anyway. However I realized afterward there is a substantial penalty for late filing, and these late forms are now visible from within efast...

My questions are as follows-

1) Will the fact that I submitted late 5500-SF forms to the efast website trigger an audit?

2) Will I be charged a penalty? And if so, is there a way I can pay any fees in a advance of receiving a bill from the govt? I noticed in the DFVCP penalty calculator it states "Form 5500-EZ filers are not eligible for the DFVC program." which concerns me greatly...

I have yet to receive any late filing notice but I fear the clock might be ticking...

Any advice would be appreciated!!

Deep breath.  While it may turn into an administrative hassle, you should not end up paying anything. If you get a notice asking for money just follow the instructions and return the form to the IRS asking them to abate the fines due to the fact that there was no requirement to file in the first place. It may take a few rounds to get everything sorted, and take a few months once the process starts.

Got it, thanks so much Mike! That's a huge relief, as the severity of the potential fines is staggering

Come back and let us know what happens, if anything.

One month later an update, got a bill for $15,000 in the mail due to late filing penalty

Part of me wonders if the submitting them late into efast alerted them to slap the penalty on me...

Anyway, I will be calling their provided number next week to try to resolve. A $15K fine for an optional piece of paper under my circumstances is unbelievable!

8 hours ago, GregM said:

One month later an update, got a bill for $15,000 in the mail due to late filing penalty

Part of me wonders if the submitting them late into efast alerted them to slap the penalty on me...

Anyway, I will be calling their provided number next week to try to resolve. A $15K fine for an optional piece of paper under my circumstances is unbelievable!

The "good" news is that even if they wont remove the penalty completely, you could go through the EZ late filer program and pay $500 per plan year.  Still stinks but better than $15k

On 6/30/2018 at 10:32 AM, RatherBeGolfing said:

The "good" news is that even if they wont remove the penalty completely, you could go through the EZ late filer program and pay $500 per plan year.  Still stinks but better than $15k

 

Thanks that's good to know, still awful but I would much prefer $500

Anyway more updates! On August 8th I received mail that stated the IRS needed 60 more days to process my appeal (i had written them a letter explaining the situation). Then on October 1st I got a letter in the mail stating that ~$200 in interest has been added to one of the previous bills. And now it is now October 8th (60 days later) and no official response yet to my letter.

I will try to contact them this week to sort this out, would sleep much better once this goes away...

On 6/30/2018 at 10:32 AM, RatherBeGolfing said:

The "good" news is that even if they wont remove the penalty completely, you could go through the EZ late filer program and pay $500 per plan year.  Still stinks but better than $15k

Once the IRS has assessed a penalty, it's too late to go back and use the delinquent filer relief program.

14 hours ago, C. B. Zeller said:

Once the IRS has assessed a penalty, it's too late to go back and use the delinquent filer relief program.

Right, but they don't start by assessing a penalty, they send a notice with a proposed penalty which gives you plenty of time to use the program.

Just got off the phone with the IRS, as of Sept. 25th both penalties have been removed! Hooray!?

They claimed that it takes up to 30 days after resolving a claim before receiving a formal response, so I suppose I'll get a letter in the mail soon-ish. Thank goodness this nightmare is finally behind me

12 minutes ago, GregM said:

Just got off the phone with the IRS, as of Sept. 25th both penalties have been removed! Hooray!?

They claimed that it takes up to 30 days after resolving a claim before receiving a formal response, so I suppose I'll get a letter in the mail soon-ish. Thank goodness this nightmare is finally behind me

Great!

On 10/11/2018 at 5:33 PM, C. B. Zeller said:

Once the IRS has assessed a penalty, it's too late to go back and use the delinquent filer relief program.

Would it help remove any future DoL penalties?

3 hours ago, BG5150 said:

Would it help remove any future DoL penalties?

Would the DOL be pursuing penalties on a late EZ?

I was asking more towards in any situation.  Someone said once the IRS starts leveling penalties it's too late for DFVC.  But is it too late to stop DoL sanctions?

From the DFVCP FAQ: https://www.dol.gov/sites/default/files/ebsa/about-ebsa/our-activities/resource-center/faqs/dfvcp.pdf

Q12. May plans participate in the DFVCP if they have already received correspondence from the Department or the IRS?

Plan administrators are eligible to pay reduced civil penalties under the program if the required filings under the DFVCP are made prior to the date on which the administrator is notified in writing by the Department of a failure to file a timely annual report under Title I of ERISA. An IRS late-filer letter will not disqualify a plan from participating in the DFVCP. A Department of Labor Notice of Intent to Assess a Penalty will always disqualify a plan.

So it appears the answer is no, receiving an IRS penalty (or notice of penalty) does not stop you from seeking relief from the DOL by using DFVCP.

My understanding is that assessed IRS penalties can still be abated using DFVCP.  For an EZ, you are ineligible for the EZ late filer penalty relief program once the IRS has assessed/charged a penalty (CP 283).  While you are ineligible for the penalty relief program, you can still request relief for reasonable cause, like we would do before the program.