Late ESOP Contributions?

Group:

Facts:

Potential Biz Owner Client says in 2018 he started process of setting up S ESOP with effective start date of June 30, 2018. For a number of personal reasons and issues with a minority owner he has not gone through the steps. 

Fast forward to Nov 2019. Clients' cpa insists he can still set up S ESOP with June '18 start date.. And merely file late 5500's, pay late penalties and fees since biz owner intent was to have retirement plan set up for 2018 tax year. 

And I have always been under impression that retirement contributions (like ESOP'S) are due by  Sept 15th of following year. 

Assume Client cpa and attorney create and memorialize all necessary ESOP docs with effective 2018 tax year. And late contribution made in Dec 2019 (two months past deadline). 

Q: Even if Biz owner intent was to set up ESOP with an effective 2018 tax year, has anyone had success arguing with an auditor of reasons for late contribution? 

Any case or IRC, Dept of Labor guidelines that biz owner can rely on?

Thoughts and comments appreciated. 

Thank you 

Joe Dadich, Esq. 

I am confused what exactly is the question. 

Are you asking can they still make a deductible contribution for PYE `12/31/2018 ESOP in Dec of 2019?   I don't see how that can be done.    Intent has nothing to do with when a contribution is deducible.  

or

Are you asking if they actually set up a plan back in 2018?   If all the paperwork was in place I think there was a plan.  It just sounds like there are no assets in the plan as of 12/31/2018. 

I am assuming you are working with a 12/31 PYE since you never stated what the PYE is.  

As an auditor, I am baffled by the question.  Why is the auditor arguing that the plan can be retroactively established - was there come binding commitment made to the employees?  Generally, the plan has to be in place by the last day of the plan year.  You might be able to get the IRS to approve a request under EPCRS to conclude that there was substantial compliance that the plan existed and depending on the nature of the commitment it could be a money purchase/stock bonus ESOP that had an obligation for 2018, but you are right, they are now past the date for getting a deduction on the 2018 return, assuming calendar year end.

Just need to know more.