Form 5500-EZ ... electronic filing requirement

I setup a plan for a CPA.  He is a single member entity and files an EZ form .  He called me in a panic this morning after reading the EZ instructions.

Mandatory electronic filing.   A filer must file the Form 5500-EZ electronically using the EFAST2 Filing System instead of filing a paper Form 5500-EZ with the IRS if the filer is required to file at least 250 returns of any type with the IRS, including information returns (for example, Forms W-2 and Forms 1099), income tax returns, employment tax returns, and excise tax returns, during the calendar year that includes the first day of the applicable plan year. If a filer is required to file a Form 5500-EZ electronically but does not, the filer is considered to have not filed the form even if a paper Form 5500-EZ is submitted

Now as a CPA he prepares a myriad of returns for his clients.  He is telling me that because he prepares more than 250 returns on behalf of his clients  that he is required to file his EZ return electronically.   I don't think so and tried to explain to him that my interpretation of the instructions is that if his business files 250+ returns on behalf of the business itself then he would need to file electronically.  Because he as a CPA who prepares returns on behalf of his clients, those returns don't count.    

Correct?

This certified public accountant might want his lawyer’s advice about whether he is a filer of a tax return he transmitted as an agent of his client, the person who makes the tax return.

No. See the following excerpt from Treasury Regulation 301.6058-2

(ii) Definition of filer. For purposes of this section, the term filer means the employer or employers maintaining the plan and the plan administrator within the meaning of section 414(g).

(iii) Special rules relating to determining 250 returns. For purposes of applying paragraph (d)(3)(ii) of this section, the aggregation rules of section 414(b), (c), (m), and (o) will apply to a filer that is or includes an employer. Thus, for example, a filer that is a member of a controlled group of corporations within the meaning of section 414(b) must file the Form 5500 series on magnetic media if the aggregate number of returns required to be filed by all members of the controlled group of corporations is at least 250.

I see Peter replied already. Good point, although I'd still incline toward the "no."

I also lean towards no.  There is no control group.  And I'll concede that if 250+ returns are filed on behalf of a single member business sponsoring a plan then maybe the IRS would want to see the EZ filed electronically.  

And just because he's a CPA preparing and filing returns for his clients should he be held to a higher standard? Be forced to file his 5500-EZ electronically?  Maybe I'm naïve.

In that example... a business that files 195 W-2s... would that business be eligible to file a 5500-EZ form anyway? Odds are unlikely I would say.

Thanks, I just didn't want to miss anything.  

9 minutes ago, K-t-F said:

In that example... a business that files 195 W-2s... would that business be eligible to file a 5500-EZ form anyway? Odds are unlikely I would say.

The electronic filing requirement for the 5500 EZ isn't really there because they expect a bunch of one participant plans with tons of W-2s , it is because there is a general electronic filing requirement when you hit 250 required returns that includes the 5500 series, so they have to require electronic filing of the EZ under those circumstances.  Same thing for the 8955.