I received an email recently from an individual who claimed that a post here at Benefitsblog saved him almost $5,000 in penalties for filing a Form 5500 late. The individual stated that he had depended on the Form 5500 mailing to remind him to file the form each year, but one year apparently did not receive the form from the IRS and thus did not file it. After filing the form late, the individual received a bill from the IRS for $5625.00. The email continues:
Our accountant sent the IRS an appeal as our POA. A few days later the IRS told me the appeal was rejected.At that point I went “on-line” and found your suggested procedure for reducing the fine. I gave it to our accountant and the DOL agrees we need only pay the limit of $750.00.
This was a learning experience for me and our accountant.
My hope is that, by mentioning the email here (permission was given to publish it), some of my CPA blogging friends might pass the info along so that more accountants can be made aware of the DOL’s amnesty program. The post which the email refers to is this one here which provides a link to this article–Resolving IRS (and DOL) Penalties for Late Form 5500 Filing–by SunGard Corbel, as well as links to the DOL’s Delinquent Filer Voluntary Compliance (“DFVC”) Program and this IRS Notice 2002-23.
Please note these important Q & As from the DOL website regarding the rules of the amnesty program:
Question: Prior to participating in the DFVC Program, a plan administrator was notified in writing by the Department that its plan’s filings are delinquent. Can the plan administrator participate in the DFVC Program?Answer: No. The DFVC Program is only available to a plan administrator that complies with the requirements of the Program before the date on which the administrator is notified in writing by the Department [DOL] of a failure to file a timely annual report under Title I of ERISA.
Question: Does participation in the DFVC Program protect the plan administrator from other civil penalties that may be assessed by the Internal Revenue Service (IRS) or the Pension Benefit Guaranty Corporation (PBGC) for failing to timely file a Form 5500 Annual Return/Report?
Answer: Both the IRS and PBGC have agreed to provide certain penalty relief under the Code and Title IV of ERISA for delinquent Form 5500s filed for Title I plans where the conditions of the DFVC Program have been satisfied. See sections 5.02 and 5.03 of the DFVC Program Federal Register Notice and IRS Notice 2002-23.