IRS provides relief from Form 5500 late filer penalties

The IRS has issued a notice providing administrative relief to late filers of Form 5500 who satisfy the conditions of the notice and the Delinquent Filer Voluntary Compliance Program (DFVC) administered by the Employee Benefits Security Administration (EBSA). The relief provided by the IRS supersedes the relief previously provided in Notice 2002-23.

Plan administrators who fail to timely file Form 5500 series annual returns/reports can be subject to penalties under both ERISA Title I and the Internal Revenue Code. In order to encourage voluntary compliance with the ERISA annual reporting requirements by late filers, the DFVC Program allows plan administrators who fail to file a timely annual report to pay reduced civil penalties.

Conditions for relief

Under the notice, the IRS will not impose penalties under Code Secs. 6652(d) and (e) (as those sections relate to the filing of Form 5500, Form 5500-SF, and Form 8955-SSA) or under Code Sec. 6692 (relating to the filing of actuarial reports) with respect to a year for which filing of such a form is required on a person who:

(1) is eligible for and satisfies the requirements of the DFVC Program with respect to a delinquent Form 5500 series return for such year and
(2) files separately with the IRS, in the form and within the time prescribed by the notice, a

Form 8955-SSA for the year to which the DFVC filing relates (to the extent that the information has not previously been provided to the Service).

Thus, for example, this notice provides relief from the penalties applicable under the Code to the late filing of Forms 5500 and 5500-SF only if any applicable Form 8955-SSA is also filed for the year at issue.

Although the IRS generally encourages filers to file electronically whenever possible, relief is provided under the notice only if a Form 8955-SSA is filed on paper with the IRS (including a fillable Form 8955-SSA completed online and then printed and filed on paper). The systems needed to provide relief for a delinquent Form 8955-SSA filed electronically are not currently in place, the IRS explains. In contrast, Form 5500 series returns must be filed electronically using EFAST2 in accordance with the requirements of the DFVC Program. If a Form 8955-SSA is filed under the notice, the filer must check the box on Line C, Part I (Special extension) of the Form 8955-SSA and enter “DFVC” in the space provided on Line C.

Any Form 8955-SSA required to be filed with the IRS under this notice must be filed on paper by the later of 30 calendar days after the filer completes the DFVC filing or December 1, 2014. This requirement applies with respect to any DFVC filing submitted through EFAST2 (generally, all DFVC filings after December 31, 2009), regardless of whether the filing was submitted before the issuance of this notice. For example, if a DFVC filing for a delinquent 2008 Form 5500 was submitted in 2012 and information required to be filed was never filed for 2008, a paper Form 8955-SSA must be filed with the IRS for the 2008 plan year by no later than December 1, 2014 to qualify for the relief provided under the notice.

The relief provided under this notice applies upon a late filer’s satisfaction of the conditions of this notice. Accordingly, the late filer need not file a separate application for relief with the IRS. The IRS will coordinate with the DOL in determining which late filers are eligible for the relief provided under the notice.

Note: The relief is available only to the extent that a Form 5500 series return is required to be filed under ERISA Title I. Therefore, for example, Form 5500-EZ and Form 5500-SF filers for plans without employees are not eligible for the relief. However, in Rev. Proc. 2014-32, the IRS has established a temporary pilot program to afford penalty relief under the Code for delinquent Form 5500 series filers that are not covered under ERISA Title I (see story below).

Source: IRS Notice 2014-35.

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