On June 2, 2014, the IRS began a pilot program to help small businesses who have failed to file tax returns related to certain types of retirement plans. Small businesses who take advantage of this program have until June 2, 2015, to obtain penalty relief from the normal penalties associated with failure to file.
Read on to learn more about this pilot program and to take advantage of it before the June 2 deadline.
What is the requirement for small businesses related to retirement plan filings?
Plan sponsors or administrators must file for each retirement plan the Form 5500 series of returns and reports:
- Form 5500 – Annual Return/Report of Employee Benefit Plan
- Form 5500-SF – Short Form Annual Return/Report of Employee Benefit Plan
- Form 5500-EZ – Annual Return of One-Participant (Owners and Their Spouses) Retirement Plan
What are the penalties to small businesses for failure to file retirement plan returns?
Sections 6652(e) and 6692 of the Internal Revenue Code defines the penalty for plan sponsors or administrators who fail to file the Form 5500 series based on the type of retirement plan:
- For the annual return for an employee benefit plan defined under Section 6058 or the returns and reports for an employee stock plan defined under Section 6047(e), a civil penalty of $25 per day per return, up to a maximum of $15,000.
- For the actuarial report for an employee benefit plan defined under Section 6059, a civil penalty of $1,000.
The IRS may waive the above civil penalties if the sponsor or administrator can should reasonable cause for failing to file a retirement plan return.
Who is eligible for penalty relief for failing to file retirement plan returns?
Penalty relief is available to plan sponsors and administrators for a retirement plan that is subject to the filing requirements of Sections 6047(e), 6058, or 6059 of the Internal Revenue Code that are not subject to Title I of The Employee Retirement Income Security Act of 1974 (ERISA).
What must a plan sponsor or administrator do to participate in the penalty relief program?
The plan sponsor or administrator must submit a completed Form 5500 Series to the IRS by June 2, 2015. A completed Form 5500 Series return must include a signed and completed copy of all required schedules and attachments for every year for which the applicant is seeking penalty relief.
For returns for 2008 and earlier, the appropriate Form 5500 Series return for that year must be required. For returns for 2009 or later, the Form 5500-EZ may be filed.
Penalty relief is not available for penalties already assessed by the IRS.
Where do you file a return for penalty relief?
Submissions of Form 5500-EZ under this program must be sent to: Internal Revenue Service, 1973 North Rulon White Blvd., Ogden, UT 84404-0020.
Submissions of all other Form 5500 Series under this program must be sent to: Internal Revenue Service, Employee Plans Delinquent Filer Program, EP Classification, 9350 Flair Drive, El Monte, CA 91731-2828.
What fees are required in order to participate in the penalty relief program?
Participation in the penalty relief program does not require the payment of a penalty or fee, because the penalty relief program is in a pilot stage. If the pilot program is replaced with a permanent program, a fee for penalty relief will be required.
How can I get help filing my return by the deadline?
If you need help completing your tax return for your small business by the June 2 deadline, you can get that help by speaking with a tax attorney. A tax attorney will be able to use his training and experience to help complete your return on time.
You can get help by calling the phone number located at the top of this web site, or by completing the form below. An attorney will get in touch with you to have a free initial consultation to start giving you the help you need.
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Mark has been a contributor to legal web sites related to bankruptcy, tax, and criminal law since 2011. He has an Accounting degree from Texas A&M University.