Late filing of Form 5500

[wsp]

Just received a phone call from a client who came back from a two week vacation to find a form 5500 sitting on her desk dated October 10 . Yes, that exact form 5500 that was to have been signed and mailed last week. Now, I know that the penalties are $10 a day under DFVC and are levied back to the July 31 date, so this vacation just cost us $800. Can anyone give me a valid reason not to do the DFVC program? I know I'm grasping at straws, but is there any possibility of avoiding a penalty in this situation? or having the penalty reduced to a lower amount? Is there any hope at all for this lost soul?

[WDIK]

Refer to this thread for an opinion regarding the actual amount the IRS and DOL will charge for a late filing. Based on jashendo's opinion, the total amount assessed for a late filer who files on their own is $75/day. If that is actually the case and you filed the Form 5500 today, the total penalty assessed would be $375. Are you much of a risk-taker?

[wsp]

except the penalty gets assessed back to July 31. So at $75/day that obviously is not the route to take unless 1) the have the leeway to apply the penalty from 10/15 or 2) they will apply some intermediate amount as a penalty given an appropriate excuse. The plan is a relatively small plan so even $800 is a bit much for everyone to swallow.

[WDIK]

My understanding is that the $75/day "reduced" penalty would apply since the expiration of the extension for filing (presumably 10/15/03).

If you were to use the DFVC program, the $10/day reduced penalty would be assessed back to 7/31/03.

Of course the $75/day mentioned is not a guarantee, hence the risk.

[Brian Gallagher]

Were you affected by the hurricane? maybe *wink, wink* the preparer was based in north carolina *wink, wink*

http://www.dol.gov/ebsa/newsroom/pr092403.html

[Guest merlin]

Does the DOL give any relief for "reasonable cause"? We just got a similar call from a client. We sent the forms out in plenty of time, but to his old address. His fault, our fault, who knows? But $750 is a pretty steep price to pay for someone's innocent error.

[kmciver]

I just read this post and thought of one of my clients who file late last year. He wrote the DOL a very humorous and honest letter that he miss place the form and found it on October 29th and filed immediately. He was fined $350. Which seems like an arbitary number, but I guess he was rewarded for his honesty. I don't think he thought he was rewarded for anything though. Good Luck

[Guest Robin S. Vatalaro]

For what it's worth - I just got a late filer out of a $900 penalty by writing a "personnel change, confusion ensued, no intent to not follow the law......" letter to the DOL. The client had UPS tracking proof that they had mailed the 2001 5500 late. I don't know why the DOL took pity but they did and waived the entire penalty. There really was no reasonable cause in my opinion; the client just wasn't paying attention.

[Guest merlin]

Robin, what was the sequence of events? How was the $900 calc'd? Did the DOL send a letter of assessment, and then give you the opportunity to demonstrate reasonable cause?

This sounds like the old IRS procedure: send a threatening letter, then accept any excuse short of wilful negligence.