We've been notified by a client that they've received a penalty notice from the IRS for a late filing of the 2006 Form 5500. They filed on the day of the deadline for extensions, October 15, 2007, via some overnight delivery service, I don't know which one, but they say that they never received the confirmation card back, and the overnight service says it was lost. In addition, some confusion over who was doing what at the client resulted in the 5500 being filed without the audit attached (it was complete and ready). They filed the auditor's report on November 25, 2007. The IRS is demanding a $25 per day penalty for 25 days late; $625. Obviously, the filing was completed well before the 45-day mark that is usually the earliest you would get an incomplete filing notice, and the client says they never received one. If it were me, I'd pay the penalty and forget about it, but our contact seems to think she will lose her job over this (!). Other than writing a letter affirming that the Form 5500 was filed timely and the audit was omitted in error, and noting that they have never had a late filing before and asking for the penalty to be abated, does anyone have any other suggestion on how to proceed? DFVC would cost more than the $625 penalty, right? Does she have any options? I can't say that I really am very sympathetic, but it doesn't hurt to consult the Group Mind on her behalf. Thanks in advance -

JP

A stamp is an inexpensive investment. Write the letter.

Before you write the letter, review the pertinent authorities to determine what is timely filing when you use a private delivery service. We know that timely filing when using US Mail is the date of delivery to the Postal Service, as evidenced by the postmark. What is timely delivery when using a private service? I don't have a clue, because I've never done it; I know I'm safe when I send it certified mail/return receipt requested and have proof of delivery to the Postal Service

Why not ask the delivery service that "lost" the form to make good on it?

I agree. Someone, somewhere has evidence of the mailing. Your client surely has the expense receipt in some books/records; the service presumably has evidence of payment and perhaps more. If you can send off that as proof of mailing, then you may have better "reasonable cause" support.

I've asked the DOL/IRS for lenience in the past with this type of issue and have always been able to get them to waive/reduce any penalty. I'd try the letter route and if a penalty still exists, I'd hit up the overnight service.

Thanks to all who replied. This last strikes me as an excellent suggestion as to how to find backup for the claim that the overnight service was used; I'll pass it on to the client and inform the board when we hear a result.

JP