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News from, January 11, 2012
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IRS Chases 5500 Non-fliers 238
Reprinted with permission from 401(k) Advisor

The IRS Employee Plans Compliance Unit has begun its Form 5500 Non-Filer Project to "promote compliance” with the Form 5500 filing requirements. The unit is sending letters to plan sponsors that were required to file one of the forms in the 5500 series but did not do so for plan years ending in 2010 or later.  In addition to prompting compliance with the filing requirements, a project goal is to identify the "underlying causes” for the filing failures and to make recommendations "for removing impediments to compliance.”

Interestingly, although the materials regarding the project on the IRS Web site state that they are contacting non-fliers, a recipient of one of these letters should indicate if it "filed the return in question.” This suggests that the information developed by the program includes at least some plan sponsors who actually have filed the necessary 5500 form. This is similar to many other IRS letters regarding late filing and other 5500 matters; most practitioners can provide many examples of IRS inquiries that included inaccurate information or faulty assertions.

If the sponsor has not actually filed the 5500 in question, it should promptly do so and also take advantage of the DOL Delinquent Filer Voluntary Compliance (DFVC) Program. This program has penalties that are far lower than those asserted in IRS communications. The maximum IRS non-filer penalty is $15,000, a figure that is prominently mentioned in virtually all IRS communications regarding 5500 forms. In addition, the IRS will continue sending letters of increasing severity until the sponsor has filed the necessary return.

Reprinted with permission from 401(k) Advisor.

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