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Employee Plans News - October 12, 2011 - EPCU Project: Form 5500 Non-Filers and Late Filing Penalty Awareness

The Employee Plans Compliance Unit has begun the Form 5500 Non-Filer Project to promote compliance with Form 5500 filing requirements.

The Project Process

EPCU sends compliance check letters to plan sponsors for whom we have no record of a Form 5500 or 5500-SF filing with DOL (or Form 5500-EZ with IRS) 6-9 months after the return’s due date. We ask the plan sponsors to either file the return or explain why it wasn’t filed. If the plan sponsor files the return, we close our contact. Many times, we’ve found that a plan sponsor did file Form 5500, but it didn’t match IRS records. In these cases, we update our records to reflect current plan information (for example, a correct EIN, plan number or plan sponsor name). If we don’t receive a response, we close the compliance check and may send a referral to Employee Plans Examinations or the Department of Labor.

If the plan sponsor is required to, but doesn’t file Form 5500, IRS will send them a delinquency notice (CP 403 Notice) asking employers to respond within 30 days. If they don’t respond, IRS will send a subsequent notice (CP 406 Notice) requesting a response within 30 days. IRS doesn’t grant extensions of time to reply to the CP 406 notice.

Late Filing Penalties

Many plan sponsors we contacted weren’t aware there is an IRS penalty for filing their Form 5500 late of $25 per day until filed, up to a maximum of $15,000. The DOL may also assess civil penalties for the late filing of the same Form 5500 of up to $1,100 per day, with no maximum.

EPCU doesn’t evaluate ‘reasonable cause’ explanations they receive during a non-filer compliance check. However, the IRS and DOL may abate or reduce penalties if there were mitigating circumstances or conditions that adversely affected the plan’s ability to file a return.

DOL’s Delinquent Filer Voluntary Compliance (DFVC) Program

If a plan sponsor hasn’t filed Form 5500 but is required to, there is an opportunity to substantially reduce DOL penalties and eliminate the IRS penalty under the DFVC Program. (This program is not available to Form 5500-EZ filers. However, Form 5500-EZ filers may attach an explanation for filing late to their return to provide information they wish the IRS to consider before assessing penalties.) Plan sponsors should indicate on their return if they have been accepted by the DFVC Program to avoid IRS penalties.

Contacting the EPCU

If you have questions about this project, please email us and we will be glad to answer them. Please include the words “Form 5500 Non-Filer Project” in the subject line.

Page Last Reviewed or Updated: 07-Nov-2013