The
Internal Revenue Service today encouraged eligible small businesses that did
not file certain retirement plan returns to take advantage of a low-cost
penalty relief program enabling them to quickly come back into compliance.
The
program is designed to help small businesses that may have been unaware of the
reporting requirements that apply to their retirement plans.
Small
businesses that fail to file required annual retirement plan returns, usually Form
5500-EZ, can face stiff penalties — up to $15,000 per return. However, by
filing late returns under this program, eligible filers can avoid these
penalties by paying only $500 for each return submitted, up to a maximum of
$1,500 per plan. For that reason, program applicants are encouraged to include
multiple late returns in a single submission. Find the details on how to
participate in Revenue Procedure 2015-32 on IRS.gov.
The
program is generally open to small businesses with plans covering a 100 percent
owner or the partners in a business partnership, and the owner’s or partner’s
spouse (but no other participants), and certain foreign plans. Those who have
already been assessed a penalty for late filings are not eligible.
The
Department of Labor offers a similar relief program for businesses with
retirement plans that include employees known as the Delinquent Filer
Voluntary Compliance Program.
Started
as a one-year pilot, the IRS program was made permanent in May 2015. The IRS
has received about 12,000 late returns since the pilot program began in June
2014.
The
IRS reminds retirement plan sponsors and administrators that in most cases, a
return must be filed each year for the plan by the end of the seventh month
following the close of the plan year. For plans that operate on a calendar-year
basis, as most do, this means the 2014 return is due on July 31, 2015. For
details, visit the Form 5500 Corner on
IRS.gov.
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