IRS Teams up with DOL to Find Form 5500 Non-Filers
If your plan sponsor clients haven’t filed Form 5500 as required, they could soon be hearing from the IRS.
Recently the Internal Revenue Service’s Employee Plans Compliance unit (EPCU) announced plans to collaborate with the Department of Labor’s Office of the Chief Accountant (OCA) to contact Form 5500 non-filers identified using payroll and plan data in their records.
The IRS will compare payroll and plan data provided by employers to records provided by the Department of Labor, and will send letters to those who may have failed to file a Form 5500 for the 2011 plan year. If the plan sponsor can’t respond with an explanation as to why it did not file (e.g., the plan is insured or unfunded and the plan has fewer than 100 participants), then it will be on notice and may face penalties for failing to file.The IRS says
the primary goal is to ensure compliance with annual filing requirements, but they are also looking to identify the underlying causes for noncompliance, and to develop recommendations for removing impediments to compliance.
If your plan sponsor clients receive a letter from the IRS they should, of course, respond to the information request — notably with the date the report was, or will be, filed. The IRS notes that the letter initiates a compliance check, and while it says it will not inspect the employers’ books and records to determine a filing liability for a particular tax period, a failure to file a required return will “…necessitate other measures and possibly result in assessed penalties to ensure compliance.”