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IRS/DOL begin Form 5500 nonfiler project

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If you have an employee benefits plan, like a retirement plan or a cafeteria plan, you must e-file an annual information return on Form 5500 with the Department of Labor (DOL). The consequences for failing to file can be draconian: Your plan may lose its tax-favored status. And, of course, unless you have reasonable cause, penalties apply to nonfilers.

The IRS’ Employee Plans Compliance Unit (EPCU) has announced that it’s collaborating with the DOL’s Office of the Chief Accountant to contact Form 5500 filers who haven’t filed for plan years ending in 2011. Nonfilers will be identified using payroll and plan data in the EPCU’s records.

Don’t panic!

The primary goal of this collaboration is to ensure compliance with annual filing requirements. Additional goals include identifying the underlying causes for noncompliance and making recommendations for removing impediments to compliance.

The EPCU will send letters to Form 5500 nonfilers. These letters are compliance checks; they don’t kick off audits. Warning: Compliance checks can morph into audits if you fail to respond.

Answer the letter promptly. The EPCU is particularly interested in the date you filed Form 5500, or, if you didn’t file, an explanation of why you’re not required to file. Also, include documents or clarifying material that you believe will be helpful for the EPCU to review. Don’t skimp: Be as complete and accurate as possible in your responses.

If you haven’t filed a return, file it as soon as possible through the DOL’s ERISA Filing Acceptance System II (EFAST2).

Email EPCU at epcu@irs.gov if you have any questions. Include “Non-Filer Project” in the subject line of your message.

Use DFVCP

The DOL’s Delinquent Filer Voluntary Compliance Program (DFVCP) encourages voluntary compliance with your annual reporting requirements. Under DFVCP, you’ll still pay a penalty for not filing, but it won’t send you to the poor house. Warning: Plan administrators are personally liable for the penalty; amounts paid under DFVCP can’t be paid from plan assets.

Participation in DFVCP is a two-part process:

  • E-file a complete Form 5500, including schedules and attachments, for each year you request relief. Heads up: Check the DFVCP program box on line D of Part I of the 5500 to ensure proper processing.
  • Electronically submit the filing information and payment to DFVCP using the DFVCP Calculator. You may also mail your payment and filing information.

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