IRS Sent Erroneous Form 5500 Penalty Notices to Businesses

By Jason Bramwell
 
Businesses that had requested an extension to file their Form 5500 recently received erroneous late-filing penalty notices from the IRS because of a service programming error, according to an alert the agency issued November 8.
 
The document, which was obtained by BenefitsLink.com, was issued as part of the IRS' Servicewide Electronic Research Program (SERP) intranet for employees.
 
The alert stated that businesses that filed their Form 5500 before their Form 5558, Application for Extension of Time to File Certain Employee Plan Returns, had a chance to post were receiving a CP 283, Penalty Charged on Your 5500 Return – a penalty notice that is sent to a business that filed its Form 5500 late or incomplete.
 
"Proposed changes to the penalty program would allow time for extensions to post before penalty notices are generated," the alert stated. "However, until these changes can be implemented, tax examiners and telephone assistors should abate these penalties as service errors."
 
The alert instructed IRS telephone assistors to apologize to the taxpayer and "prepare Letter 168C explaining the penalty has been removed due to service error."
 
"Any penalties that have been erroneously assessed should be abated, regardless of the amount, because the penalties are due to service programming," the alert stated. "Use Reason Code (RC) 045 to signify IRS error."
 
If the caller is an employee plan administrator or sponsor with multiple plans or clients, the alert instructed personnel to abate up to five penalties for the caller.
 
"If the caller has penalty notices for more than five accounts, instruct the caller to put his/her request for abatement in writing," the alert stated, which added that the "names and Employer Identification Numbers of the impacted plans may be put on an list; a separate request is not required for each entity."
 

You may like these other stories...

Renaissance avoided more than $6 billion tax, report saysThe Senate Permanent Subcommittee on Investigations said on Monday that a Renaissance Technologies LLC hedge fund’s investors probably avoided more than $6...
A new Gallup survey found that 58 percent of smokers in the United States see increased state and federal taxes on cigarettes as an act of unjust discrimination, while 39 percent believe the tax hikes are justified.The...
Liberal groups object to bill barring taxes on Internet accessThe Internet Tax Freedom Act hasn’t been a controversial bill. In fact, it’s so popular that senators are seeking to pair it up with a far more...

Upcoming CPE Webinars

Jul 23
We can’t deny a great divide exists between the expectations and workplace needs of Baby Boomers and Millennials. To create thriving organizational performance, we need to shift the way in which we groom future leaders.
Jul 24
In this presentation Excel expert David Ringstrom, CPA revisits the Excel feature you should be using, but probably aren't. The Table feature offers the ability to both boost the integrity of your spreadsheets, but reduce maintenance as well.
Jul 31
In this session Excel expert David Ringstrom helps beginners get up to speed in Microsoft Excel. However, even experienced Excel users will learn some new tricks, particularly when David discusses under-utilized aspects of Excel.
Aug 5
This webcast will focus on accounting and disclosure policies for various types of consolidations and business combinations.