New IRS Program to Give Penalty Relief to Small Business Retirement Plans
Next month, the IRS will launch a one-year pilot program intended to help small businesses with retirement plans that owe penalties for unknowingly failing to file reporting documents.
Small businesses that file current and prior-year forms during this pilot program can avoid penalties.
The program, which will begin in June, is targeting certain small businesses that maintain retirement plans but may have been unaware of the filing requirement. The IRS said it hopes the program will bring a significant number of small business owners into compliance with the reporting requirements.
The agency noted that plan administrators and sponsors who do not file an annual Form 5500 can face stiff penalties of up to $15,000 per return. The pilot program is open only to retirement plans generally maintained by certain small businesses, such as those in an owner-spouse arrangement or eligible partnership, and not to plan administrators and sponsors who have already been assessed a penalty for late filings.
Multiple late retirement plan returns may be included in a single submission. If a retirement plan has delinquent returns for more than one plan year, penalty relief may be available for all of these returns, according to the IRS. Similarly, delinquent returns for more than one plan may be included in a single penalty relief request. No filing fee will be charged during the pilot program.
More information on how to participate in the program can be found in Revenue Procedure 2014-32.