With National Small Business Week kicking off today, the IRS is reminding small businesses that penalty relief is available if certain retirement plan returns, such as Form 5500-EZ, are past-due.
Small businesses that take advantage of a special penalty relief program would be given until June 2 to file the required annual returns.
The one-year pilot program, which the IRS launched on June 2, 2014, gives sponsors and administrators of retirement plans not covered under Title I of the Employee Retirement Income Security Act of 1974 (ERISA) automatic relief from late-filing penalties on past-due Forms 5500-EZ, Annual Return of One-Participant (Owners and Their Spouses) Retirement Plans.
Plan administrators and sponsors of these retirement plans who fail to file their required annual returns can face stiff penalties of up to $15,000 per return. According to an IRS webpage on Form 5500s, the due date for Form 5500-EZ is the last day of the seventh month after the plan year ends (July 31 for a calendar-year plan).
Filers who participate in the pilot program can avoid these penalties by filing their late returns by June 2. So far, about 6,000 delinquent returns have been filed under this program, according to the IRS.
The temporary penalty relief program is generally open to certain small business (owner-spouse) plans and plans of business partnerships (together, “one-participant plans”) and certain foreign plans. Those who have already been assessed a penalty for late filings are not eligible for the program.
Applicants under the program may include multiple late returns in a single submission. There is no filing fee or other payment required.