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Pilot Program Offers Relief for Late 5500 Filers

Pilot Program Offers Relief for Late 5500 Filers

The IRS recently established a one-year pilot program to provide penalty relief under Internal Revenue Code (“IRC”) §§ 6652(e) and 6692 for certain small businesses that are delinquent in filing Form 5500.

The program gives sponsors and administrators of retirement plans that are not covered by Title I of the Employee Retirement Income Security Act (“ERISA”) automatic relief from the IRS for late filing penalties on past due:

  • Form 5500-EZ – Annual Return of One-Participant (Owners and Their Spouses) Retirement Plan
  • Form 5500 – Annual Return/Report of Employee Benefit Plan – This return must be filed if the non-ERISA plan does not meet the filing requirements for Form 5500-EZ for plan years before 2009.

Delinquent filers can face penalties of up to $15,000 per return. Those eligible for relief include:

  • Non-ERISA plans covering only a 100% business owner or one or more partners, and their spouses (no common law employee participants)
  • Plans maintained outside the U.S. primarily for non-resident aliens (foreign plans) subject to IRS annual reporting.

However, plans that have already had a penalty assessed for a delinquent return (CP 283 Notice) are not eligible for the program.

Additionally, a plan is not eligible for relief under the pilot program for any year that said plan was subject to Title I of ERISA. Instead, relief may be sought for these years through the Department of Labor’s (“DOL”) Delinquent Filer Voluntary Compliance Program.

To request the waiver, filers must file the applicable Form 5500 Series, and indicate on the heading, in red ink, “Delinquent return submitted under Rev. Proc. 2014-32, Eligible for Penalty Relief.” A special transmittal schedule must be included with each delinquent return. The return must be sent to the IRS and cannot be filed through the DOL’s EFAST2 filing system.

The IRS believes the penalty program may become permanent at the end of the trial year, and notes that while the pilot program has no fee, a permanent version would require a user fee.


If you have any questions about this Tax Tip, please contact your WithumSmith+Brown professional, a member of WS+B’s National Tax Services Group or email us at taxbriefs@withum.com.

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Author: David Springsteen, CPA, MBA | dspringsteen@withum.com

To ensure compliance with U.S. Treasury rules, unless expressly stated otherwise, any U.S. tax advice contained in this communication is not intended or written to be used, and cannot be used, by the recipient for the purpose of avoiding penalties that may be imposed under the Internal Revenue Code.

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