The Internal Revenue Service has admitted to mistakenly assessing penalties on businesses that had requested extensions on filing the Form 5500 for their employee retirement plans.

The IRS is telling its help center representatives to apologize remove the penalties when they are contacted about the error, acknowledging a timing problem in posting the extension requests, according to a directive obtained by the site BenefitsPro.

“Form 5500 filers that file their return before their extension Form 5558 has had a chance to post are receiving CP 283s assessing them a late filing penalty,” said the IRS. “Proposed changes to the penalty program would allow time for extensions to post before penalty notices are generated. However, until these changes can be implemented, tax examiners and telephone assistors should abate these penalties as Service Errors.

The IRS telephone assistance representatives and tax examiners are also supposed to prepare a Letter 168C explaining that the penalty has been removed due to a “Service Error.”

“If the caller is an administrator or sponsor with multiple plans/clients, you may abate up to five penalties for the caller,” said the IRS. Benefit plan administrators who get more than five penalty notices from the IRS need to put their requests for abatement in writing and send them to the IRS.
For more help with the Form 5500, visit the Form 5500 Corner on

Register or login for access to this item and much more

All Accounting Today content is archived after seven days.

Community members receive:
  • All recent and archived articles
  • Conference offers and updates
  • A full menu of enewsletter options
  • Web seminars, white papers, ebooks

Don't have an account? Register for Free Unlimited Access