Small Businesses Can Get IRS Penalty Relief for Unfiled Retirement Plan Returns

Small businesses that fail to file required annual retirement plan returns, usually Form 5500-EZ, can face stiff penalties — up to $15,000 per return

However, under an IRS relief program, eligible small businesses that did not file certain retirement plan returns can 'fess-up and pay a much reduced amount, enabling them to come back into compliance.

Under this program, eligible filers can avoid these penalties by paying only $500 for each return submitted, up to a maximum of $1,500 per plan. For that reason, program applicants are encouraged to include multiple late returns in a single submission.The program is generally open to small businesses with plans covering a 100 percent owner or the partners in a business partnership, and the owner’s or partner’s spouse (but no other participants), and certain foreign plans. Those who have already been assessed a penalty for late filings are not eligible. Find the details on how to participate in Revenue Procedure 2015-32 on IRS.gov.

The Department of Labor offers a similar relief program for businesses with retirement plans that include employees known as the Delinquent Filer Voluntary Compliance Program.