The Internal Revenue Service is launching a pilot program in which small businesses can avoid penalties for late or non-filing of retirement plan information.
Employers who offer retirement benefits almost always must file an annual return with the IRS reporting information about the retirement plan. SIMPLE Individual Retirement Accounts (IRAs) are the only type of plan for which employers do not have to file a return.
Many small businesses are unaware of the reporting requirements, however, and may have not filed their reports for several years. The IRS can fine small businesses up to $15,000 per delinquent return.
The new one-year IRS pilot program will allow certain small businesses to file their information for past years with no filing fees and no penalties. Businesses that must file reports for multiple years can file all of their delinquent reports at the same time.
To take advantage of the program, small businesses must clearly mark their returns as delinquent documents for processing under the pilot program. If the returns are not marked, the IRS will not put them into special pilot program but handle them using normal procedures, which will likely result in fines.
The program is aimed at foreign-owned small businesses and businesses in which the owners and their spouses are the only ones who receive retirement benefits. Businesses that the IRS has already fined for late retirement plan reporting are not eligible for the program.
Small businesses offering any kind of retirement benefits should check their records to ensure that they are in compliance with all reporting requirements. Any small business that is not up-to-date on its retirement plan reporting should file its delinquent returns before the program ends on June 2, 2015.
- Herb Wolfson, Wittlin, Simon & Newman, firstname.lastname@example.org
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