On Thursday, May 22nd The Internal Revenue Service (hereinafter the “Service”) announced that it will begin a one-year pilot program in June to help small businesses with retirement plans that owe penalties for not filing reporting documents.

By filing current and prior year forms during this pilot program, small businesses can avoid penalties. The Service issued Rev. Proc. 2104-32 earlier this month describing the scope and application of the program. The Service indicated that it is also reaching out to certain small businesses that maintain retirement plans that may have been unaware that they had a filing requirement. The Service estimates that the new program will bring a significant number of small business owners into compliance with the reporting requirements.

As a caveat, it should be duly noted that Plan Administrators and sponsors who do not file an annual Form 5500 series return can face tax penalties of up to $15,000 per return. Those who have already been assessed a penalty for late filings are not eligible for this program. The program is open only to retirement plans that are generally maintained by certain small businesses, such as those in an owner-spouse arrangement or eligible partnership.

In connection to the scope and application of the program, multiple late retirement plan returns may be included in a single submission. If a retirement plan has delinquent returns for more than one plan year, penalty relief may be available for all of these returns. Similarly, delinquent returns for more than one plan may be included in a single penalty relief request. No filing fee will be charged during the pilot program.

In accordance with Circular 230 Disclosure