IRS Clarifies Rules for Hardship-Related eFiling Waivers

The Internal Revenue Service (IRS) has set forth Revenue Procedure 2015-47, which supplies guidance for administrators of qualified retirement plans seeking an exemption from requirements to file electronically certain annual forms. The new guidance helps clarify how plans can properly request a waiver of the electronic filing requirement due to economic hardship.

The forms impacted by the revenue procedure are Form 8955-SSA, “Annual Registration Statement Identifying Separated Participants With Deferred Vested Benefits,” and Form 5500-EZ, “Annual Return of One-Participant (Owners and Their Spouses) Retirement Plan.” Under the terms of Revenue Procedure 2015-47, certain plan sponsors will be able to continue to file paper versions of these forms, despite other recent rulemaking requiring electronic filing. 

But because the Department of the Treasury and the IRS believe that electronic filing will not impose significant burdens on the taxpayers covered by the regulations, the IRS Commissioner “anticipates granting waivers of the electronic filing requirement only in exceptional cases.”

By way of background, Section 6011(e) of the Internal Revenue Code (IRC) authorizes the IRS to issue regulations that require an entity to file returns on “magnetic media,” so long as the entity is required to file at least 250 returns during the calendar year. The term magnetic media includes electronic filing via the Internet, as well as other forms specifically permitted under applicable regulations, revenue procedures, publications, forms, instructions, or other guidance from the IRS. 

During September 2014, the Department of the Treasury and the IRS issued final regulations to require certain plan administrators to file electronically Form 8955-SSA registration statements and Form 5500 series returns. Form 5500 series returns include Form 5500, Annual Return/Report of Employee Benefit Plan, Form 5500-SF, Short Form Annual Return/Report of Small Employee Benefit Plan, and Form 5500-EZ. Under the electronic filing regulations, a Form 8955-SSA registration statement must be filed electronically if the plan administrator is required to file at least 250 returns during the calendar year that includes the first day of the plan year.

Under a related section of the electronic filing regulations, a Form 5500 series return must be filed electronically if the plan administrator and the employer maintaining the plan are, in the aggregate, required to file at least 250 returns during the calendar year that includes the first day of the plan year. These electronic filing regulations provide that if a filer is required to file electronically a Form 8955-SSA registration statement or a Form 5500 series return and fails to do so, the filer is deemed to have failed to file the registration statement or the return, respectively.

The electronic filing regulations further provide that the Commissioner of the IRS may waive the electronic filing requirement for a given plan in cases of undue economic hardship. According to the IRS, the principal factor in determining economic hardship will be the amount, if any, by which the cost of filing the registration statement or return electronically exceeds the cost of filing the registration statement or return on paper or other media.

NEXT: Other background requirements 

The earlier regulations also provide that a request for a waiver must be made in accordance with published guidance, and that the waiver will specify the type of filing and the period to which it applies. The waiver is also subject to any terms and conditions regarding the method of filing that may be prescribed by the IRS Commissioner.

The electronic filing requirement under § 301.6057-3 of the electronic filing regulations applies to Form 8955-SSA registration statements required to be filed for plan years that begin on or after January 1, 2014, but only for filings with a filing deadline (not taking into account extensions) on or after July 31, 2015. Filers of Form 8955-SSA registration statements due on July 31, 2015, would be eligible for an automatic extension until October 15, 2015, if they filed Form 5558, Application for Extension of Time to File Certain Employee Plan Returns. The electronic filing requirement under § 301.6058-2 of the electronic filing regulations applies to Form 5500 series returns required to be filed for plan years that begin on or after January 1, 2015, but only for filings with a filing deadline (not taking into account extensions) after December 31, 2015.

Form 8955-SSA registration statements that are filed electronically are filed using the Filing Information Returns Electronically (FIRE) system. Form 5500 series returns that are required to be filed electronically are generally filed under the Department of Labor’s ERISA Filing Acceptance System (EFAST2). However, because Form 5500-EZ returns are paper-only returns that are filed with the IRS, filers of Form 5500-EZ returns that are required to file electronically must file Form 5500-SF returns using EFAST2 in lieu of the Form 5500-EZ.

NEXT: Waivers have limited scope

The IRS stresses that the new guidance under Revenue Procedure 2015-47 does not provide hardship waiver procedures for any electronic filing requirement for a form that a filer is already required to file electronically, such as Form 5500 and Form 5500-SF (which are required to be filed electronically through EFAST2 under a Department of Labor rule).

Accordingly, the waiver procedures provided for in the new revenue procedure apply only to Form 8955-SSA and Form 5500-EZ filings. Also, as previously announced in the preamble to the electronic filing regulations, the IRS anticipates adding items on the Form 5500 and Form 5500-SF relating solely to Code requirements and intends to provide an optional paper-only form containing those Code-related items for use by filers that file fewer than 250 returns during the calendar year.

Filers that are required to electronically file Form 5500 series returns using EFAST2 and that file at least 250 returns during the calendar year would be required to answer these IRS-only questions electronically using EFAST2 (even though the Department of Labor rule requiring electronic filing does not apply to these IRS-only questions). The Department of the Treasury and the IRS do not believe that answering five these IRS-only questions electronically would impose any significant burdens because these filers are already required to electronically file a Form 5500 or Form 5500-SF return using EFAST2. Accordingly, a waiver of the electronic filing requirement will not be granted with respect to these questions.

With these limitations in mind, the IRS will approve or deny a request for a waiver of the electronic filing requirement for Form 8955-SSA or Form 5500-EZ based on each filer’s particular facts and circumstances. In the case of a waiver request relating to Form 8955-SSA, the filer must be the plan administrator required to file Form 8955-SSA under § 6057(a). In the case of a waiver request relating to Form 5500-EZ, the filer must be either the plan administrator or the employer that maintains the plan as provided in § 6058(a).

In determining whether to approve or deny a request, the IRS will consider the filer’s ability to file timely the registration statement or return electronically without incurring an undue economic hardship. The specific criteria are described at length in the text of Revenue Procedure 2015-47.