You can file your tax returns using the U.S. postal system, but it’s sort of like riding a bicycle to work. Sure, some people do it, but there is a much easier way. Enter e-File. Electronic filing has been around for a while, but a surprising number of businesses and self-employed people fail to take advantage of it. Maybe they think that paper long-forms are still necessary. Maybe they have someone else doing their taxes and they just don’t want to bother changing things that have “worked” for so long. Don’t be like those businesses. E-filing saves you time and money. Still, if you’re not familiar with it, you might have some questions like:
Do I Need Software To Submit My Form 5500 or 5500-SF?
Answer: Nope. You don’t need any software to use EFAST2 Internet filing. It’s a free online filing tool for individual filers and service providers who don’t want to use EFAST2-approved third-party software to complete Form 5500 or 5500-SF filings.
What Do You Mean by EFAST2 Credentials and Why Do I Need Them?
Answer: If you’re using IFILE to prepare your 5500 or 5500-SF, then you’re going to need three credentials. First, you’ll need a user ID. You’re also going to need a PIN and, finally, you’ll need to create a password. The registration process isn’t too hard, and it assigns you all three credentials. While you provide employment information, the credentials supplied to you aren’t linked to your company.
What Do I need to use IFILE?
Answer: You’ll need a form 5500 or 5500-SF. You also need access to the Internet, and a way for the site to send you information. Basically, you need regular access to the Internet. If you complete the form 550 or 5500-SF, you must register as the Filing Author, and you must register as the Filing signer is you’re the one signing the forms. If someone else signs the forms, they will need to register as the Filing Signer.
Is It Easy To Get EFAST 2 Credentials?
Answer: Yes, actually. You get your EFAST2 credentials in five easy steps. All you need to do is follow the instructions on the site. It only takes a few minutes. You’ll have to read the privacy statement and agree to it. Then, you’ll have to select one of two challenge security questions (in case you lose your credential information). Once you get your credentials via email, you can access the site via the link in the email you receive. You will be asked to accept the PIN Agreement and prompted to create a password.
How Do I Confirm That Form 5500 or 5500-SF Has Been Transmitted and Received by EFAST2?
Answer: All you have to do is log into the EFAST2 website with your credentials. Select “Submissions” from the menu on the left-hand side of the screen. All of your filings will appear in a list with the status of each one.
Is There Any Way To Have a Service Provider Complete and Electronically File the Form 5500/5500-SF For Me If I Don’t Want To Get EFAST2 Credentials?
Answer: Yes. Many small businesses use service providers (i.e. accountants) to do their taxes. You can use your own third-party service provider, if you wish, to complete your tax returns and submit them using the EFAST2 system.
Are There Civil Penalties For Failure To Electronically File The Plan’s Form 5500 or Form 5500-SF?
Answer: Yes. There are several penalties under ERISA and the Internal Revenue Code if you do not meet the annual return/report filing requirements.
Is There a Process To Appeal Civil Penalties Assessed For Failing To E-file?
Answer: Yes. Under ERISA section 502(c)(2), and the DOL’s civil penalty regulations, you may appeal civil penalties in certain circumstances. For example, you may submit an appeal within 30 days of the date of submitting a notice to file a statement of reasonable cause for failure to timely file an annual return. The Department may waive any or part of any penalty if you can show that there was a reasonable cause for failing to file.
Jeremy has worked as an accountant for more than 10years. He shares his tips on book-keeping and tax filing for a variety of business blogs online. Visit Liberty Tax Services for your business accounting needs.