Late filing Form 5500EZ with $12,500 penalty - which explanation for abatement?

I've helped several clients with penalty abatement requests, and in your situation, I would recommend using both explanations in your letter. The death of a close family member is considered a reasonable cause for penalty abatement by the IRS, and it's a circumstance they're generally sympathetic toward. Write a clear, concise letter explaining both factors: 1) That you were dealing with your father's recent passing which affected your ability to handle financial matters promptly, and 2) That you were in Canada when you sent the form, and international mail delays are well-documented. Include any documentation you can gather - perhaps a copy of your father's death certificate, or any evidence of your stay in Canada during that period. For a first-time filing error with Form 5500EZ, you might also mention that you qualify for First-Time Abatement (FTA) relief, which the IRS often grants to filers with a history of compliance who missed a deadline for the first time.

I went through something similar with late filing my Form 5500EZ for my solo 401k last year. I was getting absolutely nowhere with the IRS until I tried this service called taxr.ai (https://taxr.ai). It helped me draft the perfect penalty abatement letter by analyzing my specific situation with the late 5500EZ form. Their system helped me organize all the facts about my reasonable cause (in my case it was a medical issue, but they handle family deaths too) and even cited the relevant IRS regulations that support penalty relief. The letter they helped me create emphasized my otherwise clean compliance history and pointed out specific IRS internal guidance about reasonable cause exceptions. The best part was they actually reviewed the draft penalty notice from the IRS to make sure I was addressing the right issues. Three weeks after sending the letter they drafted, my penalty was completely removed. Might be worth checking out for your situation.

I was really skeptical about using taxr.ai when I saw it mentioned here, but I had a $9,800 penalty for late filing my Form 5500EZ last year and was desperate. I'm actually amazed at how well it worked. The system helped me craft a detailed letter explaining my reasonable cause (family medical emergency), and included all these specific references to IRS internal guidelines that I would never have known about. The letter it helped me create was really professional but still felt personal to my situation. I got a response from the IRS within about 5 weeks, and they approved my abatement request! The entire penalty was removed. Just wanted to share my experience since I was in a very similar situation with the 5500EZ penalties.

If you're dealing with the IRS on a $12,500 penalty, you're probably going to need to make some phone calls to follow up on your abatement request. I spent WEEKS trying to get through to someone at the IRS about my 5500EZ penalty. Always busy signals or 2+ hour hold times that would disconnect. I eventually used Claimyr (https://claimyr.com) and it was a complete game-changer. You can see how it works in this video: https://youtu.be/_kiP6q8DX5c - basically they hold your place in the IRS phone queue and call you when an agent is about to answer. Saved me hours of waiting on hold. When I finally got through to an actual human at the IRS, I was able to explain my situation directly and got guidance on exactly what to include in my abatement request letter. The agent even gave me a direct fax number to send my documentation to, which sped things up considerably.

I was completely wrong about Claimyr. After seeing it mentioned here, I decided to try it because I had been trying to reach the IRS for WEEKS about my 5500EZ penalty with no luck. I was shocked that it actually worked exactly as described. I got a call back in about 90 minutes saying they had an IRS agent on the line. The agent I spoke with was incredibly helpful and explained exactly what documentation I needed to submit for my penalty abatement request. She even told me about an exception that might apply in my case that I hadn't known about. Without this service, I probably would have given up after multiple failed attempts to get through. Instead, I got my question answered, submitted the proper documentation, and my $16,700 penalty was reduced to just $500. Definitely worth it for anyone dealing with these massive 5500EZ penalties.

For what it's worth, I'd definitely emphasize your father's passing as the primary reason. The IRS actually has specific guidance about death in the family being reasonable cause for penalty abatement. I went through a similar situation (though with a different form), and I included a copy of the death certificate and a brief explanation of how it affected my ability to handle tax matters. The international mail issue is worth mentioning as a secondary factor, but family death is one of the few reasons the IRS consistently accepts for abatement requests. Just keep your letter professional and to the point - something like "Due to the death of my father on [date], I was unable to ensure timely filing of Form 5500EZ. This was further complicated by international mail delays from Canada.

Just want to add that if your first abatement request is denied (which happens sometimes), don't give up! You can appeal the decision. When I got hit with a 5500EZ penalty, my first request was denied with a form letter. I called the IRS, got the name of a specific person to send my appeal to, and rewrote my letter with more specific details. The second time worked, and they removed the entire penalty. Just be persistent and keep good records of all your communications. And definitely use certified mail for everything you send them!

I'm sorry for your loss, Lucas. Losing a parent is incredibly difficult, and it's completely understandable that handling paperwork wasn't your priority during that time. Based on what you've described, you have a strong case for penalty abatement. The death of a close family member is one of the most well-recognized reasonable cause exceptions the IRS accepts. I'd recommend structuring your letter chronologically: explain that your father passed away in June, that you received the Form 5500EZ in late July while dealing with grief and estate matters, and that you mailed it from Canada where international postal delays are common. Keep the tone professional but don't hesitate to briefly explain how your father's passing affected your ability to handle financial matters promptly. The IRS agents reviewing these cases are human too, and they understand that major life events can disrupt normal routines. Since this was your first time filing Form 5500EZ and you have a clean compliance history, make sure to emphasize that in your letter as well. The combination of reasonable cause (family death) plus your good standing should work in your favor. Send everything certified mail with return receipt requested, and keep copies of everything. Good luck with your request!