The IRS’s attempt to delay the reporting deadline for IRAs may have a snag, according to some groups.
The new deadline could require recordkeepers to file the reporting form on the same day that a contribution was made, the Securities Industry and Financial Markets Association (SIFMA) and the American Bankers Association said in an April 22 letter to the IRS.
“No system could reasonably capture the data, individualize the report and file it in minutes, and that assumes that the custodian would have received the contribution on July 15, rather than, as is sometimes the case, a few days later through the mail,” the letter said.
The two groups said this issue was likely an “inadvertent error on the part of the IRS” and asked for an additional extension to meet the reporting requirements.
In Notice 2020-23, 2020-18 IRB 1, the IRS provided expansive deadline relief until July 15. The letter notes that that includes a delay for individuals to make IRA contributions for 2019, and a delay for recordkeepers to report IRA contributions on Form 5498, “IRA Contribution Information.”
SIFMA and the American Bankers Association first asked that the IRS clarify that all 2019 contributions made through July 15 should be reported on the 2019 Form 5498 rather than reporting contributions made between April 15 and July 15 as late contributions on the 2020 form.
Assuming that clarification, the groups said that having the deadline for contributions be the same day as the deadline for reporting wasn’t feasible. “As is evident, it would be impossible for a recordkeeper to file a Form 5498 on the very day that an IRA contribution was made,” the letter said.
The IRS should extend the deadline for reporting until “at least August 31, 2020, and preferably to September 15, 2020, to account for mail delays over the summer,” the groups suggested.