(a) In general. (1) Pursuant to the authority granted the Secretary
under section 502(c)(2) of the Employee Retirement Income Security Act
of 1974, as amended (the Act), the administrator (within the meaning of
section 3(16)(A)) of an employee benefit plan (within the meaning of
section 3(3) and Sec. 2510.3-1, et seq.) for which an annual report is
required to be filed under section 101(b)(4) shall be liable for civil
penalties assessed by the Secretary under section 502(c)(2) of the Act
in each case in which there is a failure or refusal to file the annual
report required to be filed under section 101(b)(4).
(2) For purposes of this section, a failure or refusal to file the
annual report required to be filed under section 101(b)(4) shall mean a
failure or refusal to file, in whole or in part, that information
described in section 103 and Sec. 2520.103-1, et seq., on behalf of the
plan at the time and in the manner prescribed therefor.
(b) Amount assessed. (1) The amount assessed under section 502(c)(2)
shall be determined by the Department of Labor, taking into
consideration the degree or willfulness of the failure to file the
annual report. However, the amount assessed under section 502(c)(2) of
the Act shall not exceed $1,000 a day, computed from the date of the
administrator's failure or refusal to file the annual report and, except
as provided in paragraph (b)(2) of this section, continuing up to the
date on which an annual report satisfactory to the Secretary is filed.
(2) If upon receipt of a notice of intent to assess a penalty (as
described in
paragraph (c) of this section) the administrator files a statement of
reasonable cause for the failure to file, in accordance with paragraph
(e) of this section, a penalty shall not be assessed for any day from
the date the Department serves the administrator with a copy of such
notice until the day after the Department serves notice on the
administrator of its determination on reasonable cause and its intention
to assess a penalty (as described in paragraph (g) of this section).
(3) For purposes of this paragraph, the date on which the
administrator failed or refused to file the annual report shall be the
date on which the annual report was due (determined without regard to
any extension for filing). An annual report which is rejected under
section 104(a)(4) for a failure to provide material information shall be
treated as a failure to file an annual report when a revised report
satisfactory to the Department is not filed within 45 days of the date
of the Department's notice of rejection.
A penalty shall not be assessed under section 502(c)(2) for any day
earlier than the day after the date of an administrator's failure or
refusal to file the annual report if a revised filing satisfactory to
the Department is not submitted within 45 days of the date of the notice
of rejection by the Department.
(c) Notice of intent to assess a penalty. Prior to the assessment of
any penalty under section 502(c)(2), the Department shall provide to the
administrator of the plan a written notice indicating the Department's
intent to assess a penalty under section 502(c)(2), the amount of such
penalty, the period to which the penalty applies, and the reason(s) for
the penalty.
(d) Waiver of assessed penalty. The Department may waive all or part
of the penalty to be assessed under section 502(c)(2) on a showing by
the administrator that there was reasonable cause for the failure to
file the annual report.
(e) Showing of reasonable cause. Upon issuance by the Department of
a notice of intent to assess a penalty, the administrator shall have 30
days from the date of the service of notice, as described in paragraph
(i) of this section, to file a statement of reasonable cause for the
failure to file a complete annual report or why the penalty, as
calculated, should not be assessed. A showing of reasonable cause must
be made in the form of a written statement setting forth all the facts
alleged as reasonable cause. The statement must contain a declaration by
the administrator that the statement is made under the penalties of
perjury.
(f) Failure to file a statement of reasonable cause. Failure of an
administrator to file a statement of reasonable cause within the 30 day
period described in paragraph (e) of this section shall be deemed to
constitute a waiver of the right to appear and contest the facts alleged
in the notice, and such failure shall be deemed an admission of the
facts alleged in the notice for purposes of any proceeding involving the
assessment of a civil penalty under section 502(c)(2). Such notice shall
then become a final order of the Secretary, within the meaning of
Sec. 2570.61(g).
(g) Notice of the determination on statement of reasonable cause.
(1) The Department, following a review of all the facts alleged in
support of a complete or partial waiver of the penalty, shall notify the
administrator, in writing, of its intention to waive the penalty, in
whole or in part, and/or assess a penalty. If it is the intention of the
Department to assess a penalty, the notice shall indicate the amount of
the penalty, not to exceed the amount described in paragraph (c) of this
section.
(2) Except as provided in paragraph (h) of this section, a notice
issued pursuant to this paragraph indicating the Department's intention
to assess a penalty shall become a final order, within the meaning of
Sec. 2570.61(g), 30 days after the date of service of the notice.
(h) Administrative hearing. A notice issued pursuant to paragraph
(g) of this section will not become a final order, within the meaning of
Sec. 2570.61(g), if, within 30 days from the date of service of the
notice, an answer, as defined in Sec. 2570.61(c), is filed in accordance
with Sec. 2570.62.
(i) Service of notice. (1) Service of notice shall be made either:
(i) By delivering a copy to the administrator or representative
thereof;
(ii) By leaving a copy at the principal office, place of business,
or residence of
the administrator or representative thereof; or
(iii) By mailing a copy to the last known address of the
administrator or representative thereof.
(2) If service is accomplished by certified mail, service is
complete upon mailing. If done by regular mail, service is complete upon
receipt by the addressee.
(j) Liability. (1) If more than one person is responsible as
administrator for the failure to file the annual report, all such
persons shall be jointly and severally liable with respect to such
failure.
(2) Any person against whom a civil penalty has been assessed under
section 502(c)(2) pursuant to a final order, within the meaning of
Sec. 2570.61(g), shall be personally liable for the payment of such
penalty.
(k) Cross-reference. See Secs. 2570.60 through 2570.71 of this
chapter for procedural rules relating to administrative hearings under
section 502(c)(2) of the Act.
[54 FR 26894, June 26, 1989]
