I have an issue for a client whose plan assets and under $250,000. Normally the Form 5500EZ is not required to be filed if the ending year plan assets is less than $250000. In 2020 our client met this criteria but we filed the EZ Form nevertheless. Thru a miscommunication the return was filed late for that year. Some months later in 2022 the client received a late filing assessment from IRS. We responded that the filing was exempted due to the $250,000 exemption. We had letter back and forth but the IRS is asking for the late filing penalty. My question is this: How can a late filing penalty apply to a year in which the return was not required? Can anyone help us?