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Penalty Abatement

Late-filing penalties can be as high as $10,000 for small tax-exempt organizations, and can go as high as $150,000 for larger organizations. However the IRS does provide relief when there is a "reasonable cause" for filing late.

I can save you lots of time and frustration by helping you write a properly structured reasonable cause letter. I'll also be happy to follow through with the IRS to make sure they give consideration to your request for abatement.

It is often shocking to tax-exempt organizations and their professional advisers how high late-filing penalties can be. Often penalties are assessed against normally compliant nonprofits that simply made an error or had a miscommunication with their professional tax preparer.

When a penalty letter is received from the IRS, it can be awkward and embarrassing for an organization's treasurer and for their CPA. The organization usually looks to blame the CPA, or if no CPA is involved, the treasurer takes the heat.

These are the kinds of questions that usually arise:

  • Do we really have to pay this?
  • Can we make our CPA pay the penalty?
  • Can we get the IRS to reduce the penalty?
  • Is our reason for being late good enough to get the penalty abated?
  • How do we convince the IRS that we should not have to pay the penalty?
  • If we call the IRS will they abate the penalty over the phone?
  • What if this is the second time we've been late?

Seeking penalty abatement for reasonable cause requires that the organization send the IRS a written request signed under penalty of perjury.  The request must establish reasonable cause. While the IRS has published a list of reasons that establish reasonable cause, they also say that "any reason will be considered."  I've written or assisted in the writing of hundreds of reasonable cause letters to the IRS. I've had great success.

Are you writing a letter now? How can you know if it will be successful. Here's a tip: If you've written a one or two page letter, your chances of success are low. It is almost impossible to make a proper reasonable cause request for abatement in one or two pages.

Let me help you.

I can write the letter for you, or I can review and critique a letter that you've written. By working with me you'll save a great deal of time and frustration and you'll have a feeling of confidence that you've written the best letter possible under your circumstances.