Do You Have a Reasonable Cause for Filing IRS Form 990 Late?

Did your nonprofit organization file a Form 990 after the due date? Are you faced with paying a penalty to the IRS?

If so, you may have heard that the IRS will “waive” or “abate” the penalty if there was a “reasonable cause” for not filing on time. You may be thinking that your reason certainly is not good enough for the IRS to accept. THIS IS A HUGE MISTAKE! Don’t be so hard on yourself.

The IRS tends to be a lot more lenient on nonprofits than on regular for-profit businesses. Especially if the organization is directed and managed by volunteers or part-timers. Here are some very common reasons (simplified) that the IRS will accept as reasonable cause for filing IRS Form 990 late if all the required elements are present in the written request for abatement:

• Our CPA (or other tax return preparer) agreed to file for us but he didn’t.
• We thought the treasurer filed, but she never mailed the return.
• A volunteer agreed to prepare the return but it was too complicated and it didn’t get done.
• We just started our nonprofit last year and didn’t know we had to file anything.
• Our president was sick and there were no other active volunteers to step up.
• We never received any contributions so we thought we didn’t have to file.
• Our return was filed electronically and was rejected by the IRS, but we didn’t know it.
• The board of directors was dysfunctional and let the filings lapse, but we are new directors and want to get back into compliance.
• Our treasurer was confused about the due date.
• We thought no extension form had to be filed because we heard it was “automatic.”

Generally, unless there was a deliberate intent not to file, you almost certainly have reasonable cause. Still, if you don’t have experience writing convincing letters to the government, it can be intimidating. Honestly, even a lot of CPA’s don’t have much experience in convincing the IRS that a nonprofit has reasonable cause for filing IRS Form 990 late. Since not everyone wants to pay an experienced IRS problem resolution specialist $500 to $1,000 to have a penalty removed, I’ve prepared some do-it-yourself materials that can guide most any nonprofit organization to successful IRS penalty relief.

My materials include a letter template, 12 examples of successful letters, a PDF manual explaining the entire process–what to do and what not to do–and several videos explaining reasonable cause. I’ve been providing these materials in various formats since 2007. All totaled I’ve kept over $1 million out of the hands of the IRS and in the bank accounts of the nonprofits where it belongs.

Have a look at my Form 990 Late-Filing penalty example letters, videos, and PDF instruction manual here.

And for those who value the services of an experienced professional, I can write the letter(s) for you. Contact me.