What is the Source of Most IRS Problems for Nonprofits?

What do most nonprofits and/or their CPA’s who run into problems with the IRS have in common?

They simply aren’t taking care of business, that’s what. Ineffective behavior.

Now, they may have a good reason for shirking their duty, or they may not.

I work almost exclusively with nonprofits and CPA’s who are facing penalties or who are in a difficult spot with the IRS. Sometimes the solution to their problem is easy. Or at least it would seem so.

I explain to my client what the solution is, how I can help, and what information I will need to resolve the problem.

The client agrees to provide the information and seems eager to have me resolve the issue. Then the problems begin.

Weeks go by and either the information dribbles in bit by bit via email attachment, or I face complete unresponsiveness.

The same behaviors that got them into the mess in the first place are continuing to prevent the issue from being resolved.

After doing this problem resolution work for almost a decade I see the same pattern of behavior in many of my clients. Not all, to be sure, but many. Delay, ignore, make excuses, lose documents, submit duplicate information, submit irrelevant information.

Even though a client may have already paid me in full up front, they still drag out the process over a period of weeks or months when it could have been resolved in three days.

The IRS HATES delays. They don’t like to be ignored. Of course they’ll ignore YOU as much as they want to and will make you wait for months. There is nothing you can do about that.

How do you stay out of trouble with the IRS:

  • Know what your filing requirements are. It’s not that hard, really. Just do a quick Google search on IRS filing requirements for nonprofit organizations. Anyone can do it. If you are a nonprofit officer, director, or manager, you MUST do it. Don’t just rely on the CPA who is a member of your board of directors unless he/she has a lot of specific experience with nonprofits. Even then, trust, but verify.
  • Assign more than one person the responsibility of meeting the filing requirements. Don’t just leave it to the Treasurer. This is the single biggest mistake nonprofits make that makes them miss filing deadlines.
  • Get the board of directors involved in monitoring the filing of all IRS returns.
  • If you receive an IRS notice and it requires a response, do so within the time period given. If you don’t know what the notice means, call the IRS!
  • Don’t hesitate to get professional help from a CPA or tax attorney with IRS problem resolution experience.
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