Archive | Penalty Relief

Form 990 Late-Filing Penalty of $50,000 Abated for Reasonable Cause

IRS Penalty Notice Form 990 late filing $50,000I’m very pleased that I was able to help a nonprofit client obtain relief from this $50,000 late-filing penalty.

The original penalty was caused by the client’s CPA failing to notify the IRS of an accounting year change. The error went undetected for a number of years, resulting in a mix-up in due dates.

By the time I was brought in, a levy was in place.

Consequences of slow and inadequate responses to IRS notices and demands were magnified by the IRS losing written communications from the client.

After many hours on the phone with the IRS EO and ACS,  and after a properly prepared reasonable cause letter with supporting documentation was received by the IRS, the levy was lifted and the penalty abated.

This case was a prime example of how a simple case that easily qualifies for abatement can become very tangled and very expensive if not handled promptly and properly.

Most CPA’s simply don’t have the experience or know-how to properly handle reasonable cause abatement requests for nonprofits. But they can learn.

Nonprofit Form 990 Penalty Abatement Manual Now in Print Edition

December 26, 2016 Update: Currently, I am no longer offering the PRINTED book format. The manual is only available as a pdf file. The example abatement letters are available as a Word file which is included with the pdf when you order it from my website. Why am I no longer offering a printed manual? It is just too difficult to keep the printed book updated. I regularly update the pdf manual with new information and new sample letters.

I’m happy to announce that my Form 990 Penalty Abatement Manual is now in print. This book has taught hundreds of CPA’s and nonprofit directors how to properly structure a reasonable cause argument to increase the chances of success in having late-filing penalties abated, or to have the IRS accept a late-filed Form 1023 and grant retroactive exempt status.

After being available only in e-book format since its first publication, the penalty abatement manual is now available as an 8.5 X 11, 150-page softcover book.

I’ve had the book printed because a number of people have indicated that they would prefer having a book that they can actually hold in their hands and keep on their book shelf as a reference book.

Many people find it easier to read and digest a printed book than to try to read an entire book on a computer screen.

I offer several different price points for purchasing the book, to meet different needs and budgets.

For more information and to purchase, visit me on the web at:


I look forward to helping you NOT pay ridiculous penalties to the IRS.


How to Write a Reasonable Cause Letter to the IRS for Nonprofit Late-Filing Penalty Abatement

how to write a reasonable cause letter to the IRSFOR IMMEDIATE RELEASE: I’ve just published a completely updated and expanded version of my popular e-book on how to write a reasonable cause letter to the IRS. This e-book is focused specifically on nonprofit, tax-exempt (501(c)) organizations that find themselves in the following situations:

  • They’ve filed their Form 990 or 990-EZ late and have been assessed a penalty by the IRS.
  • They’ve made errors on their Form 990 or 990-EZ that caused the IRS to assess penalties because the return was deemed incomplete.
  • They’ve had their tax-exempt status revoked for failing to file the required Form 990-N, 990-EZ, or Form 990 for three consecutive years and they want to have their tax-exempt status reinstated retroactively to the date it was revoked.

This e-book will help anyone in those situations who has reasonable cause for their non-compliance.

Who has reasonable cause? Generally, I maintain that anyone who did not knowingly and deliberately ignore the filing requirement usually has a very good chance for penalty abatement, especially if this is the first time penalties have been assessed. Showing a lack of “willful neglect”of the filing requirement in and of itself is NOT considered sufficient to demonstrate “reasonable cause,” but taken together with other factors (which I explain in great detail in the book) such an organization is usually a very good candidate for abatement.

Included with the purchase of this 75 page e-book (delivered instantly as a pdf file downloaded to your computer) is a 22 page Microsoft Word document that contains a letter template you can use to structure your letter. Additionally, I’ve added the full text of six penalty abatement request letters that were successful in having thousands of dollars of late-filing penalties abated.

Visit my web site to learn more about my materials that teach you how to write a reasonable cause penalty abatement request letter to the IRS for a nonprofit organization.


David B. McRee, CPA

Saint Petersburg, Florida

Late-Filing IRS Penalty Relief for Nonprofits

It happens to lots of nonprofit organizations for various reasons. But failing to file Form 990 on time doesn’t have to end with writing a large check to the IRS.

The filing requirements are clear; A nonprofit organization (with limited exceptions) MUST annually file either Form 990-N, Form 990-EZ, Form 990, or Form 990-PF. Which form it files depends largely on the level of gross receipts and total assets owned.

However, the IRS understands that nonprofits often rely on well-meaning but uninformed volunteers to manage the organization, keep the books and financial records, and perform tax-exempt functions. So it has historically offered a considerable amount of leniency and forbearance to nonprofit organizations that it does not offer to for-profits.

Officers, directors, managers, and professional advisers to non-profit organizations should not be shy about asking the IRS to abate penalties assessed for late filing of the Form 990 series when the organization generally has a good filing history, or if it is a newly formed organization, or has otherwise encountered circumstances beyond its control which resulted in the late filing of a return, even when multiple years may be involved.

While it does appear that the IRS may be taking a harder line on non-compliant nonprofits now than it has in the past, it is still likely that for two years or less of non-compliance, a nonprofit stands a very good chance of receiving abatement of late filing penalties if it can convince the IRS that it had reasonable cause for being late.

The IRS code and regulations as well as the IRS website and other published guidance has some helpful guidance on what it considers reasonable cause and what has to be shown to demonstrate that reasonable cause exists.

Writing a reasonable cause penalty abatement request letter to the IRS is not difficult. But in order to be successful you need to structure your argument properly, include all relevant facts and circumstances, and anticipate all the questions that the IRS might ask concerning why the organization was late.

Unless you are familiar with the code’s reasonable cause provisions, you should probably get some professional help.

Learn how to write a reasonable cause penalty abatement request for tax-exempt organizations that have been assessed late filing penalties for Form 990.

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