Can penalties for filing Form 990 late be abated?
Failure to timely file the information return, absent reasonable cause, can give rise to a penalty under section 6652 of the Code. Generally, the reasonable cause exception to the penalty will be determined on a case-by-case basis taking into account all relevant facts and circumstances.
The regulations provide that a request for abatement of penalties based on reasonable cause must be made in the form of a written statement, containing a declaration by the appropriate person that the statement is made under the penalties of perjury, setting forth all the facts alleged as reasonable cause. When requesting reasonable cause, your letter should include supporting documentation and address the following items:
The reason the penalty was charged. The daily delinquency penalty may be charged for either a late filed return, an incomplete return or both.
Explain what prevented the organization from complying with the law, including:
what prevented the organization from requesting an extension of time to file its return;
how the organization was not neglectful or careless, but exercised ordinary business care and prudence; and
what steps have been taken to prevent the same situation from occurring in the future.
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