Video instructions and help with filling out and completing Are Form 843 Additions

Instructions and Help about Are Form 843 Additions

Hi this is David McCray cpa today i want to give you a look at a reasonable cause penalty abatement request letter written by a tax-exempt organization that was unsuccessful in having penalties abated here's the letter on behalf of the above nonprofit organization i'm requesting your consideration in abating the penalty charged in your attached letter as a nonprofit organization whose mission it is to provide assistance to the homeless the payment of this penalty would create an economic hardship as an entity and would be detrimental to fulfilling the mission of the organization regarding the late filing of form 990 additional processes and safeguards have been put in place by our organization to avoid late filing of any subsequent returns again we respectfully request that this penalty be abated now this is the exact text with some identifying information removed disguised to protect the identity this is the exact letter that was written by the organization now why do you think that letter was unsuccessful what do you see there that's missing can you see anything that's wrong let's have a look at the IRS as response to this letter and here is the actual IRS response letter dear taxpayer thank you for the inquiry your request for penalty abatement did not state the reason why the return was filed past the due date in order to consider the request for penalty adjustment we need the following information and then they go on to ask for some specific information the reason for the delay attach supporting information the date the delay occurred and the information about people involved and so on and so forth so this is the kind of response that the organization got so what the IRS is saying is that the organization didn't give them the reason that they filed late and they didn't tell them why that they felt they deserved penalty abatement for reasonable cause what reasonable cause did they have for filing late nor did they say anything about how they were going to prevent future late filings so they just didn't give enough information this is a reasonable cause abatement request letter and so you have to give reasonable cause you have to explain to them why you had reasonable cause for filing late and this just goes to show you that there's a certain approach that you have to take and certain information that you have to give to the IRS to get reasonable cause abatement you can't just say we're great organizations sorry we're late we won't do it again if you're a small all-volunteer organization and this is your first time that used to work but the IRS is actually becoming a little bit harder line on that and so they want you to explain the details not just brush it off and say sorry we won't do it again please give us a payment so be sure that you include all of the elements necessary to request abatement if you don't know what those are my website is a good place to find out I offer materials that will help you craft the best letter you possibly can to get abatement not 100% guarantee in all circumstances but it can improve your chances tremendously form 990 help calm