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

Instructions and Help about Are Form 843 Errors

Hi I'm David McCray I'm a CPA and I want to help your organization write the best letter that it can to the IRS to have its penalties abated for filing his form 990 late so I want to give you a couple of things to get you started first of all you're going to need to think about two things number one why did your organization file late and number two how are you going to prevent future filings from being late those are two very important issues to address when you're writing your letter the first one why did your organization file late you need to look at that from both an operational perspective in other words the mechanical reason for why you found late and from governance perspective first the operational perspective that would mean did you just forget did you never know that you had a filing requirement did you have hi director turnover and so there was no institutional memory the knowledge about the filing requirement and simply wasn't passed on to the new directors perhaps the treasurer who was responsible for filing the return was ill or moved and took the records with him or her perhaps you had that you were relying on a CPA who dropped the ball or a volunteer who dropped the ball perhaps you realize the return was late but didn't feel that you had the resources to get the return prepared and you sort of just pushed it off because you thought that the penalties just wouldn't be that high but of course as you've probably found out twenty dollars a day even for a small organization adds up very quickly so those are the operational reasons for why your return might not have been filed timely from a governance perspective the IRS has determined that there's a very close connection between an organization's board of directors and the appliance aspects of the organization in other words whether they file their returns on time now if you thought your return late that is some indication that your organization has a problem with its governance and as you know that the Board of Directors has a fiduciary responsibility to the to the organization to the donors the donors are giving you their money and they expect it to be used for a charitable purpose I don't think they had paid IRS penalties in mind when they gave you their money and so failure to exercise due diligence in other words as a board member of determining what the proper filing requirements are for the organization definitely is not good for for donor relations now how will the organization convince the IRS that it's going to file on time in the future as if the IRS thinks that you have a problem and you're going to continue filing late no they're going to be of the mind that maybe you need to be convinced that you need to file on time and maybe their method of convincing you will be to uphold the penalty so you need to convince them that you really are serious about making sure that you file on time in the future so again looking at it from an operational standpoint what what procedures and policies are you going to change within the organization to help you file on time are you going to hire a real bookkeeper somebody that really knows how to use QuickBooks or whatever software you're going to use and it can produce timely accurate financial reports are you going to bring in an outside CPA who has its qualified and has knowledge of filing form 990 a lot of CPAs you know they really don't have the expertise to file Form 990 and so you need to ask those questions are you hiring a CP ated that really knows what they're doing how many 990s do they filed during the year some organizations have turnover in their Board of Directors pretty much every year good though that would be perhaps a high school Booster Club where parents come and go as their children move on and graduate and so there's a lot of turnover and there may not be a policy or method of passing along the knowledge of the form 990 filing requirements and that's something that you need to address figure out how you're going to do that and communicate that to the IRS from a governance perspective how are you going to convince the IRS that you're going to file timely you need to convince the IRS that you're getting your board of directors involved do that do all the board members know when the form 990 is due do they understand that there's a filing requirement that there's a twenty dollar a day or a hundred dollar a day penalty for filing late do they know that you can get an extension is on the calendar of the board it's a good idea to have the board actually have the form 990 in their hands and review it and have the preparer come to the board meeting and go over it with them so that they're involved and they understand and they're expecting that form 990 and if it's if it's not forthcoming if it's not being prepared they have time to take action before the due date comes around so those are things you need to think about and I will leave you with another little piece of information and that is with regard to prior year returns if you have a late filed return and you filed returns in the past the IRS is very likely to go back and have a look actual human eyes looking at your priority returns and if they find things that are amiss you forgot to attach schedules you forgot to answer certain questions you forgot to provide certain information that's required that they may well assess penalties