Sunday, December 16, 2007

Charities, Form 990, and IRS Penalties

Charities just should not have to pay penalties to the IRS, unless they really do something wrong. Sorry for the off-topic post, but one of the things you'll find about the people who live on the coast is that they tend to be involved in charitable organizations that support the wildlife and coastal environment. The Surfrider Foundation is a good example, or the Suncoast Seabird Sanctuary; Friends of Barefoot beach, the Egmont Key Alliance, etc. Hundreds of them, if not thousands.

As a CPA (my day job), I run into charities all the time that are being assessed huge late filing penalties from the IRS because they didn't know they were supposed to file a tax return (Form 990). Most small organizations like this operate on a shoestring budget and are overwhelmed just trying to do good works. Most of them also cannot afford representation by a CPA or attorney.

But they need to know that unless they deliberately failed to comply with IRS filing requirements for charities, they should not have to pay the penalties. A logical, truthful, well-composed letter that uses the provisions in the Internal Revenue Code to have penalties removed for "reasonable cause" is usually all that is required.

I've had nearly a dozen years experience writing penalty abatement letters for my nonprofit clients and now I've written a 37 page IRS Penalty Relief Manual for nonprofits. If you are a nonprofit looking for penalty relief but think you can't afford a CPA to represent you or write a letter for you, this manual will teach you everything you need to know to do it yourself. Then you can get back to doing good.

Now I'm going back to the beach!

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