Nothing hurts like having to pay late filing fees to the IRS
. And for exempt organizations, these penalties aren’t as simple as dropping a few coins in a bucket. You’re looking at a daily charge of $20 or $100 – depending on gross receipts – for each day your tax return is late. The maximum penalty can cost as high as $50,000, or 5% of your gross receipts.
You might not be able to recover the money you lose with IRS penalties, but with these two fantastic tips, you can avoid paying the IRS with the hard-earned money generated by your organization.
Tip #1 – File an Extension
Your best option for dodging late filing fees is to file IRS Form 8868 – there are two parts to this tax extension form.
- Part I – Automatic 3-Month Extension
- Part II – Additional, Non-Automatic 3-Month Extension
Filing Part I will extend your deadline three months past the original due date. If you need even more time, you can file Part II to add three more months to your extended period; however, you are required to provide a reason why you need the extra time, and the IRS must have already approved your Part I.
All you need to file is your primary organization’s details and tax year period, the simply select which 990 form you’re extending time to file – 990/990-EZ, 990-PF, 990-T, etc. You are required to submit Part I before your original due date, and Part II before your extended date, if necessary. Filing either form a day late will get rejected by the IRS – serving no purpose.
Important: An Extension Form 8868 for a 990-N (e-Postcard) is not required. If you’re late filing an e-Postcard, you should just complete your filing as soon as possible.
Tip #2 – Schedule O (Form 990/990-EZ)
If time slipped through your hands, and you weren’t able to file an extension by the original deadline, you have no choice but to file your tax return as quickly as you can. By doing so, you can use Schedule O to explain why you’re filing late.
Schedule O is the form where you can provide the IRS with accurate explanations regarding your 990/990-EZ form. In this particular situation, you must prove reasonable cause with a written statement from an officer or director under penalties of perjury. Your statement has to contain facts about what caused your organization to file late.
You can enclose the following information:
- How your organization practices stable business
- What factors restricted your organization from filing an extension
- What measures have been made to prevent late filing in the future
Explaining your situation in a diligent manner won’t automatically clear your case, but it can help to appeal penalty charges filed against you.
Remember: The only way to entirely avoid late penalties is to file an extension form and then file your tax return before the extended deadline. With ExpressExtension, you can have your Form 8868 done, transmitted, and approved within minutes. We also offer a FREE downloadable app for iOS/Android devices for even more convenience.
For friendly, professional assistance with e-filing an extension, call our live experts at our headquarters in Rock Hill, South Carolina. We’re available Monday through Friday from 9 a.m. to 6 p.m. EST at (803) 514-5155, and 24/7 with [email protected]