April Fools? IRS Sending Penalty Notices to Exempt Organizations Erroneously

Posted by Jonathan D. Moll, CPA

Tax Exempt Penalities Error - Nonprofit Tax Planning I was somewhat relieved that April 1st fell on a Sunday this year. This meant that the volume of intra-office April Fool’s pranks was greatly reduced. I did not have to exercise extreme caution when opening my desk drawer. Nor did I have to verify the authenticity of emails from the office manager claiming that the ice-cream party was starting in the kitchen in 5 minutes (I waited for 10). Despite the temporary embarrassment associated with being the recipient of an April Fool’s prank, hilarity and smiles usually ensue. That is not the case with communication being received by various nonprofit agencies from the IRS that fit the bill of a cruel April Fool’s prank.

There are increasing reports within the profession that nonprofit organizations are receiving penalty notices from the IRS for late filings of their Form 990, even though they received an automatic extension and filed their during March. In a previous blog titled Filing Deadline Extended to March 30 for Some Tax Exempt Organizations, we noted that the IRS’ e-filing system was not available for filing Form 990 from January 1st through February 29th. As a result, the IRS extended the filing deadline (Notice 2012-4) for those affected (January or February deadlines) until March 30th. Affected organizations were allowed to file electronically in March, however, some that did received a penalty notice for a late filing.

If you or someone else you know received this IRS notice erroneously, the IRS has advised us on how to remedy the situation. In order to have the penalty abated:

  1. Call the number listed on top of the notice (877-829-5500)
  2. Request that the penalty be abated in accordance with Notice 2012-4

After you hang up and order is restored, sit back, smile, and enjoy the mischief that is associated with April Fool’s Day.

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