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ExpressTaxExempt Blog

Friday, March 4, 2016

3 Ways Nonprofits Can Avoid Late Filing Penalties

We know as well as anybody that keeping track of deadlines can be a chore. It’s pretty simple, after your tax year ends, you file your return the 15th day of the 5th month after. Say what?

Okay, if you’re confused, don’t worry. It happens to the best of us.

But we should probably examine the stakes at hand. I mean, what are the late filing penalties for nonprofits and tax exempt organizations?

Let’s use the words of the IRS themselves:
If an organization whose gross receipts are less than $1,000,000 for its tax year files its Form 990 after the due date (including any extensions), and the organization doesn't provide reasonable cause for filing late, the Internal Revenue Service will impose a penalty of $20 per day for each day the return is late.

From there, your maximum penalty is $10,000, or 5% of the organization's gross receipts. It depends on which is less, really. The penalty then reaches $100 per day, and can reach up to $50,000 if your nonprofit grosses receipts above $1,000,000. If you fail to file the required information return for three consecutive tax years, you will lose your tax exempt status.

I don’t know about you, but I’d rather avoid that. All of it.

So how do you avoid late filing penalties? Try following these steps.

Start early with ExpressTaxExempt

Instead of waiting until the last minute, create your account and start filing now. Even if your deadline is May 15th, you can start gathering your important records and entering valuable information now.

Give Multiple Users Access

With the ability to invite multiple users to the account, you can hand off your tax filing duties to a financial professional, a filing expert, or even a dedicated member of your team. As the main user, you have the ability to create sub-users and grant editing permissions to these users.

Manage Reviewers and Approvers

Do you have to present your return to a board of directors before you can actually file it? With the Manage Reviewers and Approvers feature, you can share Form 990 through a secure link with your investors, board of directors, or anybody who matters with just a few clicks.

Bottom line, planning and preparation are key. Going into your tax deadline with a gameplan will save you, your investors, and the people you help a lot of trouble. I mean, we’ve made Form 990 as easy as can be—so don’t miss the opportunity!

If you have any questions about these features, contact us by phone at 704.839.2321 to reach our dedicated support team. And follow our Twitter and Facebook to keep up with upcoming filing deadlines!


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