Deadline Day: Tax Exempt Extensions & Late Filing Penalties

Hope you’re having a great deadline day! Are you ready to e-file your Form 990 to the IRS?

No? Well, it’s pretty clear what you have to do.

You need to get a tax exempt extension with Form 8868!

How Do I Get an Extension?

You can use Form 8868 to apply for an additional, non-automatic 3-month extension if the original 3-month extension was not enough time.

To obtain this additional extension of time to file, the organization must show reasonable cause for the additional time requested.

What Are the Penalties for Late Filing?

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 IRS will impose a penalty of $20 per day for each day the return is late.

The maximum penalty is $10,000, or 5% of the organization’s gross receipts, whichever is less.

The penalty increases to $100 per day, up to a maximum of $50,000, for an organization whose gross receipts exceed $1,000,000.

What Happens If I File the E-Postcard After the Deadline?

There is not a penalty associated with late filing the e-Postcard.

However, should you fail to file a return for 3 consecutive years, the IRS will revoke your tax-exempt status.

Automatic Revocation of Tax Exempt Status

So what exactly happens when you haven’t filed for 3 consecutive years?

When an organization loses tax exempt status, they must begin filing as a taxable organization with the IRS.

Any taxes owed by the organization from that period on may be subject to fees and penalties.

In the event you believe that your tax exempt status has been revoked, you should contact the IRS immediately for confirmation and to determine how you will need to reapply for tax exempt status.

So how do you find out if your tax exempt status was revoked? The IRS publishes a list of organizations that have had their federal tax exempt status revoked after failing to file their Form 990 for 3 consecutive years.

Our suggestion? If you’re not ready to file, go with Form 8868. Spend the next 3 to 6 months getting things ready, and then you can make sure you have everything right when you e-file Form 990.

Regardless, we’re here to help! If you have any questions about e-filing Form 990 or extension Form 8868, call the ExpressTaxExempt experts at 704.839.2321.

Happy e-filing, everybody!