As the title states, you most likely are looking for how you can recover from IRS penalties because of late filing. However, there aren’t really any ways to get back what you’ve lost from IRS penalties; fortunately, you can become proactive and prevent late filing penalties for the next tax season.
One of the best assets available for you to avoid IRS penalties is filing a tax extension. The Extension Form 8868
is broken into two parts, and can grant you either an automatic, 3-month extension, or a non-automatic, additional 3-month extension. By filing Part I of the extension form, your extended deadline will depend on your tax period end date.
For a Calendar Tax Year:
Original Tax Deadline (May 15) + Extension Form 8868 Part I (3 months) = Extended Tax Deadline (August 15)
For a Fiscal Tax Year:
Original Tax Deadline (15th Day of the 5th Month after tax period end date) + Extension Form 8868 Part I (3 months) = Extended Tax Deadline (Original Deadline + 3 months)
By filing Part II, you can gain an additional 3-months under two conditions:
- You already received the first extension from Part I
- You can provide a valid reason for the additional time
Once you gain your additional time, you can add three months to your extended tax deadline.
Calendar Tax Year:
Extended Tax Deadline (August 15) + Extension Form 8868 Part II (3 months) = 2nd Extended Deadline (November 15)
Fiscal Tax Year:
Extended Tax Deadline (Original Deadline + 3 months) + Extension Form 8868 Part II (3 months) = 2nd Extended Deadline (Original Deadline + 3 months + 3 months)
FACT: To properly take advantage of Extension Form 8868, you need to have Part I filed before or on your original tax deadline.
If you didn’t manage to file a tax extension on time, you can still submit an explanation with your tax form pertaining to why you’re filing late. Your reasons can go on Schedule O
of your Form 990
or Form 990-EZ
. You can use as much room as needed to provide adequate information on Schedule O; there is no limit to the amount you write.
The IRS mainly looks for “facts and circumstances,” or reasonable explanations detailing why you were delinquent. Examples of legitimate excuses include
- What prevented your organization from requesting an extension of time to file its return
- How your organization was not neglectful or careless, but exercised ordinary business care and prudence
- What steps have been taken to prevent the same situation from happening again
You’ll gain a better chance of having your penalties dropped or lessened by supplying answers to the questions above. You should also include any circumstances that were outside your control like unexpected events, or advice from a tax professional.
Prevent late filing penalties during the next tax season by e-filing your Extension Form 8868 with Express990. We offer both Part I and Part II of the tax extension, and you can even e-file it wherever you may be with the Express990 App for iOS/Android tablets or mobile site for smartphones.
For professional assistance with e-filing any of our 990 forms or extensions, contact our live experts at our Rock Hill, South Carolina headquarters by phone (704-839-2321, Monday through Friday from 9 a.m. to 6 p.m. EST), email (firstname.lastname@example.org), or live chat (www.expresstaxexempt.com).