The Form 990-PF is specifically designed for private foundations to report their financial information from the tax year to the IRS. This form must be completed annually and filed no later than the 15th day of the 5th month after the close of their accounting year.
For private foundations that operate on a calendar year schedule, this date is May 15.
What are the consequences of filing late or failing to file at all? They are pretty hefty, so ignoring them is a bad idea.
What Are The Penalties For Filing Form 990-PF Late?
Small foundations and large foundations are punished differently. The IRS defines a small foundation as one with less than $1,000,000 in gross receipts. A foundation is considered large if their gross receipts total $1,067,000 or more.
A small foundation will be penalized $20 per day with a maximum penalty of $10,500.
A large foundation will be charged $105 per day with a maximum penalty of $53,000.
The maximum penalty for late filing is up to 5% of the private foundation’s gross receipts.
What Is The Penalty For Failure To File Form 990-PF?
Private foundations will be penalized for both failing to file the Form 990-PF or for filing this form with incorrect or missing information. The scale of the penalty is based on the foundation’s ability to respond to the IRS and either file or file correctly.
The IRS will send a notice requesting the tax return and the foundation must respond quickly with an explanation and plan to move forward with filing. If they do not do so within the IRS’ required timeframe, penalties will ensue.
All private foundations will be charged $10 for every day that the Form goes unfiled. The maximum penalty that can be accrued is $5,000.
There is a penalty for not paying tax when due under section 6651.
Eventually, The penalty is 1/2 of 1% of the unpaid tax for each month or part of a month the tax remains unpaid, not to exceed 25% of the unpaid tax.
If there was reasonable cause for not paying the tax on time, the penalty can be waived.
However, interest is charged on any tax not paid on time, at the rate provided by section 6621.
Are There Exceptions?
As you can see, these IRS penalties are pretty hefty. There are some cases where the IRS will work with your foundation and forgo charging penalties. This is generally only in cases where the foundation acted in good faith and made the effort to file but was unable to due to circumstances beyond their control.
This tax relief is rare. While it is possible to attain, your foundation should never make the assumption that you will be able to easily receive tax relief from the IRS.