"CPA Reveals How to Remove IRS Late-Filing Penalties for Nonprofit Organizations"
By clicking "Buy Now," you will be purchasing a full year of access to all the materials in the course, including the PDF manual, example letters, and instructional videos. At the end of your subscription you will have the opportunity to renew.
Has an 18 year track record of success.
Saves you a lot of time, frustration, and second-guessing.
The price is right. Much less expensive than a tax attorney or CPA's time.
Detailed video instruction.
Provides you with the text of actual successful letters.
Learn everything you need to know to write a successful reasonable cause letter to the IRS to have penalties waived for the following situations:
Late-filing penalties for Form 990, 990-EZ, or 990-PF.
Reasonable Cause for Filing Form 1023 after the 27 month deadline.
Reasonable Cause for late 501(c)(4) notifications.
General approach to making reasonable cause requests for abatement for most any type of IRS penalty assessed against a nonprofit organization.
As far as I know, this is the only product of its kind dedicated to tax-exempt nonprofit organizations.
As far as I know, this is the only product of its kind dedicated to tax-exempt nonprofit organizations.
Learn everything you need to know to write a successful reasonable cause letter to the IRS to have penalties waived for the following situations:
Late-filing penalties for Form 990, 990-EZ, or 990-PF.
Reasonable Cause for Filing Form 1023 after the 27 month deadline.
Reasonable Cause for late 501(c)(4) notifications.
General approach to making reasonable cause requests for abatement for most any type of IRS penalty assessed against a nonprofit organization.
What’s Included in this Course?
100+ pages of instruction in a pdf manual.
One full year of access to this course and all included materials.
A letter template to help you get started.
The complete text of 19 letters that were successfully used in a variety of situations to have penalties abated. The example letters are in several file formats, including MS Word format for your convenience.
Two video webinars explaining the fine points of "reasonable cause" and how to structure your letter."
Note: All materials will be available to you in digital format. You will not receive a printed book or printed materials or CD or flash drive or any other physical media. You are purchasing access to this course and all included materials for a period of one year, including all updates during the year. You may renew when your access expires.
Until you've exhausted every effort to waive the penalties.
Before writing a check to the IRS--in fact, before you even pick up the phone to call them--read through my penalty manual. I show you step-by-step how to assess your situation, organize your facts, gather documentation, formulate your argument using the IRS code, regulations and other guidance, and finally I show you how to structure your letter.
SAVE MONEY, EARN MONEY
If you are a nonprofit board member, you can save hundreds of dollars in CPA fees by handling this yourself.
If you are a CPA, attorney, or similar professional advisor to nonprofits, learning the methods in this manual will be a great investment in yourself. Even if its your fault, this book will help. The skills and knowledge you learn from following my instruction and doing it yourself will give you a new skill that you can use in the future, not only with nonprofits, but with for-profits as well.
100+ pages of explanations, techniques, recommended language, laws, regulations, Internal Revenue Manual guidance, and example letters.
How the IRS calculates late filing penalties.
What the IRS says about penalty abatement.
What the Law says about penalty abatement.
What to do immediately when your organization receives a penalty notice from the IRS because the Form 990 was late.
What "reasonable cause" is.
"Mitigating factors" and how they can save you.
Learn about "events beyond the filer's control."
How to successfully blame your CPA or other professional.
How you can show that you acted in a responsible manner by using the IRS's own language.
Tips from the IRS Penalty Manual.
How, exactly, to analyze your situation, structure your letter and develop your argument.
What to do if you are a CPA, attorney, or other advisor and your actions caused or contributed to the late filing.
How to write a reasonable cause explanation to get retroactive reinstatement of tax-exempt status after being revoked for non-filing of three consecutive returns.
Other nonprofit penalties that can be removed (abated) for reasonable cause.
Checklist to use before mailing your letter (so you don't forget anything critical).
Suggested tax-compliance policy to be adopted.
IMPORTANT:
It's important for me to tell you that this isn't a book of "tricks" known only to me, or special magic secret tactics or any of that hype. I don't have any special connections inside the IRS. What I offer is simply an organized and effective approach, based on my more than 18 years of experience, using the provisions of the Internal Revenue Code and other written guidance from the IRS. It works.
My instructional materials will help you write a strong argument that will make it EASY for the IRS to see how your circumstances qualify for penalty abatement under the law (or retroactive reinstatement, if applicable). It helps to know how to speak the specialized IRS language that this material teaches you.
Remember that $50,000 penalty notice higher up on this page? By using the techniques and structure I teach, I was able to get the penalty abated. Below is the letter the client received from the IRS. Do you think the client was happy?
These are actual letters that worked!
The materials I'm offering to you include the full text of twelve letters that were successful in having IRS penalties abated for reasonable cause. I've carefully selected these ten letters to cover all of the most common circumstances that I've run into over the years. I'm sure you'll find parts of letters that will be very similar to your situation.
Several of the letters were successful in very difficult circumstances. If I can do it, so can you. These letters are included in this package in MS Word file format to make it easy for you to cut and paste the parts that you think apply to your situation.
Below is a summary of the situations covered by the letters:
Letter 1 - A private school, Star Fleet Academy, filed its Form 990 on time, but the IRS claimed that it was filed late because it was received after the extended due date. We provided Certified Mail receipts showing that extensions were filed, and that the return was filed before the extended due date. We reminded the IRS of the law that “timely mailed is timely filed,” regardless of what date the return is actually received.
Letter 2 - A small public charity [501(c)(3)] filed incomplete Forms 990 for several years. It did not attach Schedule B as required. In the eyes of the IRS, filing an incomplete return is the same as not filing a return and it will assess penalties from the due date through the date the corrections were received by the IRS. In this case, a CPA prepared the incomplete returns and we successfully argued that the organization relied on the expertise of the licensed professional to prepare a complete return.
Letter 3 – A 501(c)(6) organization, Red Widget Manufacturers Association, had a CPA firm prepare and file their 990. Because of software issues, a paper return was filed instead of e-filing the return as usual. After two years passed, the IRS claimed to have never received the return and charged a penalty. We successfully argued that although there was no Certified Mail receipt, other evidence, including board minutes indicated that a return was, more likely than not, mailed timely.
Letter 4 – A private foundation with a prior instance of late-filing of Form 990-PF received a late-filing penalty because their CPA failed to transmit an extension request. We showed that the CPA had administrative turnover and some software issues that cause them to miss the extension filing.
Letter 5 – After dissolving and distributing its assets, a large public charity [501(c)(3)] filed its final, short year return after the due date--over one year late, in fact. Numerous circumstances contributed to the delinquency. The late-filing penalty, which was abated, was nearly $50,000. When an organization terminates operations and liquidates before the normal tax year end, the Form 990 is due sooner than the normal due date. It is not unusual for a terminating organization to miss the short year’s due date and incur a penalty.
Letter 6 - A nonprofit school filed multiple years' Form 990 delinquent. It took over a year to correct the delinquency. The organization's own abatement letter was rejected. This letter that I wrote on their behalf resulted in the abatement of all penalties (about $20,000). The school relied heavily on their CPA who did not perform as promised.
Letter 7 – A CPA failed to file a client’s return on time due to some glitches in their due date tracking software. The first abatement request letter failed. This is the second letter, which was successful in abating nearly $30,000 in late-filing penalties. This is a fantastic “case study.” This letter was written by the involved CPA using my method and is shared with his permission.
Letter 8 - A large organization was facing a $50,000 penalty. The CPA firm prepared the 2010 return and provided a copy to the organization. The CPA was supposed to e-file the return but did not do so. Both the organization and the CPA “thought” the return had been electronically filed.
Letter 9 - A fairly large local youth sports organization had multiple problems with its Form 990 filings over multiple years, resulting in combined penalties of more than $30,000. Schedule A was not filed, multiple returns were filed late, and many of the letters from the IRS were not responded to by the organization or its CPA. The IRS had sent multiple letters of “final notice of intent to levy on certain assets.” This letter is very complex and instructive and is a very valuable case study. In this case we leaned heavily on the “reasonable reliance on a licensed professional” argument to show reasonable cause.
Letter 10 - An organization filed its return late for two consecutive years. It had a long history of filing returns on time and a long-standing relationship with its CPA firm. During the years in question, the CPA firm went through some technology changes and failed to file extension requests on time.
Letter 11 – A public charity relied on a key volunteer to prepare the Form 990, but the volunteer was unable to file the return on time. We demonstrated that the volunteer was competent and reliable, but was overcome by excess responsibilities and personal health issues.
Letter 12 – This “letter” is actually designed to be an attachment to Form 1023 to explain why there was a reasonable cause for not filing returns for three consecutive years, which resulted in the loss of tax-exempt status. This statement conforms to IRS Revenue Procedure 2014-11 and is an actual statement that was successful in achieving retroactive reinstatement for a small 501(c)(3) association. The all-volunteer organization suffered from frequent turnover in directors and simply did not know of the filing requirement.
Letters 13 and 14 – These letters were written by an organization whose mission is to help the visual arts community. They were late two years in a row for multiple reasons: they filed paper returns when they were required to file electronically, they changed their legal name, COVID interfered with their normal filing process, and the IRS did not notify the organization of the failed filings. The letters explain their phone contacts with the IRS, with their Congressional Representative, and with the Taxpayer Advocate. Outstanding examples of persuasive and successful correspondence with the IRS.
Letter #15 – American Elementary PTO’s volunteer parent treasurer filed the PTO’s 2014 Form 990-EZ (a paper return) but did not prepare the Schedule A support schedule that is required for a complete return. The return was filed in 2015, close to the due date. The IRS sent a penalty notice SEVEN YEARS later because the return was incomplete. I prepared the abatement request letter and Schedule A. The IRS abated the penalty.
Letter #16 – American Society International is a very small nonprofit corporation and had never applied for tax-exempt status. Without the full knowledge of the board, the President filled out an application, claiming exempt status under section 501c4. There were defects in the application and the IRS closed the application without issuing a determination letter. However, the IRS did enter the organization in the Exempt Organization Business Masterfile as a 501c4 organization, which generated a penalty notice because they had not filed Form 8976 to give notice of intent to operate as a 501c4. An officer paid the $5,000 penalty. I wrote this letter to have the penalty abated and refunded. Concurrently, the organization applied for recognition of tax-exempt status under section 501c3. The penalty was abated and refunded after more than 6 months.
Letter #17 – A mountain bike racing club formerly classified as a 501c7 social club lost its tax-exempt classification and is now seeking reclassification as a 501c4 social welfare organization. Because it was incorporated many years ago, the IRS assessed a penalty because more than 60 days elapsed between the time it was incorporated and the date it filed Form 8976 to give notice that it is claiming exemption under section 501c4. I have not used this exact letter, but it is the letter I would write to handle the given circumstances.
Letter #18 – An adult community basketball team formed in 2022; however they did not apply to the IRS for recognition of tax-exempt status. In 2023, they learned that they were required to file a Form 990-EZ with the IRS. They did so, and shortly thereafter they received a penalty notice for failing to file Form 8976 within 60 days of formation. This letter relies primarily on “ignorance of the law” as a reason for not filing. This is not an exact copy of a letter for or by an actual organization. It is an example of an approach I would use to write a letter claiming ignorance. Your facts will vary. Customize accordingly.
Letter #19 – A Scouting organization was formed as a nonprofit corporation but failed to immediately consider which paragraph under Section 501(c) it would claim tax-exemption. It was realized when filling out its first Form 990 filing that it was required to indicate the type of organization it was. The board of directors determined it would hold itself out as a 501(c)(4) organization. This was quite a few months after it was incorporated and was past the deadline for filing Form 8976. They received a $5,000 late-filing penalty. Using this letter, we were successful in having the penalty abated although it took roughly 6 months.
Here are some unsolicited emails I've received from people who have purchased and used my Form 990 Penalty Abatement Manual or for whom I've written letters. These are all from real people. I know I should probably ask all my clients for testimonials, but I think it means more when I receive one without asking.
From a California CPA after purchasing my penalty manual:
"Your materials were so thorough, it reminded me of studying for the CPA [exam] with Becker!"
From a nonprofit organization on the West Coast for which I wrote a reasonable cause letter for penalty abatement:
"Hi David. We just received written notice from the IRS that [our organization's] 2015 Late Filing Abatement Process that you prepared and submitted for us was a success. The $3,740 Late Penalty has been dismissed and removed from our account. Thanks so much for your outstanding work. Let me know if you need a copy of the IRS notice for your file. Thanks Again, God Bless, D."
From a Nonprofit Treasurer for whom I wrote a reasonable cause statement for retroactive reinstatement of tax-exempt status:
"Hi David, just in.... a Christmas miracle! (Attached IRS Letter.)
Thank you so much for your help and encouragement through this whole ordeal. You had a difficult job helping me draft a letter asking the IRS to excuse 4 years of missed tax filings. In the end, the letter won the day, and the IRS graciously accepted and approved my request [for retroactive reinstatement]. Unbelievable. Thank you again! This is such a huge weight off of my shoulders, and a real lesson in life for me.
Sincerely and Merry Christmas." -- from J.K., a nonprofit Treasurer in California.
From a CPA who hired me to write an abatement request letter to the IRS:
"Dave, you did a great job putting that letter together. I have written them myself. I know it is more of an art form than a science, for sure. The all-important tone was excellent. You struck a good balance between the two extremes. I hope I don't need your services in the future, but if I do, I won't hesitate to contact you." --from D.H., a California CPA
From a CPA I helped:
"I used your services for an abatement letter on 990 late filing back in October. I just wanted to let you know that the penalty was 100% abated with a savings of $16,700. Thanks for your help with this."--from Matt, a CPA.
From an Enrolled Agent in Illinois:
"David McRee’s Form 990 Penalty Relief Manual for Do It Yourself Penalty Relief is well worth the money. I have used it successfully to achieve retroactive tax exempt status for a client in my practice. In particular the advise on writing the Reasonable Cause Letter is invaluable. Stop thinking about it and get the book today!" Ted Adams EA., Adams Tax Service, Granite City, IL 62040 618-791-8360.
From a California CPA:
"...I have 100% successfully used the Abatement Petition method 3 or 4 times, which served to abate more than $16,000 in proposed penalties against my nonprofit clients." --from Charles D., a California CPA.
From a CPA who purchased my materials:
"Your web site, materials and work on this topic is absolutely amazing and I am super impressed. It is far better than Thomson Reuters or any of the national resource services that I consulted. I found you through a Google search and I am very impressed with your work." --from Mike, a CPA
From a nonprofit client regarding a letter I wrote on the client's behalf requesting retroactive reinstatement of tax-exempt status:
"Hi David, I just finished reading the attachment, and what a brilliantly written letter! You laid the argument out perfectly and I understand now what you meant about establishing a timeline. This letter flows so much better [than the one our CPA wrote]. I can really see the time and effort that you put into writing this letter, and I feel that my money was well spent. Regardless of the outcome, I will know that my best effort was put forth. I thank you again for your advice and expertise and I am cautiously optimistic! ... " from T.S., Exec. Dir. of a health clinic.
Received from a West Virginia CPA:
"Dear David,
I was devastated when one of our nonprofit clients received a $30,000 late filing penalty. I did not know how to handle such penalties and did not know that they can be abated. With the help of your Form 990 Penalty Abatement e-book I was able to get the entire amount abated. This e-book is full of great and useful information for nonprofits. Due to the special circumstances of our case, our first abatement attempt was rejected by the IRS. We contacted you via email and with your help and guidance the second letter completely abated this huge $30,000 penalty. This book is for anybody who deals with IRS penalties as it has basic and detailed information that is necessary to be successful in removing penalties." ---from L.I., CPA, West Virginia.
From a professional advisor:
I purchased your publication titled “Form 990 Penalty Relief Manual” a few months ago, and with the help of your publication, we were able to get $46,600 in failure to file penalties waived! This entity was formed about 15 years ago and had never filed a 990. We filed the last three years, one on time and 2 late. This was the penalty on 2 years filed late. (The entity went over the $1mil revenue mark in the second late year, so the penalty max was higher.) Thanks for your guidance! ---from M.H., a professional advisor.
From a small nonprofit officer:
"Dear Mr. McRee,
When I nervously opened the IRS envelope today, I could not believe my eyes! In the amount owed box, this word appeared in capital letters: NONE!
We owe nothing! Thanks to you and your e-book, the IRS adjusted our penalty of $2156.95 to nothing!
Thank you for your clear, practical and accurate advice. I had previously written the IRS about the penalty.Their response was the penalty would stand. In researching what in the world to do in the face of their response and dreading the severe impact the loss of a large amount of money would have on our little non-profit charity, I came across your website and e-book. I wasn't too sure if a second letter to the IRS about the same penalty would do any good, but your encouragement gave me a little sliver of hope. I pieced together a letter based on your examples and verbiage and miracle of all miracles- it worked!
This was the best money I have spent in a long, long time and I highly recommend to others- do not hesitate; buy this book, follow the advice and I believe you will have a greater opportunity for a successful penalty abatement too.
Thank you again, Cindy."
From a nonprofit officer:
"The IRS dropped all $22,000 in fines! Thank you so much for writing this informative and well-written book, and thanks for all of your assistance with writing the penalty abatement request letter -- we could not have done it without you. You really know your stuff, and it's clear that you really care about helping non-profits. Thanks, David!" - Patrick, Austin TX
From a tax professional:
I purchased your book by downloading it. It is a great investment! I used it to draft a letter for my client who had received a penalty in the amount of $6,000 for not filing their 2007 990 on time. ...Well it worked. They received a waiver for the $6,000 penalty and they are thrilled. So this really helped them, and I am now the hero...Thank you so much for your invaluable help. Monica
From a nonprofit officer:
I am just following up with you on the outcome of the penalty abatement letter. We received a notice (CP210) abating all penalties! Thank you again for your guidance and assistance in reviewing my letter. Have a great day! Cindy
From a nonprofit treasurer:
Just wanted to let you know that you can add [our organization] to your list of satisfied customers who received abatement from the IRS. We just received two letters notifying us that both penalties have been waived. Can't tell you how much we appreciate your assistance with this. You were a huge life saver. From Mike K., Treasurer of a youth sports organization.
From a tax professional:
Thank you, thank you, thank you.
I received penalty abatements for both clients. Before reading your book, I was about to give up and just pay the penalties. The oversight that gave rise to the penalty was mine. There was no one else to blame. I couldn't even blame the stress of the tax season. Your book changed my outlook on the situation and provided me with everything I needed to write 2 effective penalty removal requests.
One last thank you for the personal advise and email response to my questions. Believe it or not, that alone was worth the price of the book. From Al.
From a nonprofit officer:
Just wanted to let you know I received two letters from the IRS today abating over $10,000 in penalties. Thanks for your help, the information I received to write the letter requesting the abatement was extremely valuable. Thanks again. From Mark in NY.
From a nonprofit officer:
" Mr. McRee, thanks to you and your treatise on Form 990 penalty abatement, I've been successful in getting $37,400 in penalties abated! I seem short on words, but it's a tremendous feeling opening up the letter from the IRS, searching for the Amount You Owe box and seeing NONE. Let's see $37,400 divided by the book's price is about a 1,000 time return on the cost of your book. It's a great service you've provided for charities like ours. Have a great day. I know I will." from John J.
From a Certified Public Accountant:
"Before I purchased your "IRS Form 990 Penalty Abatement" I wrote what I believed was a reasonable letter to have the penalty abated. It was rejected. I incorporated some of the language you spell out and it was abated. My client is very happy with the results and I am both very happy and impressed. This is my most cost effective purchase EVER! Thanks, Donald V., CPA NYC
From a nonprofit advisor:
First of all I want to thank you. I just talked to the IRS today and they have abated penalties for 2005 and 2006!!!!!!!!!! 2007 is under review and should also be abated. Your book was wonderful and really helped me with the correct language. It was the best $$$ our organization has ever spent.
Thank you very much for your advice. You have been very helpful to our organization. You really do provide a useful service to people who need it very much. I hope you understand what that means to organizations like us. From Steve, a professional advisor involved with a tax-exempt organization.
I guarantee that by using my materials, you will be able to write a much more effective reasonable cause letter to the IRS than you otherwise would have, and that it will take much of the time, frustration, and guesswork out of the process. If, after using my materials and writing your letter, you do not believe it helped you significantly and if you are not satisfied with your purchase, I will happily refund your money at your request.
What I DON'T GUARANTEE: I do not guarantee that the IRS will abate your penalties. I have no control of the IRS and I don't know the facts of your situation. Under no circumstances am I responsible for any penalties or interest you may have to pay.
David McRee, CPA has been helping nonprofit organizations apply for tax-exempt status, meet their government filing obligations, and get out of trouble with the IRS for over 27 years. As economic conditions have shifted in recent years, he has seen a tremendous increase in demand for training for those individuals wanting to "do-it-themselves" rather than hire a professional. He is committed to providing accurate, easy-to-understand instruction to nonprofit officers, directors, volunteers, CPA's and to other professional advisors serving nonprofits.
Florida CPA License #AC0031324.