"How to Remove Form 990 Late-Filing Penalties for NONPROFIT
Write an Effective Reasonable Cause Letter to the
Penalties for Form 990 and 990-EZ start at $20 per day and can be as high as $100
per day. Have you received that dreaded letter from the IRS telling you to pay thousands or tens of thousands
of dollars in penalties for filing your organization's Form 990 late? Pretty scary isn't it? You work hard to
do good and help people and this is the reward you get? Don't lose sleep over it! You can be
successful in having the penalties waived by following the instructions in my Form 990 Penalty
Relief Manual available as a printed desk reference or e-book.
Click here for pricing or to purchase right
Click here for pricing or to purchase right
Be cautious about advice that tells you that all you have to do is tell the IRS what
a great organization you have and how paying penalties will cause you to reduce charitable programs. That does
nothing to establish "reasonable cause." Simply dropping buzzwords like "no willful neglect," or "administrative
oversight" often do not persuade the IRS that you deserve abatement. While these cliches might work in the most
simple cases, placing your reliance on them can lead to dissapointment.
The IRS is serious about collecting penalties. I take penalties seriously and I
provide the materials you need to convince the IRS you deserve abatement. I've written or reviewed hundreds of Form
990 late-filing penalty abatement request letters with nearly 100% success.
Don't take the approach that "Well, it's worth a shot!" or "What have we got to lose
by sending a letter?" Asking for penalty abatement is not gambling. It's not a poker game or a crap shoot.
Penalty abatement for reasonable cause is a provision in the tax code. Send a letter with a
properly structured argument and your chances for abatement are very high if you have reasonable cause.
If you've already written a letter requesting abatement and the IRS has denied your
request, the information in this e-book can help you figure out what you did wrong, possibly giving you a
second chance at having your penalties abated if you act quickly.
In addition to my proven penalty manual, I'm also offering example letters and a template you can
use to structure your letter to the IRS.
Example Letters for Form 990 Penalty Abatement
My materials include the full text of seven letters that were
successful in having IRS penalties abated for reasonable cause. See exactly what a successful letter looks
like. You might even find some parts of the letters that will apply directly to your situation.
Abatement Letter Template in MS Word
After many requests, I'm offering a reasonable cause letter template you can
use to structure your letter. This template is in Microsoft Word format, so you can save it to your
computer, open it, and get started on your letter (after you've read the penalty manual, of
One of the successful letters was written by a CPA (using the guidance from my e-book) who missed a filing
deadline for one of his nonprofit clients AND the client had a prior history of late filing! $29,000 in penalties
abated. He was kind enough to let me share his letter in my materials. It's practically a case study all by
Do NOT Send Money to the IRS!
Before you send that check to the IRS, and before you pick up the phone and call them, you need to read my
penalty relief manual on how to get the penalties removed. In this 75 page e-book I show you,
step-by-step, how to write a successful "reasonable cause" letter to send to the IRS. If you know what to say, and
how to use the IRS guidelines on what constitutes "reasonable cause" for filing late, there
is a very high likelihood that the IRS will remove the penalties. They do it all the time for those who
know what to say and how to ask for relief.
My Form 990 Penalty Relief Manual
After helping many nonprofits get out of paying ridiculous penalties assessed by the IRS, and after seeing many
nonprofits try and fail to have penalties removed on their own, I decided to write this special Penalty
Relief Manual to teach you how to do it. You can save
hundreds of dollars in CPA fees by doing it yourself. And if you are a CPA, attorney, or other
advisor to nonprofits and find yourself in a position of having to write such a letter (even if the late filing is
your fault), this ebook is for you, so you can serve your clients better, and keep them happy!
Click here for pricing or to purchase right
What's in the Penalty Relief Manual?
What if your organization
believes its tax-exempt status may have been revoked because it failed to file for three consecutive years?
If the IRS has your correct address, you will receive a notice informing you of the revocation. The IRS says
that an organization can have its tax-exempt status reinstated retroactively to the date of revocation if it
can show that there was "reasonable cause" for the failures to file. Is this the same "reasonable cause"
definition that I use in my book? Will the method I show in this e-book for penalty relief also work for
retroactive reinstatement of exempt status? Maybe, but probably
The IRS has released guidance
with Notice 2011-44 on what it will accept as reasonable cause for retroactive reinstatment. It is the same
concept that I use in this e-book, and I have expanded the e-book to specifically deal with making a
request for retroactive reinstatement of tax-exempt status. However, the IRS is approving very few requests
for retroactive reinstatement. Your best chance of success is if you have written documentation from
the IRS stating (in error) that the organization was not required to file Form 990. Possibly, having written
documentation showing that the organization paid a CPA firm to determine that there was no requirement to
file might be accepted as reasonable cause.
This isn't a book of "tricks" known only to me, or special magic secret tactics or any of that hype. It is simply
an organized and effective approach using the provisions of the Internal Revenue Code and other written
guidance from the IRS. It works.
My ebook will help you write a strong argument that will make it easy for the IRS to see how your
circumstances qualify for penalty relief under the law (or retroactive reinstatement, if applicable). One of the
biggest problems I see in penalty abatement letters is that the organization fills the letter with information
about what a wonderful organization it is and how many people it helps every year. The IRS does not care. Such a
letter has a low chance of success.
Once I had a call from a private, nonprofit school in another state. They had received a $20,000
penalty from the IRS for late filing. The school president immediately responded to the IRS saying that the CPA
they had hired to do the annual audit was supposed to have filed the 990, but didn't. The IRS, as usual, denied
their request for penalty relief by saying that it was the organization's responsiblity to file, not the CPA's. In
desperation they searched the internet and found me. I wrote a reasonable cause letter on their behalf, using the
language and approach in this book, and the penalties were abated. The entire $20,000 penalty was
removed. Like I said, it works.
I've been writing penalty abatement letters for my nonprofit clients with great success for over
12 years. It helps to know how to speak the specialized IRS language. With this special manual, I teach you the
approach I've learned over the last decade.
It's an INCREDIBLE RELIEF to get that letter from the
IRS saying you now owe ZERO!
Just read a few of the unsolicited emails below that I've received from people who have used my
Form 990 Penalty Manual or for whom I've written letters (yes, they are real):
Received August 30, 2012 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
Received August 7, 2012 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 argumeent 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 December 19, 2011
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 ebook 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.
Received March 8, 2011
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
Received November 16, 2010
"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
Thank you again, Cindy."
Received October 29, 2010
"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
Received August 2, 2010
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
Received June 28, 2010
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
Received April 16, 2010
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.
Received July 16, 2009
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.
Received April 2, 2009
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.
Received August 25, 2008:
" 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 $$$ is about a 1,000 time return on the cost of your book. It's a great service you've
provided for charities like ours. Have a great day. I know I will." from John J.
March 12, 2008:
"Your site was a life saver! I
worked for cpa firms before and have written these letters before for corp/individuals, but your info was so much
more comprehensive. I have done so many 990s but never had this penalty assessed before as they were always on
time, and was shocked at the amount. Wow, you learn something new every day…"
from the Treasurer of a Parent Teacher Association
October 29, 2008:
purchased your "IRS Form 990 Penalty Abatement" I wrote what I believed was a reasonable letter to have the penalty
abated. It was rejected. I incorporated some of the language you spell out and it was abated. My client is very
happy with the results and I am both very happy and impressed. This is my most cost effective purchase EVER! Thanks, Donald V., CPA
Received February 20,
First of all I want to thank
you. I just talked to the IRS today and they have abated penalties for 2005 and 2006!!!!!!!!!! 2007 is under review
and should also be abated. Your book was wonderful and really helped me with the correct language. It was
the best $$$ our organization has ever
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
Click here for pricing or to purchase right
Having a problem? Contact David McRee, CPA
Request a phone consultation with David