Not-For-Profits Are Getting Assessed Due to Current IRS Glitches: Do You Need A Penalty Abatement?

Not-For-Profits Are Getting Assessed Due to Current IRS Glitches: Do You Need A Penalty Abatement?

As discussed in a prior newsletter article, the IRS suspended its Modernized efile (MeF) system from January 1, 2012 through February 29, 2012 for electronic filing. It then issued guidance in Notice 2012-4 related to filing extensions that applied to affected organizations. Despite the filing extension outlined in the Notice, some organizations are mistakenly receiving penalty notices from the IRS for late filing.

About the Extension

According to IRS Notice 2012-4, "Certain Filing Changes for Tax-Exempt Organizations," the extension applied to affected organizations filing Forms 990, 990-EZ, 990-PF or 1120-POL whose original due date (or first three-month extended due date) for qualifying returns occurred during the suspension period (January 1, 2012 through February 29, 2012). The extension applied to all such organizations with affected return filings due during this period, whether or not they were required to file electronically.

Affected organizations required to file electronically were able to do so between March 1, 2012 and March 30, 2012. Affected organizations not required to file electronically were able to do the same or could have filed on paper before March 30, 2012.

In the case of an organization with a second extended due date that occurred during the suspension period (January 1, 2012 through February 29, 2012), the organization would have reasonable cause for late filing and would not be subject to the late filing penalties if it filed by March 30, 2012. The organization should have attached a "Reasonable Cause Statement" to its return, as referenced in Appendix A of Notice 2012-4, in order to avoid receiving a system-generated penalty notice for late filing.

Requesting Penalty Abatement

It appears that the IRS is generating notices if the applicable affected returns noted above and due during the suspension period (January 1, 2012 through February 29, 2012) were not filed by the due dates of January 15, 2012 or February 15, 2012, but were instead filed during the period of March 1 to March 30, 2012, as instructed by notice 2012-4.

If an organization has received Notice CP141L in error, it may take the following steps to request penalty abatement:

1) Organizations that were normally required to file electronically and chose to file on paper pursuant to Notice 2012-4 and received a system-generated form asking for an explanation of why they did not file electronically, it is sufficient to respond "Paper Filing Pursuant to Notice 2012-4."

2) Other affected organizations erroneously receiving a system-generated penalty notice for late filing from the IRS should call 877-829-5500 to request that the IRS remove the penalty in accordance with Notice 2012-4.

For more information, please contact your local CBIZ office.


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Not-For-Profits Are Getting Assessed Due to Current IRS Glitches: Do You Need A Penalty Abatement?The IRS suspended its Modernized efile (MeF) system from January 1, 2012 through February 29, 2012 for electronic filing. ...2012-04-26T18:12:00-05:00The IRS suspended its Modernized efile (MeF) system from January 1, 2012 through February 29, 2012 for electronic filing.