Failure to timely file the information return, absent reasonable cause, can
give rise to a penalty under § 6652 of the Code. Generally, the reasonable
cause exception to the penalty will be determined on a case-by-case basis
taking into account all relevant facts and circumstances. The regulations
provide that an affirmative showing of reasonable cause must be made in the
form of a written statement, containing a declaration by the appropriate
person that the statement is made under the penalties of perjury, setting
forth all the facts alleged as reasonable cause. The request for abatement
may be made by using Form 4571, which may be obtained by calling
1-800-TAX-FORM (1-800-829-3676), and should include supporting
documentation.
When requesting reasonable cause, your letter should address the following items:
- The reason the penalty was charged. The daily delinquency penalty may be charged
for either a late filed return, an incomplete return or both.
- Show how the event prevented the organization prevented the organization from
requesting an extension of time to file their return.
- Explain how the situation prevented the organization from complying with the law.
- Show the organization was not neglectful or careless, but exercised ordinary business
care and prudence.
- Explain what steps have been taken to prevent the same situation from occurring in the future.
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