IRC Section 6652: Form 990, Form 5500, and Penalty Relief

IRC Section 6652 penalties apply when an organization, plan administrator, or individual fails to file a required information return, fails to include required information, or fails to meet a related disclosure obligation. The penalties are separate from the Section 6651 penalties for not filing a tax return or paying tax owed, and they run on a daily basis until the filing is corrected or the statutory cap is reached. The amount depends on which return is missing, the size of the filer, and whether the IRS has issued a written demand.¹

Form 990 Penalties for Tax-Exempt Organizations

The most common penalty under Section 6652(c)(1)(A) hits tax-exempt organizations that file Form 990, Form 990-EZ, or Form 990-PF late, or that file with missing or incorrect information. The penalty accrues from the return’s due date (including any extension) until the organization files a complete, correct return or the cap is reached.

For returns required to be filed in 2026, the rates depend on gross receipts:

Smaller organizations with gross receipts of $1,309,500 or less pay $25 per day, capped at the lesser of $13,000 or 5 percent of gross receipts per return.
Larger organizations above that threshold pay $130 per day, capped at $65,000 per return.

The statutory base amounts written into the code are $20 per day ($10,000 cap) for smaller organizations and $100 per day ($50,000 cap) for larger ones. Those figures are indexed for inflation each calendar year, which is why the 2026 amounts above sit higher than the numbers in the statute itself.²

Personal Penalty on Managers After an IRS Demand

If an organization already owes the organizational penalty, the IRS can send a written demand specifying a deadline to file. Ignoring that demand triggers Section 6652(c)(1)(B), a personal penalty on any officer, director, trustee, or employee who had authority over the filing and knowingly failed to comply.

The rate is $10 per day for each day the failure continues after the deadline in the demand. The aggregate across all responsible persons for a single return cannot exceed $5,000 at the statutory base rate (roughly $6,000 after recent inflation adjustments). It sits on top of the organizational penalty, and the IRS must show the person knowingly failed to comply with the demand before assessing it.¹

Public Inspection Penalties

Tax-exempt organizations also have to make annual returns and exemption applications available for public inspection under Section 6104(d). Section 6652(c)(1)(C) imposes $20 per day, up to $10,000 per return, when the organization fails to meet the annual-return disclosure requirement. Section 6652(c)(1)(D) applies the same $20 per day rate to failures involving exemption applications and notice-of-status materials, but with no cap.¹

Automatic Revocation After Three Missed Years

The financial penalty is not the worst outcome. Under Section 6033(j), an organization that fails to file required Form 990-series returns or notices for three consecutive years automatically loses its tax-exempt status. Revocation happens by operation of law and takes effect on the original filing due date of the third missed return. Income received after that date may be taxable, and donors can no longer claim deductions for contributions.³

Reinstatement requires filing a new application (Form 1023, 1023-EZ, 1024, or 1024-A) with the applicable user fee. Two paths lead to retroactive reinstatement:

Streamlined retroactive reinstatement is available to organizations that were eligible to file Form 990-EZ or 990-N during the three missed years and have not been previously revoked. The application must be submitted within 15 months of the later of the revocation letter date or the date the organization appeared on the IRS Revocation List. If reinstated, the IRS waives Section 6652(c) penalties for the three triggering years, provided the missing returns are filed.
Standard retroactive reinstatement applies to organizations required to file Form 990 or 990-PF, or that have been previously revoked. The same 15-month deadline applies. The organization must submit a statement establishing reasonable cause for failing to file during at least one of the three years, along with all missing returns. Penalties for the triggering years are also waived if reinstatement is granted.

Applications submitted after the 15-month window can still be granted, but reinstatement is effective only from the postmark date of the new application, leaving a gap during which the organization was not exempt.⁴

Form 5500 Penalties for Employee Benefit Plans

Section 6652(e) covers failures to file returns required under Section 6058 (deferred compensation plans) and Section 6047 (trust and annuity plans), which is the Form 5500 series. The SECURE Act of 2019 raised the penalty from $25 per day to $250 per day and lifted the cap from $15,000 to $150,000 per return.¹

At $250 per day, two months of delay produces roughly $15,000 in penalty, and a full year hits the $150,000 cap. The penalty runs from the due date (including extensions) and is assessed against the plan administrator.⁵

DOL Penalties Stack on Top

The Department of Labor has its own enforcement authority for late Form 5500 filings under ERISA Section 502(c)(2). The DOL civil penalty is adjusted annually for inflation and can exceed $250 per day. The two penalties stack; paying one does not satisfy the other.

The DFVC Program

Plan administrators who have not yet been contacted by the DOL can use the Delinquent Filer Voluntary Compliance Program to resolve late filings at reduced rates. The DFVC penalty is $10 per day with these caps:⁶

Small plans: $750 per late filing, with a $1,500 per-plan cap across all late filings. For small plans sponsored by a 501(c)(3), the per-plan cap drops to $750.
Large plans: $2,000 per late filing, with a $4,000 per-plan cap.

The DFVC Program covers only ERISA Title I plans. Form 5500-EZ filers and one-participant plans are not eligible. And DFVC participation does not resolve IRS penalties under Section 6652(e); the IRS runs a separate penalty relief program for Form 5500-EZ late filers.⁷

Other Filings Section 6652 Covers

The statute also reaches a set of narrower reporting duties, each with its own rate.

Pension Plan Registration and Change-of-Status Notices

Section 6652(d) penalizes failures to file the annual registration statement required under Section 6057(a) at $10 per participant per day, capped at $50,000 per plan year. A separate penalty covers failures to notify the IRS of a change in plan status under Section 6057(b): $10 per day, up to $10,000 per notification.

Foreign-Owned U.S. Real Property Interests

Section 6652(f) penalizes failures to file returns required under Section 6039C, which applies to certain foreign persons holding interests in U.S. real property. The rate is $25 per day, capped at the lesser of $25,000 or 5 percent of the aggregate fair market value of the interests held during the year.

QSEHRA Notices

Section 6652(o) penalizes employers that fail to provide the written notice required for a Qualified Small Employer Health Reimbursement Arrangement. The penalty is $50 per employee for each failure, capped at $2,500 per calendar year. It does not apply where the employer shows the failure was due to reasonable cause rather than willful neglect.

Employee Tip Reporting

Section 6652(b) reaches employees who fail to report tips to their employer as required by Section 6053(a). The penalty is 50 percent of the employee’s share of FICA taxes on the unreported tips. It falls on the individual and does not apply if the employee shows reasonable cause.¹

Requesting Penalty Relief

A penalty notice is not the final word. The IRS will waive a Section 6652 penalty when the filer shows reasonable cause, meaning ordinary business care and prudence was exercised but the deadline still could not be met. The IRS evaluates reasonable cause case by case, weighing all the surrounding facts.⁸

Facts that commonly support reasonable cause include the death or serious illness of the person responsible for filing, a natural disaster that destroyed records or the office, and documented reliance on incorrect advice from a qualified tax professional or an IRS employee. Reliance on a professional requires proof that you gave them all relevant information and that they specifically advised the return was not required or was properly handled. General ignorance of the filing requirement, or lack of funds, does not meet the standard.

How to Submit an Abatement Request

The formal vehicle is Form 843, Claim for Refund and Request for Abatement, which includes a checkbox for penalty abatement based on reasonable cause. Attach a written statement explaining the circumstances and supporting documents such as medical records, insurance claims, or a signed statement from the tax professional whose advice you relied on.⁹

For exempt organizations, the IRS also accepts a reasonable cause statement attached directly to a late-filed Form 990. That statement must include a declaration signed under penalties of perjury by an appropriate person within the organization.⁸

Appealing a Denied Request

If the IRS denies the request, you can seek a conference with the IRS Independent Office of Appeals. You must have already submitted a written request for penalty removal that was formally denied. The denial letter explains your appeal rights and the applicable deadline; generally you have 30 days from the date of the letter to file a written protest. Keep filing any outstanding returns while the request or appeal is pending, because abatement removes the penalty but does not excuse the underlying filing obligation.¹⁰

1
Office of the Law Revision Counsel. 26 USC 6652 Failure to File Certain Information Returns, Registration Statements, Etc.
2
Internal Revenue Service. Annual Exempt Organization Return Penalties for Failure to File
3
Internal Revenue Service. Automatic Revocation of Exemption
4
Internal Revenue Service. Automatic Revocation – How to Have Your Tax-Exempt Status Reinstated
5
Internal Revenue Service. Relief From Internal Revenue Code Late Filer Penalties for Certain Employee Benefit Plans
6
U.S. Department of Labor. Delinquent Filer Voluntary Compliance (DFVC) Program
7
Internal Revenue Service. Penalty Relief Program for Form 5500-EZ Late Filers
8
Internal Revenue Service. Exempt Organizations Annual Reporting Requirements – Filing Procedures: Abatement of Late Filing Penalties
9
Internal Revenue Service. Instructions for Form 843
10
Internal Revenue Service. Penalty Appeal