The IRS doesn't wait long to penalize a late Form 990. The penalty starts the day after the due date (or the extended due date) and grows every day until the return is filed. For a small organization the cap is a percentage of its own receipts; for a larger one it can reach tens of thousands of dollars.
The penalty amounts
The penalty under Internal Revenue Code section 6652(c)(1)(A) applies to Forms 990, 990-EZ and 990-PF. The amounts are adjusted for inflation and depend on the year in which the return was required to be filed, not the tax year it covers. Gross receipts here means everything the organization received during the year from all sources, before subtracting costs.
| Return required to be filed in | Gross receipts | Daily penalty | Maximum per return |
|---|---|---|---|
| 2026 | $1,309,500 or less | $25 | Lesser of $13,000 or 5% of gross receipts |
| 2026 | Over $1,309,500 | $130 | $65,000 |
| 2025 | $1,274,000 or less | $25 | Lesser of $12,500 or 5% of gross receipts |
| 2025 | Over $1,274,000 | $125 | $63,500 |
| 2027 | $1,339,500 or less | $25 | Lesser of $13,000 or 5% of gross receipts |
| 2027 | Over $1,339,500 | $130 | $66,500 |
A calendar-year 2025 return, due May 15, 2026 (or November 16, 2026 with an extension), uses the 2026 row. A calendar-year 2026 return, due in 2027, uses the 2027 row. See Form 990 due dates to pin down your own date.
How the penalty is figured
- Find the due date, including any valid Form 8868 extension.
- Count the days from the day after that date to the day an acceptable return is filed.
- Pick the daily rate from the row for the year the return was required to be filed, based on that year's gross receipts.
- Multiply, then apply the cap. For smaller organizations the cap is the lesser of the dollar maximum or 5% of gross receipts.
Three organizations, all filing a 2025 return due May 15, 2026.
| Organization | Gross receipts | Days late | Days × rate | Cap | Penalty |
|---|---|---|---|---|---|
| Community arts group | $180,000 | 60 | 60 × $25 = $1,500 | Lesser of $13,000 or $9,000 = $9,000 | $1,500 |
| After-school tutoring program | $600,000 | 200 | 200 × $25 = $5,000 | Lesser of $13,000 or $30,000 = $13,000 | $5,000 |
| Regional housing nonprofit | $2,400,000 | 90 | 90 × $130 = $11,700 | $65,000 | $11,700 |
The arts group would reach its $9,000 cap after 360 days. The tutoring program's cap of $13,000 would be reached after 520 days, and the housing nonprofit's $65,000 cap after 500 days.
Incomplete returns are penalized too
The same penalty applies when a return is filed on time but is incomplete (required lines left blank, required schedules missing) or contains incorrect information. The Form 990 instructions give an example: reporting contributions net of related fundraising expenses can trigger the penalty. Using a paid preparer doesn't relieve the organization of its responsibility. That is why every applicable question should be answered, not just the financial pages; see Form 990 schedules for what Part IV triggers.
A paper return when e-filing is required
If your organization is required to e-file and mails a paper return instead, the IRS treats it as not filed, and the penalty keeps running. See e-filing requirements.
The managers' penalty
If the IRS sends a written demand to file (or to complete) a return by a set date and the organization doesn't comply, a separate penalty under section 6652(c)(1)(B) applies to the person or persons responsible: $10 a day, up to $6,500 for all persons combined on any one return required to be filed in 2026 or 2027 ($6,000 for 2025). This is a personal liability, which is one reason board members care about the 990.
The 990-N
There is no monetary penalty for filing the Form 990-N late. But the 990-N counts toward the three-year rule: miss it, or any required annual return, three years in a row and the organization's exemption is automatically revoked.
Public disclosure penalties
Failing to give the public a copy of the annual return when properly requested carries its own penalty: $25 a day, up to $13,000 per return (2026 amounts), plus $5,000 for willful failure. See public disclosure.
Getting a penalty removed
The IRS will not impose the penalty if the organization shows the failure was due to reasonable cause: that it used ordinary business care and prudence and still couldn't file on time. If the return itself is late, the Form 990 instructions ask you to include a reasonable-cause explanation when you file it. If you receive a penalty notice, respond by the date on the notice with a signed statement that:
- explains what happened, with dates;
- shows why it prevented timely filing;
- describes the steps you took to file as soon as you could;
- explains what has changed so it won't happen again.
Attach the return if it hasn't been filed, and any documents that support the story. Late returns and penalty relief walks through the process.
Don't ignore a penalty notice while you gather facts. Respond by the date on the notice, even if only to explain that a fuller statement will follow, and keep proof of when you sent it.
Common mistakes
- Using the wrong year's amounts. The year the return was due controls.
- Thinking a late 8868 helps. An extension filed after the original due date does nothing.
- Filing a skeleton return to "stop the clock." An incomplete return can be penalized as if it weren't filed.
- Waiting for the IRS to write. Penalties run daily from the deadline, letter or not.
Frequently asked questions
Our return was late but we had a good reason. Can the penalty be removed?
Yes, if the failure was due to reasonable cause. Respond to the penalty notice with a written explanation of what happened, why it prevented timely filing, and what you did to file as soon as possible. Serious illness or death of the person responsible, a natural disaster or the loss of records are typical examples; simply forgetting, or relying on someone else to file, usually isn't enough.
Does filing an extension stop penalties?
If Form 8868 was filed on time, no penalty runs until the extended due date. An extension filed late doesn't help.
Which year's amounts apply to us?
The amounts are adjusted for inflation each year and depend on the calendar year the return was required to be filed, not the tax year it covers. A calendar-2025 return due in 2026 uses the 2026 amounts.
Is there a penalty if we owe tax, too?
Yes, separately. If a return with tax due, such as Form 990-T or the excise tax on a private foundation's investment income, is filed or paid late, interest and late-payment penalties apply to the tax. An extension to file doesn't extend the time to pay.
Can the penalty be more than our organization's income?
For organizations with gross receipts of $1,309,500 or less (2026 amounts), no: the cap is the lesser of $13,000 or 5% of gross receipts. Larger organizations face a flat cap of $65,000 per return.
Sources
- IRS: 2025 Instructions for Form 990, section H and Appendix D. irs.gov
- IRS: Rev. Proc. 2024-40, section 3.54 (returns required to be filed in 2026). irs.gov
- IRS: Rev. Proc. 2023-34, section 3.54 (returns required to be filed in 2025). irs.gov
- IRS: Rev. Proc. 2025-32, section 4.53 (returns required to be filed in 2027). irs.gov
- IRS: Annual exempt organization return, due date. irs.gov
- IRS: Annual electronic filing requirement for small exempt organizations (Form 990-N). irs.gov
IRS figures change; inflation-adjusted amounts are updated each year. We review this page when the IRS publishes new instructions.
990IRS.com is a private company, not the IRS. This page is general information, not legal or tax advice for your organization. Example organizations and figures are hypothetical.
