Internal Revenue Code Section 6652 penalties apply when an organization or individual fails to file a required information return, or files one that is incomplete or incorrect. The amount depends on which return was missed, how large the filer is, and how long the failure continues. Most penalties accrue on a per-day basis up to a statutory cap, and the IRS can abate them if you show reasonable cause.
Form 990 Penalties for Tax-Exempt Organizations
The most common Section 6652 penalty hits tax-exempt organizations that file Form 990, Form 990-EZ, or Form 990-PF late or with missing information. The penalty under Section 6652(c)(1)(A) starts on the return’s due date, including any extension, and runs until the organization files a complete, correct return or hits the cap.1Office of the Law Revision Counsel. 26 USC 6652 Failure to File Certain Information Returns, Registration Statements, Etc.
The daily rate and cap turn on the organization’s gross receipts. For returns required to be filed in 2026:
- Smaller organizations with gross receipts of $1,309,500 or less pay $25 per day, with a maximum per return of the lesser of $13,000 or 5 percent of gross receipts for the year.
- Larger organizations with gross receipts above $1,309,500 pay $130 per day, with a maximum of $65,000 per return.
The statute itself sets base amounts of $20 per day with a $10,000 cap for smaller filers and $100 per day with a $50,000 cap for larger filers. Those figures are adjusted for inflation each year, so the actual numbers shift slightly from one filing season to the next.2Internal Revenue Service. Annual Exempt Organization Return Penalties for Failure to File
Personal Penalty on Officers and Directors
If an organization has already been assessed the penalty above, the IRS can send a written demand setting a date by which the return must be filed. Ignoring that demand triggers a second penalty under Section 6652(c)(1)(B), this one against the individual officer, director, trustee, or employee responsible for the failure.1Office of the Law Revision Counsel. 26 USC 6652 Failure to File Certain Information Returns, Registration Statements, Etc.
The individual penalty runs $10 per day for each day the failure continues past the demand date. The total across all responsible persons for a single return is capped at $5,000 under the statute, adjusted to roughly $6,000 for recent filing years. The IRS must show the person knowingly failed to comply with the written demand before imposing the penalty, and the amount is assessed personally, on top of what the organization owes.
Automatic Loss of Exempt Status After Three Years
A separate consequence sits alongside the Section 6652 penalties and often matters more. 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 by operation of law. Revocation takes effect on the original due date of the third missed return.3Internal Revenue Service. Automatic Revocation of Exemption
Once revoked, the organization’s income may be taxable and donors can no longer deduct contributions. Reinstatement requires a new exemption application (Form 1023, 1023-EZ, 1024, or 1024-A) and the applicable user fee. Two main paths exist:
- Streamlined retroactive reinstatement is open 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 filed 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 the Section 6652(c) penalties for the three years that caused revocation, provided the missing returns are filed.
- Standard retroactive reinstatement applies to organizations that were required to file Form 990 or 990-PF or that have been previously revoked. The same 15-month deadline controls. The organization must submit a reasonable-cause statement for failing to file during at least one of the three years and file all missing returns. The IRS again waives 6652(c) penalties for the three triggering years if reinstatement is granted.
An organization that misses the 15-month window can still apply, but reinstatement will be effective only from the postmark date of the new application, leaving a gap during which the organization was not tax-exempt.4Internal Revenue Service. Automatic Revocation – How to Have Your Tax-Exempt Status Reinstated
Form 5500 Penalties for Employee Benefit Plans
Plan administrators who miss the annual Form 5500 face a far steeper penalty. Section 6652(e) covers failures to file returns required under Section 6058 (deferred compensation plans) and Section 6047 (trust and annuity plan information). The SECURE Act of 2019 raised the penalty from $25 to $250 per day and lifted the cap from $15,000 to $150,000 per return.1Office of the Law Revision Counsel. 26 USC 6652 Failure to File Certain Information Returns, Registration Statements, Etc.
At $250 per day, a two-month delay produces roughly $15,000 in penalties, and a full year reaches the $150,000 cap. The penalty accrues from the return’s due date (including extensions) and applies to the designated plan administrator. If no administrator is formally designated, the plan sponsor is treated as the administrator for penalty purposes.5Internal Revenue Service. Relief From Internal Revenue Code Late Filer Penalties for Certain Employee Benefit Plans
Department of Labor Penalties Stack on Top
The IRS penalty is only half the picture. The Department of Labor has its own enforcement mechanism under ERISA Section 502(c)(2), with a civil penalty that is adjusted annually for inflation and can run over $250 per day. The two penalties stack, so paying one does not satisfy the other.
DOL Delinquent Filer Voluntary Compliance Program
Plan administrators who have not yet been contacted by the DOL about a missing filing can use the Delinquent Filer Voluntary Compliance (DFVC) Program to resolve late Form 5500 filings at reduced amounts. The DFVC penalty is $10 per day with the following caps:6U.S. Department of Labor. Delinquent Filer Voluntary Compliance (DFVC) Program
- 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) organization, the per-plan cap drops to $750.
- Large plans: $2,000 per late filing, with a $4,000 per-plan cap.
The DFVC Program is available only to ERISA Title I plans. Form 5500-EZ filers and one-participant plans are not eligible. Using DFVC does not resolve the IRS penalty under Section 6652(e); the IRS runs a separate penalty relief program for Form 5500-EZ late filers.7Internal Revenue Service. Penalty Relief Program for Form 5500-EZ Late Filers
Other Reporting Failures Covered by Section 6652
Section 6652 reaches a range of narrower reporting obligations, each with its own penalty structure.
Section 6652(d) covers pension plan registration under Section 6057(a). The penalty is $10 per participant per day, capped at $50,000 per plan year. A separate penalty for failing to notify the IRS of a change in plan status under Section 6057(b) runs $10 per day, up to $10,000 per notification.
Section 6652(f) covers failures by certain foreign persons to file returns under Section 6039C reporting interests in U.S. real property. The penalty is $25 per day, capped at the lesser of $25,000 or 5 percent of the aggregate fair market value of the U.S. real property interests owned during the year.
Section 6652(o) applies to employers who 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, and does not apply if the failure was due to reasonable cause rather than willful neglect.
Section 6652(b) applies to employees who fail to report tips to their employer as required by Section 6053(a). The penalty equals 50 percent of the employee’s share of FICA taxes on the unreported tips. It falls on the individual employee and does not apply if the employee shows reasonable cause.1Office of the Law Revision Counsel. 26 USC 6652 Failure to File Certain Information Returns, Registration Statements, Etc.
Requesting Penalty Relief
A Section 6652 penalty notice is not the final word. The IRS can waive the penalty if the organization or individual shows reasonable cause for the failure. The standard requires demonstrating that you exercised ordinary business care and prudence but still could not meet the filing deadline. The IRS evaluates reasonable cause case by case, looking at all surrounding facts and circumstances.8Internal Revenue Service. Exempt Organizations Annual Reporting Requirements – Filing Procedures: Abatement of Late Filing Penalties
Common grounds that support reasonable cause include the death or serious illness of the person responsible for filing, a natural disaster that destroyed records, 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 the relevant information and that the professional specifically advised the return was not required or was properly handled. General ignorance of the filing requirement and lack of funds do 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 along with supporting documentation such as medical records, insurance claims, or a signed statement from the tax professional whose advice you relied on.9Internal Revenue Service. Instructions for Form 843
For exempt organizations, the IRS also accepts reasonable cause statements attached directly to a late-filed Form 990. The statement must include a declaration signed under penalties of perjury by an appropriate person within the organization.
Appealing a Denial
If the IRS denies the abatement request, you can request a conference with the IRS Independent Office of Appeals. You must have already submitted a written request for penalty removal that the IRS formally denied. The denial letter explains your appeal rights and the deadlines that apply; generally, you have 30 days from the date of the denial letter to file a written protest.10Internal Revenue Service. Penalty Appeal
Keep meeting all outstanding filing obligations while the request or appeal is pending. A successful abatement eliminates the penalty but does not excuse the underlying duty to file the correct return.