The Section 6652(c) Penalty. 

Section 6033(a)(1) of the Internal Revenue Code (the “Code”) generally requires “every organization exempt from taxation under section 501(a) . . . [to] file an annual return.”  For tax-exempt organizations, the annual return is IRS Form 990, Return of Organization Exempt From Income Tax, Form 990-EZ, Short Form Return of Organization Exempt from Federal Income Tax, or IRS Form 990-N, Annual Electronic Filing Requirement for Small Exempt Organizations.  If the organization fails to file a timely and accurate return with the IRS, the IRS is permitted to impose a civil penalty against the organization under Section 6652(c) of the Code.

The daily rate of the civil penalty in addition to the maximum penalty that can be imposed generally depends on the size of the tax-exempt organization.  For returns required to be filed in 2020, smaller organizations can be assessed civil penalties of up to $20 per day not to exceed the lesser of $10,500 or 5% of the gross receipts of the organization.  But, for larger organizations—i.e., those with gross receipts exceeding $1,067,000—the daily rate of the civil penalty can increase to $105 per day up to a maximum of $54,000.

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