Reasonable cause for failure to file or pay tax: Organization fails to establish public charity status
A private foundation is subject to penalties for failure to file proper information and tax returns or pay private foundation excise taxes unless it has reasonable cause for such failure. An organization will be deemed to have reasonable cause for failure to comply with its private foundation requirements in a tax year in which, prior to the due date for filing Form 990-PF, it has filed notice on Form 1023 claiming not to be a private foundation. The organization will continue to be deemed to have reasonable cause in subsequent tax years until 90 days after the date of the letter from the Internal Revenue Service containing the determination of foundation status or a determination that the organization cannot reasonably be expected to be a public charity.
Within 90 days after the date of the letter containing a determination that the organization is a private foundation, the organization must file all required returns for prior years and pay all taxes due, including interest. A statement explaining the basis for reasonable cause for failure to file timely should be attached to the returns. Revenue Procedure 79-8, 1979-1 C.B. 487, should also be cited in the statement.