THE INTERNAL REVENUE MANUAL (IRM) 20.1.1.3.2(1) STATES THAT "REASONABLE CAUSE RELIEF IS GENERALLY GRANTED WHEN THE TAXPAYER EXERCISED ORDINARY BUSINESS CARE AND PRUDENCE IN DETERMINING THEIR TAX OBLIGATIONS BUT NEVERTHELESS FAILED TO COMPLY WITH THOSE OBLIGATIONS". IRM 20.1.1.3.2.2.6 DESCRIBES HOW A TAXPAYER'S IGNORANCE OF THE LAW, IN CONJUNCTION WITH OTHER FACTS AND CIRCUMSTANCES, CAN ESTABLISH REASONABLE CAUSE FOR PENALTY ABATEMENT. IN THIS INSTANCE, THERE WERE MANY VARIABLES THAT LEAD TO THE LATE FILING OF THE FORM 990-PF, MANY OF WHICH WERE A DIRECT RESULT OF THE TAXPAYER'S IGNORANCE OF THE LAW. THE TAXPAYER IS NOT FORMALLY EDUCATED IN THE VAST AREA OF GENERAL BUSINESS TAX, AND EVEN LESS KNOWLEDGEABLE REGARDING THE INTRICACIES OF THE INTERNAL REVENUE CODE SURROUNDING TAX EXEMPT PRIVATE FOUNDATIONS. THE 2019 FORM 990-PF WAS THE INITIAL TAX RETURN FILING FOR THE TAXPAYER. THEREFORE, THE TAXPAYER DID NOT HAVE PRIOR EXPERIENCE WITH THIS FILING, HAD NOT PREVIOUSLY BEEN SUBJECTED TO THIS TAX, AND HAD NEVER BEEN ASSESSED PENALTIES IN THE PAST. IN ADDITIONAL TO TREADING ON NEW GROUND, THE TIMING OF THE INITIAL FILING WAS SCHEDULED DURING THE COVID-19 PANDEMIC AND RELATED IRS SHUTDOWN. WITH CONSTANT TAX LAW CHANGES AND NO IRS RESOURCES AVAILABLE FOR ASSISTANCE, THE TAXPAYER MADE THE DECISION TO ENGAGE A THIRD PARTY PUBLIC ACCOUNTING FIRM TO ASSIST IN THE INITIAL FILING OF THE FORM 990-PF. BASED ON THE TAXPAYER'S LACK OF KNOWLEDGE SURROUNDING THE TAX LAWS, COMBINED WITH THE RAPIDLY CHANGING TAX LAWS AND THE LACK OF IRS RESOURCES, THE TAXPAYER ESTABLISHED ORDINARY BUSINESS CARE AND PRUDENCE, AS OUTLINED IN IRM 20.1.1.3.2.2, IN THIS DECISION. A CLEAR GOOD FAITH EFFORT TO MEET ALL REQUIRED TAX OBLIGATIONS WAS MADE ON JUNE 30, 2020 WHEN THE ACCOUNTING FIRM WAS ENGAGED AND AGREED TO ASSIST IN THE PREPARATION AND FILING OF THE 2019 FORM 990-PF. UNFORTUNATELY, DURING THE UNPRECEDENTEDLY HECTIC AND RAPIDLY CHANGING TAX FILING SEASON, AN OVERSIGHT WAS MADE BY THE HIRED FIRM AND THE 2019 FORM 990-PF WAS NOT EXTENDED OR FILED BY THE JULY 15, 2020 DEADLINE. AS COVERED BY IRM 20.1.1.3.2.2.5, THE TAXPAYER RELIED ON THE PREDEFINED AND AGREED UPON SERVICES WITH THE FIRM, WHICH INCLUDED TIMELY FILING; HOWEVER, BY NO FAULT OR WILLFUL NEGLECT OF THE TAXPAYER, THIS FILING DEADLINE WAS ERRONEOUSLY MISSED.WE ARE HEREBY, RESPECTFULLY, REQUESTING FOR LATE FILING PENALTIES TO NOT BE ASSESSED WITH THIS THE FILING OF THIS TAX RETURN. PENALTIES ARE MEANT TO BE PUNITIVE AND TO PUNISH TAXPAYERS FOR WILLFUL NEGLECT OF TAX COMPLIANCE. TO PENALIZE THE TAXPAYER, WHEN THEY ACTED IN GOOD FAITH AND EXERCISED ORDINARY BUSINESS CARE AND PRUDENCE TO VOLUNTARILY FULFILL THEIR TAX OBLIGATIONS, WOULD PLACE AN UNDUE HARDSHIP THAT IS NOT CONSISTENT WITH THE INTENT OF THE INTERNAL REVENUE CODE.
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