Don't Throw Away Tax-Exempt Status: Electronic Annual Filings Now Required
January 07, 2020

All organizations that have tax-exempt status under Internal Revenue Code (the “Code”) Section 501 or 527 are required to annually file an information return with the Internal Revenue Service (“IRS”). Failure to make a filing for three consecutive years results in the automatic revocation of the organization’s exemption. Under recently enacted law, organizations are now required to file information returns and related forms electronically for tax years beginning after July 1, 2019. 
 
The following IRS forms are included in the electronic filing requirement:
 

    •     Form 990, Return of Organization Exempt from Income Tax, for 501(c) organizations with gross income of greater than $200,000 or assets greater than $500,000.

 

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501(c) organizations with gross income of $50,000-$200,000 and assets less than $500,000 can file Form 990-EZ, and the IRS is postponing the electronic filing of that form for one year.

 
    •     501(c) organizations with gross income of less than $50,000 already file an electronic Form 990-N (E-Postcard).
    •     Form 990-PF, Return of Private Foundation or Section 4947(a)(1) Trust Treated as Private Foundation.
    •     Form 8872, Political Organization Report of Contributions and Expenditures.
    •     Form 1065, U.S. Return of Partnership Income (if filed by a Section 501(d) apostolic organization).
    •     Forms 990-T and 4720 will be included in the electronic filing requirement in the next year, when the conversion to the electronic format is complete.

 
Those who previously filed paper forms will receive a letter from the IRS informing them of the change. Filing deadlines vary by form type and the organization’s fiscal year-end.
 
Forms 990 and 990-PF Electronic Filing
For most organizations that generally file Forms 990 or 990-PF by the 15th day of the fifth month after the fiscal year-end, the electronic filings will not be due before December 15, 2020.  Specifically, Forms 990 and 990-PF filings for tax years ending on or before June 30, 2020, may still be on paper. Filers of Forms 990 and 990-PF with tax years ending July 31, 2020, and later MUST be filed electronically.

More information on software providers is available on the IRS.gov website at:
https://www.irs.gov/e-file-providers/exempt-organizations-mef-providers
 
Form 990-EZ Transition Relief
For smaller exempt organizations with tax years ending on and before July 31, 2020, the IRS will accept either paper or electronic filing of Form 990-EZ. For tax years ending August 31, 2020, and later, Form 990-EZ must be filed electronically.
 
Forms 990-T and 4720
In 2020, the IRS will continue to accept paper forms that are pending conversion into electronic format. These include Form 990-T, Exempt Organization Business Income Tax Return, and Form 4720, Return of Certain Excise Taxes Under Chapters 41 and 42 of the Internal Revenue Code. The IRS plans to have these returns ready for electronic filing in 2021 (reporting on tax year 2020).
 
Form 8872
The IRS will no longer accept paper Forms 8872 reporting on periods after 2019. Forms 8872 reporting information for periods starting on or after January 2020, will be due electronically by Code Section 527 organizations. These include political parties, political action committees and campaign committees of candidates for federal, state or local office.  Among other requirements, most tax-exempt political organizations have a requirement to file semiannual, quarterly or monthly reports on Form 8872.  To file electronically, the organization must have the username and password it received from the IRS after electronically filing its initial notice (Form 8871). To replace a username or password, you can contact: IRS, Attn: Request for 8872 Password, Mail Stop 6273, Ogden UT 84201; Fax (855) 214-7520. Organizations can file electronically at: https://www.irs.gov/charities-non-profits/political-organizations.
 
Please contact a member of the firm’s nonprofit corporation practice group if you have questions as to which filings you are making will need to be converted to electronic filings.

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