IRS Requires Tax Exempt Organizations to E-file Forms
Due to a change in legislation, tax exempt organizations who previously filed hard copies of Forms 490 (Return of Organization Exempt from Income Tax,) 490-PF (Return of Private Foundation or Section 4947(a)(1) Trust Treated as Private Foundation,) 8872 (Political Organization Report of Contributions and Expenditures,) and 1065 (U.S. Return of Partnership Income) will now be required to file these documents electronically. This change, mandated by the Taxpayer First Act, which was enacted on July 1, 2019, will affect tax exempt organizations in tax years beginning after the same date. According to the IRS, all entities who previously filed paper copies of these forms will be notified of the change via mail.
Requirements for Filing Form 8872
In order to file Form 8872, a tax exempt organization must have the username and password it received from the IRS after electronically filing its initial notice. Forms can be filed electronically at IRS.gov/polorgs in accordance with Section 527 organizations, including political parties, political action committees, and campaign committees of candidates for federal, state or local office.
Requirements for Filing Form 990 and 990-PF
While Form 990 and Form 990-PF filings for tax years ending on or before June 30, 2019 can still be filed in hard copy, any filings for tax years closing after this date must be submitted online. The only exemption from this ruling are short tax years or other special circumstances as dictated by the form instructions, since the IRS cannot yet receive different versions on these documents electronically.
Requirements for Filing Form 990-EZ
The new legislation allows for a “transition relief” period for small tax exempt organizations with annual gross receipts less than $200,000 and total year-end assets less than $500,000, meaning that the IRS will still accept paper filing of form 990-EZ from these entities for tax years ending before July 31, 2020.
Requirements for Filing Form 990-T and 4720
Forms 990-T and 4720 are still pending conversion to electronic format. As a result, the IRS will continue to accept paper filing for both. The IRS has stated that it plans to have the electronic versions of these forms ready for filing by the time they need to be submitted for the 2020 tax year.
According to the IRS, there are also several more forms that a tax exempt organization can choose to file electronically , including the following:
• Form 990, Return of Organization Exempt from Income Tax;
• Form 990-EZ, Short Form Return of Organization Exempt from Income Tax;
• Form 990-PF, Return of Private Foundation or Section 4947(a)(1) Trust Treated as a Private Foundation;
• Form1120-POL, U.S. Income Tax Return for Certain Political Organizations;
• Form 8868, Application for Extension of Time to File an Exempt Organization Return; and
• Form 7004, Application for Automatic 6-Month Extension of Time To File Certain Business Income Tax, Information, and Other
It is likely that forms 990-T and 4720 will also come under the e-filing requirement in the near future. This push is part of a larger objective to modernize the IRS and make it more friendly to taxpayers. Other changes mandated in the Taxpayer First Act include development of a customer service strategy and a cybersecurity update. For more information, check out the above links.