Tax Tips For Nonprofits At Year End
The new Taxpayer First Act that was enacted on July 1st, 2019, makes it compulsory for tax-exempt organizations to electronically file returns and related forms beginning for tax years starting after July 1st, 2019. Organizations that filed paper forms in the past will receive a letter from the IRS to inform them of the change. The deadlines are dependent on the type of form.
The act endeavors to expand and strengthen taxpayer rights by reforming the IRS into a more user-friendly agency. The IRS is required to develop a new customer service strategy, which includes the modernization of its technology and cybersecurity.
The following forms are included:
- form 1065 e-filing
- form 8872
- form 990 & 990-pf-e-filing
- form 990-EZ transition relief
- paper forms 990-t & 4720
- The IRS will postpone the required e-filing of Form 990-EZ for one year while optional e-filing remains available
- Forms 990-T and 4720 will fall under required e-filing starting in 2020, but the IRS will accept these forms on paper until it is converted to electronic format
Form 1065 E-Filing
Most Section 501(d) apostolic organizations use Form 1065, and for them, the e-filing legislation will only apply to returns due after October 15th, 2020. As a rule, the Form 1065 deadline is on the 15th day of the 3rd month after the end of the tax year. Software for this is available from providers listed on the IRS website.
For periods after 2019, the IRS will not accept any more paper filings. Periods after January 2020 are due electronically for all Section 527 organizations, including political parties, political action committees and campaign committees of candidates for local, state or federal office.
All tax-exempt political organizations must file semiannual, quarterly and monthly reports on Form 8872. To file electronically requires a username and password that will be sent to the same by the IRS after registering the initial notice on Form 8871. Filing can be done via the IRS.gov. Replacement usernames and passwords can be requested from:
Attn: Request for 8872 Password
Mail Stop 6273,
Ogden, UT 84201 Fax (855) 214-7520
Form 990 & 990-PF-E-Filing
Most e-filings from charities and other exempt organizations that file Form 990 or 990-PF by the 15th day of the fifth month after the tax year will not be due before the 15th of December 2020. Put differently, Forms 990 and 990-PF filings for tax years ending July 31st, 2020, and after MUST be filed electronically while those due before June 30th, 2020, can still be done on paper. For short tax years and for circumstances detailed in the instructions, paper filing will continue to be accepted. Information on software providers can be accessed at www.irs.gov
Form 990-EZ Transition Relief
A postponement is expressly provided for small exempt organizations. For tax years ending before July 31st, 2020, paper or electronic filing of Form 990-EZ will be accepted. Short-form Return of Organizations Exempt from Income Tax for tax years ending on August 31st, 2020 and later, must be filed electronically using Forms 990-EZ. Forms 990-EZ are for organizations with annual gross receipts of less than $200,000 and total assets at ta year-end of less than $500,000.
Paper Forms 990-T & 4720
Paper forms will still be accepted during 2020, including for Forms 990-T and 4720, Return of Certain Excise Taxes under Chapters 41 and 42 of the Internal Revenue Code. E-filing for the same will be available reporting for the tax year 2020, in 2021.
Pre-Existing E-File Rules
The above legislation supersedes the e-file regulations for large exempt organizations. Up to the tax year beginning after July 1st, 2019, exempt organizations with assets of $10 million or more that filed 250 or more returns of any type whatsoever during the calendar year had to e-file Forms 990 and 990-PF. This was also required of Form 8872 filers expecting more than $50,000 in contributions or expenses for the calendar year. These rules will still apply to some e-filings for 2020.
Readers should note that this article is only intended to convey general information on these issues and that FAS CPA & Consultants (FAS) in no way intends for the contents of this article to be construed as accounting, business, financial, investment, legal, tax, or other professional advice or services. This article cannot serve as a substitute for such professional services or advice. Any decision or action that may affect the reader’s business should not rely solely on the contents of this article, but should rather be consulted on with a qualified professional adviser. FAS shall not be responsible for any loss sustained by any person who relies on this presentation. This article is subject to change at any time and for any reason.
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