Tax-Exempt Status of Private Foundations
November 16, 2020

IRS Update on Mandatory E-Filing for Tax-exempt Organizations

Taxpayer First Act Electronic Filing Requirements

The Taxpayer First Act, which was enacted on July 1, 2019, was enacted to modernize and provide a broad redesignation of the IRS. Specific provisions require all nonprofit to file their tax returns electronically. That includes all 501(c)(3) organizations which are typically public charities, as well as private foundations. Tax-exempt organizations that are required to file Forms 990, Form 990-PF, Form 990-EZ, and Form 990-T, are now required to file electronically.

If your nonprofit organization’s tax year ended on July 31, 2020 or later, per the Taxpayer First Act, you are required to e-file your Form 990.

The new e-file requirements are as follows:

 BeginningMust E-File On
Calendar Year FilersJanuary 1, 2020May 15, 2021
Fiscal Year FilersJuly 2, 2019November 15, 2020 and after
Fiscal Year FilersJuly 1, 2019November 2021

Nonprofits with less than $200k in receipts and total assets of less than $500k, that normally file form 990-EZ and any required form 990-T filing for tax years ending before July 31, 2021, will get transitional relief for up to two years. Organizations currently exempt from filing Forms 990 are not affected by the law.

Notification of Tax-Exempt Status Revocation

Prior to the Taxpayer First Act, the IRS was not required to notify tax-exempt organizations before revoking their tax-exempt status. In most cases, nonprofit organizations did not realize that their tax-exempt status had been revoked until it was too late. With the passage of the Taxpayer First Act, the IRS is now required to contact organizations before revoking their tax -exempt status. Failure to file for two consecutive years, will result in the IRS sending a notice to the organization in question. If your nonprofit organization fails to file for the third consecutive year, it will result in the loss of your tax-exempt status.

If your organization has received such a notice or is behind on its tax filings, contact us immediately. Our experienced nonprofit Certified Public Accountants will get you back into compliance and keep you in good standing.

Public Access to Your Form 990

The law also mandates the IRS to make all Form 990’s electronically available to the general public “as soon as it is practical in machine readable format”. With this in mind, it is important that your nonprofit files correctly and in a timely manner. It is quite common for potential donors to request copies of your Form 990 before donating towards your cause.

Revised IRS Form 1024-A

Application for Recognition of Exemption Under Section 501(c)(4) of the IRC, and an application for reinstatement of tax-exempt status must now be filed electronically. Currently, the IRS provides a 90-day grace period during which it will continue to accept paper instructions for Form 1024-A.

If your nonprofit organization has not yet transferred to electronic filings for your Forms 990, 990-EZ, 990-T, or 990-PF, reach out to your nonprofit CPA for a free consultation.

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