Richard Scoresby, CPA, is a tax partner specializing in Nonprofit tax planning and preparation. Richard leads our Nonprofit Tax Practice.

 

What returns are required to be filed electronically?

In a recent Exempt Organization update, the IRS reminded exempt organizations of the requirement to file information and tax returns electronically for tax years beginning after July 1, 2019.  This includes Forms 990, 990-EZ, 990-PF, and 990-T.  Although the IRS encourages all exempt organizations to begin filing electronically, they have provided transitional relief for smaller organizations who file Form 990-EZ.  The IRS will continue to accept Form 990-EZ returns that are filed on paper for any tax year ending before July 31, 2021.

The electronic filing requirement first applies to calendar-year filers for the 2020 tax year with returns due on May 17, 2021.  Unlike last year, the IRS has not extended this deadline due to the pandemic.

Up until now, the IRS has been accepting 2019 Form 990-T returns filed on paper; however, the IRS has now completed its conversion of Form 990-T to an electronic format and will require all 2020 Form 990-T’s, with a due date on or after April 15, 2021, to be filed electronically.

What if we continue to file our Form 990 on paper?

The IRS has indicated that they will send back Form 990 returns that are filed on paper and will reject electronically filed returns that are incomplete or the wrong return.  Exempt organizations should be aware that harsh penalties can be assessed on returns that are not complete and accurate.

How do we transition to electronic filing?

If your organization has always filed on paper and prepared your own return, you will be forced to look at other options to prepare and file your return.  Three main options exist for you to make the transition:

  1. Invest in tax preparation software that allows exempt organization returns to be efiled.
  2. Find an online service provider that allows you to prepare and file your exempt organization return online.
  3. Hire an accounting firm that prepares and files exempt organization returns.

If you have questions, please give Larson & Company call to see if we can help.