990 E-filing Requirement Coming Soon

On July 1, 2019 the Taxpayer First Act was signed into law. This new law extends the requirement for nonprofits to electronically file the IRS annual information returns (Forms 990, 990-PF, 990-EZ, and 990-T). Organizations that are exempt from filing information returns with the IRS are not impacted by this new law.

This new law will be gradually implemented over the next two years. Under the new law, mandatory e-filing will start arriving for some tax-exempt nonprofit organizations in 2020 and for all tax-exempt organizations in 2021. The new requirements apply to calendar year filers covering tax year 2020 and to fiscal-year filers covering tax years beginning on and after July 2, 2019.

There is a caveat that the IRS may delay implementation of e-filing for up to two years for financially small organizations with total assets of less than $500,000 and annual revenue less than $200,000, all organizations filing unrelated business income tax returns, and any organization facing undue burdens from the change. If an organization is eligible for this temporary relief it should continue to prepare to e-file their returns beginning in 2022.

Not only does this new law require e-filing it also adds some requirements to the IRS. The IRS must now make the information provided on the forms available to the public as soon as practicable in a machine-readable format. It also requires the IRS to notify an organization after the organization’s second consecutive failure to file an information return in order to give the organization time to file an information return and prevent their tax-exempt status from being revoked.

This text is provided with the understanding that ECFA is not rendering legal, accounting, or other professional advice or service. Professional advice on specific issues should be sought from an accountant, lawyer, or other professional.


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