The Internal Revenue Service recently alerted tax exempt organizations of a reporting delay for some with unrelated business income. System upgrades at the agency will prevent any e-filing of Form 990-T until March 17, 2024.

Churches, ministries, and other exempt organizations may be subject to unrelated business income tax (UBIT) for regularly conducted business that is not “substantially related” to their nonprofit missions. Forms 990-T are generally required to be e-filed by exempt organizations that receive such UBI of $1,000 or more during a year.  

The IRS estimates this year’s e-filing delay will only affect about one percent of the 200,000 annual 990-T filers. However, it is recommending that those with filing deadlines between January 15 and March 15 request automatic six-month extensions using Form 8868. Nevertheless, even if one of these affected organizations neglects to secure an extension, it can also request relief from tardiness penalties when it is finally able to file the Form 990-T. 

Unrelated business income can be a complicated matter for churches and ministries. ECFA encourages members to learn more about it with their free access to our newly released 2024 Church and Nonprofit Tax Guide, especially the UBI checklist on page 29 of the resource. Also of interest may be ECFA’s recent “Taxes Made Easy” webinar and our brief YouTube video titled “Too Much Unrelated Business Income?"