On July 1, 2019, the Taxpayer First Act (TFA) was enacted into law, granting taxpayers more rights and changing the Internal Revenue Service (IRS) administrative procedures to be more taxpayer-friendly. The IRS plans to meet the TFA requirements by developing comprehensive customer service, modernizing its technology and enhancing its cyber security. In addition, the TFA mandates electronic filing for certain tax-exempt organizations. With the electronic filing requirement, the intent of TFA is to expand access to Form 990 information.
Prior to the effective date of the TFA, a tax-exempt organization was required to electronically file its Form 990 if it:
In addition, organizations that qualified to file the Form 990-N (having average gross receipts under $50,000 and total assets under the Form 990 threshold) were also required to electronically file their Form 990-N postcard each year.
Any tax-exempt organization that did not meet the two criteria above had the option to file electronically or by mail. There were also exceptions that required paper filing, regardless of whether the two criteria above were met:
Conversely, all tax-exempt organizations filing Form 990-T were limited to paper filing since electronic filing of that form was not available.
The TFA now mandates that all of the following forms be electronically filed as of the first taxable year beginning after July 1, 2019:
The TFA will also require electronic filing for Forms 990-T and 4720 in 2021 (for the tax year 2020) or once the IRS updates its system to enable e-filing of these forms. The IRS will continue to accept paper-filed forms until e-filing is available.
The TFA provides a delay for small tax-exempt organizations, i.e., those filing Form 990-EZ who have gross receipts of less than $200,000 and gross assets of less than $500,000 at year-end. Form 990-EZ will need to be electronically filed for taxable years beginning after July 1, 2021.
The TFA mandates the following forms be electronically filed as of the first taxable year beginning after July 1, 2019, or July 1, 2021, for small organizations:
The IRS is in the process of sending correspondence to tax-exempt organizations regarding the new electronic filing requirement. If you currently do not electronically file the Form 990 or 990-PF, we recommend the following:
For more information on this topic, or to learn how Baker Tilly specialist can help, contact our team.
There have been no changes made to the aforementioned TFA requirements under the Families First Coronavirus Response Act or IRS Notice 2020-18, but please check back regularly as we continue to monitor for any updates.
The information provided here is of a general nature and is not intended to address the specific circumstances of any individual or entity. In specific circumstances, the services of a professional should be sought. Tax information, if any, contained in this communication was not intended or written to be used by any person for the purpose of avoiding penalties, nor should such information be construed as an opinion upon which any person may rely. The intended recipients of this communication and any attachments are not subject to any limitation on the disclosure of the tax treatment or tax structure of any transaction or matter that is the subject of this communication and any attachments.