Taxpayer First Act brings filing changes for tax-exempts

Tax Hot Topics newsletter The Taxpayer First Act (H.R. 3151), signed into law on July 1, 2019, will soon require all tax-exempt organizations to electronically file their annual Forms 990, 990-PF, 990-EZ, and 990-T. Section 527 organizations will also have to e-file their Forms 8872 (periodic contribution and expenditure reports)

Currently, organizations which 1) have $10 million in assets and 2) file 250 or more forms annually with the IRS must e-file their Form 990. That minimum threshold is now eliminated so smaller organizations which paper-file their Forms 990 will need to change their process.

The effective date for this requirement is for organizations with a calendar year beginning on or after Jan. 1, 2020 (returns due May 15, 2021), and for fiscal-year filers with a tax year beginning after July 2, 2019. For example, an organization which has a fiscal-year end Aug. 31, 2020, will have to e-file their Form 990 by Jan. 15, 2021. Paper filing will be discontinued by 2022.

Organizations which file the Form 990EZ (gross receipts less than $200,000 and assets less than $500,000) may receive transitional relief from IRS for up to two years, but the IRS has not yet acted to extend such relief.

Forms 990T must also be e-filed, but the IRS does not currently have a mechanism to accept Forms 990-T electronically. The IRS is expected to hasten the development of that process in light of the new law.

Churches and other organizations exempt from filing Forms 990 are not affected by the law.

The Taxpayer First Act also requires the IRS to contact organizations before automatically revoking tax-exempt status for organizations that have not filed a Form 990 for three years. Organizations should make sure their contact information is correct in IRS records so they would receive such notification.

Finally, the Taxpayer First Act mandates the IRS to make Form 990 readily available to the public “as soon as practicable in a machine readable format.” The IRS has already taken large strides in the digitization of the information through the use Amazon Web Services, but this law seeks to extend the availability of this information to the public, charity watchdog groups, the media and other interested persons.

Mary Torretta
Senior Manager
Arlington Office 
T +1 703 847 7659

Frank Giardini
National Tax Leader, Life Sciences
Philadelphia Office  
T +1 215 656 3060

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