Under the newly enacted Taxpayer First Act, all nonprofits will soon need to file their information returns electronically. Depending on the size of your organization, the requirement could take effect as soon as next year.
The Taxpayer First Act requires nonprofits to file their report statements or returns in the Form 990 series or Form 8872 (political contributions and expenditures) electronically, effective for the 2020 tax year for calendar-year filers. For fiscal-year filers, this applies to returns covering tax years beginning on and after July 2, 2019. This newly includes Form 990-T. The act also directs the IRS to make nonprofits’ annual tax returns available to the public in a machine-readable format as soon as practicable and at no charge.
The statute gives the IRS the option to delay implementation of the filing requirement for smaller organizations for two years. “Smaller organizations” are defined as those with annual gross receipts of less than $200,000 and aggregate gross assets of less than $500,000 at the end of the tax year. The IRS may similarly delay implementation related to Form 990-T filings.
The new law also requires the IRS to notify an organization that fails to file a Form 990-series return or e-postcard for two consecutive years. Nonprofits automatically lose their tax-exempt status if they don’t file annual information returns for three consecutive years.
Sooner or Later
Whether Congress opts to delay implementation of the e-filing requirement for smaller organizations or not, it’s coming for every nonprofit at some point in the near future. Your BPM team can help you stay in compliance on this and other tax-related matters.