Mandatory E-Filing of Nonprofit Tax Returns

On July 1, 2019, President Trump signed the Taxpayer First Act (Act), which requires all tax-exempt organizations to electronically file IRS Forms 990, 990-PF, 990-EZ and 990-T. In addition, Section 527 political organizations that file periodic contribution and expenditure reports are now required to e-file Form 8872.  Previously, only nonprofits with total assets of $10 million or more and organizations that file 250 or more returns were required to e-file. Under the new Act, by the year 2022, all nonprofit organizations will be required to e-file, with the exception of churches and government entities. This Act will affect organizations whose fiscal year begins on or after July 2, 2019 and for calendar year filers as of January 1, 2020.

In regards to the implementation timeline, the Act allows the IRS to delay implementation for two years for nonprofits that file 990-T forms. This delay also applies to organizations with assets of less than $500,000 and annual revenues under $200,000.

While these forms are already available to the general public, the Act also requires that the IRS make the return information public as soon as possible for transparency and accountability purposes.  Additionally, the Act requires the IRS to notify organizations that don’t file within a two-year time frame, reminding them that if they don’t file within three years, they automatically lose their tax-exempt status and will be required to reapply with a new application.  It is therefore important for organizations to keep their contact information updated with the IRS to ensure receipt of notices.

For more information or questions regarding mandatory e-filing for exempt organizations, please contact Schneider Downs.