Attention nonprofits…thanks to the Taxpayer First Act of 2019, which was recently signed into law, virtually all form 990s are required to be e-filed. Under prior guidance, only the largest and smallest form 990s were required to be e-filed.

More about what’s changed

Prior guidance

If an organization had between no activity and $50,000 of gross receipts, they filed an electronic postcard or 990-N. If an organization was large enough to have 250 returns of any type filed with the IRS during the calendar year that ends within the tax year of the organization and total assets of $10 million or more at the end of the tax year, it was required to file its Form 990 electronically. Individual W-2s and 1099s were counted, along with other filings. Other Form 990s falling in between the two requirements were welcome to e-file, but it was not mandatory.

New guidance

On July 1, 2019, President Donald Trump signed The Taxpayer First Act of 2019 into law. Now, virtually all Form 990s must be e-filed. There will still be very specific exceptions of course, for example new organizations that are not in the database yet, etc. The law also covers Form 990-T. However, the Treasury Secretary may delay the application of this part of the law for up to 2 years. The IRS cannot yet accept electronic Form 990-Ts for now.

Did anything else change?

Other changes and clarifications in the new law include:

1. A new requirement for the IRS to notify an organization before revoking their exemption for failure to file returns. In the past, the IRS could revoke after three years. Now they are required to notify the organization after two years of non-filing (i.e. they have no record of a return having been filed) that they will be revoked after year three.
2. Also, the IRC Section 6651 penalty for failure to file has been increased to $330. This is separate from the $20 per day for smaller returns and $100 per day for larger returns that is charged for filing late.

Congress’ goal is to reach 100% electronic filing. The change is expected to improve efficiency, reduce costs and generally improve oversight of tax-exempt organizations. It will also increase the transparency of and enhance public access to information about charitable organizations.

Questions on your e-filing requirements, nonprofits? Reach out to us