Upcoming IRS Form 990 Changes for Tax Exempt Entities
Currently, certain tax-exempt organizations are required to e-file Forms 990-PF and 990. After a recently passed law takes effect, the majority of tax-exempt nonprofit organizations will be required to file online by either 2021 or 2022, depending upon whether they are calendar-year filers with a return covering tax year 2020 (due 5/21/21), or fiscal-year filers, with a return covering future tax years beginning on or after 7/2/19.
For nonprofits who started a new fiscal year on July 1, 2019: For the 7/1/20 - 6/30/21 tax period, they must e-file in 2021.
For new organizations with fiscal years starting between July 2 and August 31, 2019: E-filing must commence with first returns due in November or December 2020. Early Filers may obtain the Form 8868 automatic extension which delays their first e-filing to 2021.
Financially small entities may seek a delay if their annual revenue is less than $200,000, and their total assets are less than $500,000, among other possible temporary delay opportunities.
The new law also requires entities to file in formats that allow the IRS to electronically disclose return information. This will make it easier for charity watch dogs, state and federal regulators, and journalists to review and analyze conflicts of interest, disproportionate salaries, and red flags of mal-administration and impropriety that may be found on a Form 990.
Finally, if an organization has not filed the required annual return for two consecutive years, the IRS must now remind them to file a return prior to an automatic revocation of their exempt status after three consecutive missed filings. As you may know, after an organization has lost its tax-exempt status, it must file a formal application for reinstatement to restore its status. Such entities must effectively re-file an exemption application.