ISSUE

So far, Congress has not mandated eFiling for Form 990 returns.  It continues to be talked about and recommended.  Your institution should consider eFiling as there are advantages.

 

SITUATION

Saltwater Christian College (SCC) is a private college exempt under Internal Revenue Code section 501(c)(3) and 170(b)(1)(A)(ii).  They are required to file Form 990 annually.

SCC calls to say that they were wondering why we eFiled their Form 990 each year.  “We are not required to electronically file as far as we can tell,” they state.

We tell them they are correct that they do not exceed the two thresholds (250 returns filed and $10 million or more in total assets), but there are numerous benefits to eFiling – not the least of which is a “date-stamped” acknowledgement that the IRS has received your form.  Think of all the paper being saved.  Also, the IRS sent out a recent “Exempt Organizations Update” with an electronic filing admonishment therein.

 

RULES

From IRS Exempt Organizations Update, May 6, 2019:

Electronic filing can help you file a complete return

Electronic filing provides you with fast acknowledgement that the IRS has received your return. It also reduces normal processing time, making compliance with reporting and disclosure requirements easier. To ensure you are ready to file electronically, check your Electronic Filing Identification Number (EFIN) to ensure it is active.

In August 2018, EFINs were deactivated (dropped) if the system showed no usage for two years. For some filers, the system erroneously deactivated the account if the only returns filed using the EFIN were Form 990 series returns. Log into your existing IRS e-File application to check your EFIN status. If the status is not listed as “Active,” you will need to reapply for a new EFIN by choosing the “Reapply” link on the “Application Details” page. If you encounter any problems when reapplying, you may contact the e-help Desk on 1-866-255-0654.

From 2018 Form 990 Instructions:

Electronic filing. The organization can file Form 990 and related forms, schedules, and attachments electronically. However, if an organization files at least 250 returns of any type during the calendar year ending with or within the organization’s tax year and has total assets of $10 million or more at the end of the tax year, it must file Form 990 electronically. “Returns” for this purpose include information returns (for example, Forms W-2 and Forms 1099), income tax returns, employment tax returns (including quarterly Forms 941, Employer’s Quarterly Federal Tax Return), and excise tax returns.

If an organization is required to file a return electronically but does not, the organization is considered not to have filed its return, even if a paper return is submitted, unless it is reporting a name change, in which case it must file by paper and attach the documents described in Specific Instructions, Item B. Checkboxes, later. See Regulations section 301.6033-4 for more information on mandatory electronic filing of Form 990.   For additional information on the electronic filing requirement, visit IRS.gov/Filing.

The IRS may waive the requirements to file electronically in cases of undue hardship. For information on filing a waiver, see Notice 2010-13, 2010-4 I.R.B. 327, available at IRS.gov/irb/2010-04_IRB/ar14.html.

From the 2015 Report of Recommendations, Advisory Committee on Tax Exempt and Government Entities (ACT):

The IRS Exempt Organizations Division should support a Congressional mandate to require electronic filing of the Form 990 series and should also take interim steps to encourage and provide incentives for voluntary e-filing of the Form 990 series for exempt organizations that are not subject to the mandatory e-filing requirements. The IRS should recommend to the Department of Treasury the elimination of the $10 million asset threshold for electronic filing of the Form 990 found in the Code Section 6011 regulations.

 

BOTTOM LINE

  • Form 990 electronic filing can help detect errors and omissions from your return by providing feedback on areas that prevent eFiling.
  • Electronic filing provides a “fast acknowledgement” from the IRS that they’ve received your return – with a “date-stamped” report.
  • Some schools are required to eFile their Form 990 due to statutory filing thresholds.
  • Signing up for the IRS’ “Exempt Organization Update” might be a good idea for your institution.  You can sign up for these email alerts at:  https://www.irs.gov/charities-non-profits/subscribe-to-exempt-organization-update

Specific questions? Email Dave Moja

The information provided herein presents general information and should not be relied on as accounting, tax, or legal advice when analyzing and resolving a specific tax issue. If you have specific questions regarding a particular fact situation, please consult with competent accounting, tax, and/or legal counsel about the facts and laws that apply.

© 2019 Christian College Resources, Inc.