Tax Tips Logo ImageISSUE:

The Taxpayer First Act contains a provision which requires certain exempt organizations to file information and tax returns electronically for tax years beginning after 7/1/19 – this includes Form 990-T, Exempt Organization Business Income Tax Return. For institutions with a June 30 year-end, this would mean the year ended 6/30/21 as their 6/30/20 year began before 7/2/19. [underline added]

The issue has been that Form 990-T (which first appeared in 1951) has never been positioned by the IRS for eFiling.  Pending conversion of Form 990-T to electronic format, the IRS has continued to accept paper copies of 2019 returns.

 

SITUATION:

Idaho Theological Seminary (ITS) is a private college exempt under Internal Revenue Code section 501(c)(3) and 170(b)(1)(A)(ii).  They are not required to file Form 990 annually.

ITS’ Director of Finance called us to inquire about Form 990-T and electronic filing.  His question centered around the filing of the form for ITS’ year ended June 30, 2020.  The return has been extended.

“Even though we are not required to file Form 990, we’ve historically ‘paper-filed’ Form 990-T.  I’m unclear about the new Form 990-T electronic filing requirements.  Will our first eFiled form be the 2019 Form 990 – for our year ended June 30, 2020 – which we are getting ready to file by the extended deadline of May 17, 2021?  Or, do we wait until next year?”

“Great question,” we said.  “The mandatory electronically filing will be for your 2020 Form 990-T that will be filed for the year ended June 30, 2021.  The IRS has stated that, ‘The 2020 Form 990-T and its instructions have been updated for e-filing of returns with due dates on or after April 15, 2021.’  Note that is for the 2020 Form 990-T not the 2019 form.  The April 15, 2021 date has been confusing for some folks who are in the process of filing their 2019 form for years beginning before 2020.  Hope that helps.”

The current edition of the IRS’ “Exempt Organizations Update” may be found at:

Current Edition of Exempt Organizations Update | Internal Revenue Service (irs.gov)

 

RULES:                                                                        .

From IRS Webpage “Exempt Organizations Update, Update on mandatory electronic filing for Form 990-T”:

The Taxpayer First Act requires certain exempt organizations to file information and tax returns electronically for tax years beginning after July 1, 2019. Pending conversion of Form 990-T, Exempt Organization Business Income Tax Return, to electronic format, the IRS has continued to accept the 2019 tax-year versions of this return on paper.

The 2020 Form 990-T and its instructions have been updated for e-filing of returns with due dates on or after April 15, 2021. As of the beginning of March 2021, several providers have made software available to file Form 990-T electronically. Information about software providers supporting electronic filing of Form 990-T can be found on the Exempt Organizations Modernized e-File (MeF) Providers page.

Any 2020 Form 990-T with a due date on or after April 15, 2021, must be filed electronically and not on paper. A limited exception applies for 2020 Form 990-T returns submitted on paper that bear a postmark date on or before March 15, 2021.

 

BOTTOM LINE:

  • The Taxpayer First Act requires electronic filing of most Form 990-series returns this year.
  • The IRS and several providers have been working diligently to provide 2020 Form 990-T software that support eFiling.
  • Note that – generally – a 2019 return will not be required to be filed electronically.
  • Continue to monitor the IRS’ “Exempt Organizations Update” for information on this and other pressing matters.

 

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.

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