Tax Tips Logo ImageISSUE:

The IRS is experiencing delays in processing paper returns, including Form 8868, Application for Extension of Time To File an Exempt Organization Return.

 

 

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.

The CFO at SCC emailed us with an interesting question…

“We have friends at a smaller school that has a December 31 tax year.  Their CPA filed an extension before May 17, 2021 (the deadline) on Form 8868 to extend the 2020 Form 990.  They just told us that they received a notice of non-filing from the IRS.  With our June 30, 2021 year end, we have a November 15, 2021 deadline for filing Form 990.  We are hoping not to extend, but how do we avoid getting a similar penalty notice?”

“Great question,” we replied, “The IRS issued guidance on this issue last month.  They are experiencing delays in processing paper returns – including Form 8868.  If we do have to extend SCC’s Form 990, we will file the Form 8868 electronically.  But we do not believe an extension will be necessary.  Let’s work together on that.  Hope that helps.”

 

RULES:                                                                        .

From IRS: Exempt Organizations Update (June 16, 2021)

Information on Notices Received After Paper Filing Form 990-EZ or Form 8868

The IRS is experiencing delays in processing paper returns, including Form 990‑EZ, Short Form Return of Organization Exempt from Income Tax, and Form 8868, Application for Extension of Time To File an Exempt Organization Return.

The IRS encourages organizations to file these forms electronically. If you file Form 990-EZ on paper, you may receive a prematurely-issued CP259A notice of non-filing. If you file Form 8868 on paper, there may be a delay in receiving CP211A notice confirming approval of your extension request. If you filed your return or extension request on paper, you do not need to take any further action.  Please don’t file a second return or contact the IRS about the status of your filing. We appreciate your patience.

 

BOTTOM LINE:

  • Filing Form 8868, Application for Extension of Time To File an Exempt Organization Return, has historically been paper-filed (via snail mail) by many institutions.
  • The IRS encourages eFiling of Form 8868 – Form 990-series returns are now generally required to be filed electronically.
  • If you file timely Form 8868 via paper and receive a notice of non-filing, you don not need to take any further action.
  • The IRS’ periodically released, “Exempt Organizations Update” may be found at:

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

 

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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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