Year-end reminder: Expanded tax benefits help individuals and businesses give to charity during 2020 

The IRS today explained how expanded tax benefits can help both individuals and businesses give to charity before the end of this year.

The Coronavirus Aid, Relief and Economic Security (CARES) Act, enacted last spring, includes four temporary tax changes that are designed to help people and businesses who give to charity this year. Here is a rundown of these key changes. 

Update on Mandatory E-Filing in 2021

The Taxpayer First Act, enacted July 1, 2019, requires tax-exempt organizations to electronically file information returns and related forms. The new law affects tax-exempt organizations in tax years beginning after July 1, 2019. 

• Tax Year 2020 Forms 990-T & 4720 Are Being Revised and Will be Available for E-filing in 2021

In 2020, the IRS continued to accept paper Form 990-T, Exempt Organization Business Income

Special Tax Deduction for Cash Donations to Charities in 2020

In the latest post on A Closer Look, Tax Exempt and Government Entities Commissioner Edward Killen reminds taxpayers there’s a special deduction for cash donations of up to $300 to a qualified charity in 2020. This $300 deduction is designed for taxpayers who take the standard deduction and aren’t normally able to deduct their donations.

Before making a donation, use the Tax Exempt Organization Search (TEOS) tool on IRS.gov/TEOS to make sure the charitable organization is eligible for tax-deductible donations.

The post also includes several other important reminders for taxpayers and charities, along with information and links to other temporary provisions of the relief provided in the CARES Act.

IRS Accepting Digital Signatures and Emailed Documents

The IRS issued a memorandum (PDF) that extends (through June 30, 2021) IRS employees’ ability to accept:

• Images of signatures
  

The Tax Exempt & Government Entities (TE/GE) FY 2021 Program Letter (PDF) lists our priorities for this new fiscal year. We’ll also use our new Compliance Program and Priorities webpage to provide information about additional priorities at the end of each quarter during the fiscal year.

Our FY 2021 compliance program and prioritiesalign with the IRS Strategic Goals:

• Strengthen Compliance Activities
• Improve Operational Efficiencies
• Maintain a Taxpayer-Focused Organization
• Ensure Awareness and Collective Understanding
• Leverage Technology and Data Analytics
• Develop Our Workforce

We’ll release a summary of our FY 2020 accomplishments when all the data is available. You can also view our annual program (or work plan) and accomplishment letters for previous years.

Annual filings and tax returns/payments due July 15, 2020

The extended deadline for a variety of information and tax returns and many tax payments is July 15, 2020. If you are unable to meet the July 15 deadline, you may want to review the extension procedures for exempt organization returns and information on the penalties for not filing.

EO user fee changes effective July 1, 2020

Revenue Procedure 2020-5 included user fee changes for certain miscellaneous determination requests submitted on Form 8940 that are effective July 1st.  See Appendix A of Rev. Proc. 2020-5 for a schedule of user fees.

Electronic filing mandate for Forms 990 and 990-PF

Effective for tax years beginning after July 1, 2019, the Taxpayer First Act requires organizations exempt from taxation under section 501(a) to file their annual Form 990 and Form 990-PF returns electronically,

IRS solicits public comments on proposed changes to group exemption letter program; will temporarily stop accepting requests for group exemption letters on June 17, 2020 

Notice 2020-36 contains a proposed revenue procedure that sets forth updated procedures under which recognition of exemption from federal income tax for organizations described in Section 501(c) of the Internal Revenue Code may be obtained on a group basis for subordinate organizations affiliated with and under the general supervision or control of a central organization. The IRS requests comments on all aspects of the proposed revenue procedure, including applicable grandfather and transition rules. Comments should be submitted on or before August 16, 2020.

Pending publication of the final revenue procedure in the Internal Revenue Bulletin, Rev. Proc. 80-27 continues to apply. However, the IRS will not accept any requests for group exemption letters beginning June 17, 2020, until publication of the final revenue procedure

The Department of the Treasury and the Internal Revenue Service today issued final regulations [lnks.gd]clarifying the reporting requirements generally applicable to tax-exempt organizations.

The final regulations reflect statutory amendments and certain grants of reporting relief announced by the Treasury Department and the IRS in prior guidance to help many tax-exempt organizations generally find the reporting requirements in one place.

Among other provisions, the final regulations incorporate the existing exception from having to file an annual return for certain organizations that normally have gross receipts of $50,000 or less.  That exception was previously announced in Revenue Procedure 2011-15. The regulations also provide that the requirement to report contributor names and addresses on annual returns generally applies only to returns filed by Section 501(c)(3) organizations and Section 527 political organizations.  All tax-exempt organizations must continue to maintain the names and addresses of their substantial contributors in their books

Form 1023 Paper Submission Transition Period Expires April 30

As of January 31, 2020, organizations are required to submit Form 1023, Application for Recognition of Exemption Under Section 501(c)(3) of the Internal Revenue Code, electronically online at Pay.gov. The IRS provided a 90-day transition period during which time applicants can continue to submit paper Form 1023 applications. The transition period expires April 30, 2020. The IRS will not accept paper Form 1023 applications postmarked after that date.

The user fee for Form 1023 remains at $600 for 2020. Applicants must pay the user fee through Pay.gov when submitting the form. Payment can be made directly from a bank account or by credit/debit card.

Updated information on Signing Electronically Submitted Form 1023 

An applicant may satisfy the electronic signature requirement for an electronically submitted Form 1023 by including, in the PDF file it uploads as part of its application, a

Last month, the IRS announced that certain taxpayers generally have until July 15, 2020, to file and pay federal income taxes originally due on April 15. The IRS has extended this relief to additional returns, tax payments and other actions. As a result, the extensions generally now apply to all taxpayers that have a filing or payment deadline falling on or after April 1, 2020, and before July 15, 2020. The extensions apply to many forms and tax payments made by tax-exempt organizations, including:

• Form 990-series annual information returns or notices (Forms 990, 990-EZ, 990-PF, 990-BL, 990-N (e-postcard))
• Forms 8871 and 8872
• Form 5227
• Form 990-T
• Form 1120-POL
• Form 4720
• Form 8976

See Notice 2020-23 and Rev. Proc. 2018-58 for more information, including a complete list of affected forms, tax payments and other time-sensitive actions.

IRS operations during COVID-19: mission-critical functions continue

In response to the

Notice 2020-20; Federal income tax filing and payment relief on account of Coronavirus Disease 2019 (COVID-19) emergency. This notice provides relief in addition to the relief provided in Notice 2020-18, issued on March 20, 2020. In this notice, the Treasury Department and IRS are providing relief to all taxpayers who have Federal gift (and generation-skipping transfer) tax returns and payments due on April 15, 2020. The April 15, 2020 deadline is postponed to July 15, 2020. Associated interest, additions to tax, and penalties for late filing or late payment will be suspended until July 15, 2020.

Notice 2020-20 will be in IRB 2020-16, dated April 13, 2020.

Tax Exempt and Government Entities Fiscal Year 2019 Accomplishments Letter

Highlights of our accomplishments during FY 2019, all of which support the goals of the IRS Strategic Plan for 2018-2022, include:

• Expanded the use of Pay.gov to make payments easier
• Expanded Employee Plans’ (EP’s) self-correction and voluntary correction programs to improve voluntary compliance
• Expanded the EP determination letter program to encourage compliance
• Expanded educational efforts, soft letters and compliance checks to increase voluntary compliance
• Released additional educational videos and articles and participated in many outreach events to empower taxpayers and encourage compliance

You can also review the TE/GE Fiscal Year 2020 Program Letter, which explains our priorities for the current fiscal year.