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Annual filings, user fees and electronic filing mandates

July 16, 2020

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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,

Proposed changes to group exemption letter program, UBTI ‘silo’ rules and more

June 15, 2020

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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

Treasury, IRS issue final regulations providing relief for certain tax-exempt organizations

May 28, 2020

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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

Electronic Form 1023 news, social media reminder and more

April 30, 2020

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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

IRS extends more tax deadlines; EO operations affected during COVID-19 and more

April 14, 2020

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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

Update to Notice 2020-18, Relief for Taxpayers Affected by Ongoing Coronavirus Disease 2019 Pandemic, Related to Gift and Generation-Skipping Transfer Tax Filing and Payment Deadlines

March 27, 2020

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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.

TE/GE Fiscal Year 2019 Accomplishments Letter

March 23, 2020

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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.

Utilizing Employer-Sponsored Foundations to Alleviate Employee Hardship

Employers are looking for ways to assist employees and their dependents experiencing financial hardship due to the Coronavirus. One potential tax-advantaged method is the use of an existing or newly formed employer-sponsored foundation which qualifies for exemption under Section 501(c)(3).

Under established IRS guidance set forth in Publication 3833, an employer-sponsored foundation may operate a fund which provides financial assistance to employees who experience financial hardship due to a qualifying event, including certain federally declared disasters or emergencies which now include circumstances resulting from the Coronavirus. If the conditions below are satisfied, persons (including the employer and other employees) making donations to the foundation are entitled to a charitable deduction under Section 170 of the Code and financial relief payments made to employees are not included in taxable compensation:

  • The class of beneficiaries must be large or indefinite (a “charitable class”) – for example, all current and future employees of
  • Form 1023 Revisions and Required Electronic Submission

    February 4, 2020

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    The IRS is revising Form 1023, Application for Recognition of Exemption Under Section 501(c)(3) of the Internal Revenue Code, and its instructions, to help charities apply for 501(c)(3) tax-exempt status.

    Effective January 31, 2020, applications for recognition of exemption on Form 1023 must be submitted electronically online at www.pay.gov. The IRS will provide a grace period during which it will continue to accept paper versions of Form 1023 (Rev. 12-2017).

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

    IRS News Release on the Taxpayer Certainty and Disaster Tax Relief Act provisions

    The following provisions may apply to tax-exempt organizations’ current and previous tax years:

    Client Alert – Section 4940 Excise Tax Simplification

    January 21, 2020

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    Section 4940 of the Code imposes an excise tax on the “net investment income” of private foundations.  Historically, the excise tax was 2%, with an opportunity for reduction to 1% for a year in which the foundation’s qualifying distributions exceeded a certain amount calculated pursuant to a complicated formula.  Recent tax legislation simplifies the two-tiered system by replacing it with a flat rate of 1.39%.  The new rate is effective for tax years beginning after the date of enactment; which would be 2020 for calendar year private foundations.