IRS Transitions to More Electronic Filing for Tax Exempt Organizations
The transition from paper filings sent via the U.S. Postal service to electronic filings continues at the Internal Revenue Service. On January 5, 2021, the service issued Revenue Procedure 2021-08, which requires that Form 1024-A (Application for Recognition of Exemption Under Section 501(c)(4) of the Internal Revenue Code) be filed electronically. The requirement to filing the Form 1024-A electronically starts immediately, but there is a 90-day transition relief period from the effective date of January 5, 2021 during which the IRS will still accept paper copies.
The Form 1024-A joins its big sister, the Form 1023 (Application for Recognition of Exemption Under Section 501(c)(3) of the Internal Revenue Code) with electronic filing. The IRS required that all Form 1023 applications be filed electronically as of January 31, 2020.
Currently, annual information returns Form 990 and Form 990-PF are generally required to be filed electronically, and Form 990-N and Form 1023-EZ have always been filed electronically.
The Future of IRS Forms
Looking forward, the IRS will soon require that Form 990-EZ be filed electronically. Currently Form 990-EZ (Short Form Return of Organization Exempt from Income Tax) is subject to transition relief. For tax years ending before July 31, 2021, the IRS will accept either paper or electronic filing of Form 990-EZ, Short Form Return of Organization Exempt from Income Tax. For tax years ending July 31, 2021, and later, Forms 990-EZ must be filed electronically. Generally, Form 990-EZ is for organizations with annual gross receipts less than $200,000 and total assets at tax year-end less than $500,000.
The IRS has said that once Form 4720 (Return of Certain Excise Taxes Under Chapters 41 and 42 of the Internal Revenue Code) and Form 990-T (Exempt Organization Business Income Tax Return), will be subject to mandatory electronic filing once the electronic version of the forms is available sometime in early 2021.
Many of these moves to electronic filing result from the Taxpayer First Act, which was enacted in July 2019 with the goal to broadly redesign the IRS, expand and strengthen rights, and remake the IRS into a more tax-payer friendly agency.