The Taxpayer First Act requires certain tax-exempt organizations to file information and tax returns electronically for tax years beginning after July 1, 2019. Pending conversion to electronic format, the IRS previously accepted paper-filed Forms 990-T, Exempt Organization Business Income Tax Return, and Form 4720, Return of Certain Excise Taxes Under Chapters 41 and 42 of the Internal Revenue Code.  As of March 2021, these forms and instructions have been revised and electronic filing is required.

For reporting on tax year 2020, the new 990-T Schedule A, Unrelated Business Taxable Income From an Unrelated Trade or Business, will reflect separate reporting of each trade or business as required by the Tax Cuts & Jobs Act of 2017. Filers will report total unrelated business taxable income tax based on Schedule(s) A information and compute the tax on Form 990-T.  On Form 4720, each taxpayer must file his or her own return. Taxpayers such as disqualified persons can no longer report their tax on the organization’s return.

For small exempt organizations, the legislation specifically allowed a postponement (transitional 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. Those who previously filed paper forms will receive a letter from the IRS informing them of the change.

Forms 990, Return of Organization Exempt from Income Tax, and 990-PF, Return of Private Foundation or Section 4947(a)(1) Trust Treated as Private Foundation, for tax years ending July 31, 2020, and later must be filed electronically.

Stanfield + O’Dell has a team of tax professionals well versed in tax-exempt organizations and compliance. If you have any questions or would like to discuss your organization’s tax filing, please contact us.