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E-Filing Mandate for Nonprofits

04.12.2021

The extension of personal tax filings (Form 1040) to May 17, 2021, is welcome relief for many — taxpayers and professionals alike. However, that deadline now overlaps with the filing deadline for calendar year-end and extended June 30, 2020, fiscal year-end for nonprofit organizations.

That is not the only wrinkle in store for some nonprofit volunteers, staff and board members, though.

Effective for tax years beginning after July 1, 2019, the Taxpayer First Act, Pub. L. 116-25 Section 2301, now requires organizations exempt from taxation under section 501(a) to file their annual Form 990 and Form 990-PF electronically, unless they are covered by an exception in the form's instructions. Form 990-EZ filers are required to electronically file for tax years ending July 31, 2021, and later.

The IRS posted a news release highlighting this change on December 13, 2019. Click here to read the release.

What happens if your organization is required to file electronically, but you submit a paper return instead, or your electronically filed return is incomplete? The IRS noted that organizations can expect to have their paper-filed returns sent back to them to be resubmitted electronically and incomplete electronic returns will be rejected. Depending on timing, that could mean the organization's return is filed late.

Late filing is a big deal for nonprofits — remember, three years of untimely filing will result in automatic revocation of the organization's tax-exempt status.

Now is not the time to go at it alone. The Not-for-Profit team at Brown Smith Wallace is here to help! Reach out to one of our team members today to discuss the needs of your nonprofit organization.

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