Final regulations: Electronic-filing requirements for exempt organization returns, other returns and documents
Final regulations amending rules for filing electronically for exempt organization returns, and other returns and other documents
Exempt organization returns
The U.S. Treasury Department and IRS last week released for publication in the Federal Register final regulations (T.D. 9972) amending the rules for filing electronically certain information and tax returns filed by tax-exempt organizations, as well as certain partnership returns, corporate income tax returns, withholding tax returns, certain other information returns, registration statements, disclosure statements, notifications, actuarial reports, and certain excise tax returns.
The final regulations [PDF 482 KB] (25 pages as published in the Federal Register on February 23, 2023) adopt with some modification regulations that were proposed in July 2021, after taking into account and addressing comments received with respect to the proposed regulations. Read TaxNewsFlash
The final regulations requiring electronic filing of the Form 990, Form 990-EZ, Form 990-PF, Form 990-T, and (in the case of a private foundation) Form 4720 apply to returns filed during calendar years beginning after February 23, 2023 (i.e., filed in 2024 or later). However, the preamble to the regulations makes clear that the statute requiring electronic filing of these returns—section 3101 of the Taxpayer First Act—is “self-executing” and generally requires electronic filing for tax years beginning after July 1, 2019.
For filers of the Form 4720 other than private foundations, the final regulations reduce the 250-return threshold for mandatory electronic filing enacted in 1998 to the 10-return threshold provided by the Taxpayer First Act. Under current regulations, the 250-return threshold applies separately to each type of information return covered under the regulations. The final regulations require filers to aggregate across return types to determine whether a filer meets the 10-return threshold and is thus, required to file electronically. These requirements are applicable to Forms 4720 required to be filed by persons other than private foundations for taxable years ending on or after December 31, 2023. This applicability date may provide a bit more time for some entities (including taxable entities for which the same applicability date applies) to transition to e-filing than under the proposed regulations, which would have made e-filing mandatory for returns filed in 2024. Treasury and the IRS made the change in the final regulations in response to comments recommending a delay of the applicability date to provide time for customers to adjust inventories; for software companies to adjust their programming; for paper filers and the IRS to adjust their processes; and for the IRS to communicate the changes to the public.
The final regulations also provide additional guidance regarding the standard for, and how to obtain, a hardship waiver from the mandate to electronically file if a taxpayer is otherwise required to electronically file the covered forms and returns, and further provides limited exceptions to the mandate.
Read a related IRS release—IR-2023-31 (February 21, 2023)
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