The Taxpayer First Act of 2019 amended Section 6033(n) to require most exempt organizations to e-file their returns and related forms for tax years beginning after July 2, 2019. However, the IRS continued to accept paper forms and delayed the implementation of the requirement in many cases because the forms had not been converted into electronic format. In order to clarify the current status of mandatory e-filing, the IRS has updated its information for the following forms:
- Form 990, Return of Organization Exempt From Income Tax must be e-filed for tax years ending July 31, 2020 and later;
- Form 990-PF, Return of Private Foundation or Section 4947(a)(1) Trust Treated as Private Foundation must be e-filed for tax years ending July 31, 2020 and later; and
- Form 990EZ, Short Form Return of Organizations Exempt from Income Tax (for organizations with gross receipts of less than $200,000 and assets of less than $500,000 at the end of their tax year) may either file a paper return or e-file for tax years ending before July 31, 2020, but will be required to e-file for tax years ending July 31, 2021 and later. The IRS notes that EZ filers that previously file paper returns will receive a letter from the IRS informing them that they are now required to e-file.
The IRS continues to accept paper filings for the following forms because these forms have not yet been converted into electronic format:
- Form 990-T (including Schedule A to Form 990-T), Exempt Organization Business Income Tax Return, which is expected to be available and required to be e-filed in February 2021; and
- Form 4720, Return of Certain Excise Taxes Under Chapters 41 and 42 (for private foundations reporting excise tax liability), which is expected to be available in March 2021, at which time taxpayers may either file a paper return or voluntarily e-file. Mandatory e-filing will be required for tax years beginning July 1, 2021 and later. Note: the IRS also announced in Notice 2021-1 that it will no longer allow taxpayers to file a joint Form 4720.