EO Update: E-News For Charities & Nonprofits – Corporate/Commercial Law

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EO Update: E-News for Charities and Nonprofits

July 05, 2021

Bryan Cave Leighton Paisner LLP

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Update on mandatory electronic filing for Form 4720 by private foundations

Section 3101 of the Taxpayer First Act requires certain exempt organizations to electronically file information and tax returns for tax years beginning after July 1, 2019. Private foundations must file Form 4720, Return of Certain Excise Taxes under Chapters 41 and 42 of the Internal Revenue code, are included in the electronic filing mandate. Until Form 4720 was converted to electronic format, the IRS continued to accept the 2019 tax year version of this paper return. While the software for the electronic version of Form 4720 is under development, the IRS continued to accept the tax year 2020 version of Form 4720 from private foundations on paper. See communication 2021-01, 2021-2 IRB 315.

The 2020 Form 4720 and its instructions have been updated for electronic filing. Since the beginning of June 2021, several providers have made software available for electronic submission of Form 4720. For information on software vendors that support Form 4720 electronic filing, see the Modernized e-File (MeF) Vendors page of Exempt Organizations.

Each 2020 and future year, a private foundation filed Form 4720 with a due date on or after July 15, 2021 must be submitted electronically rather than on paper. A limited exception applies to 2020 Form 4720 returns with a due date on or after July 15 that are submitted on paper and postmarked on or before June 16, 2021. Organizations other than private foundations that are required to file Form 4720 are encouraged, but not required, to file Form 4720 electronically.

Information about notices that have been submitted on paper Form 990-EZ or Form 8868

The IRS is experiencing delays in processing paper returns, including Form 990-EZ, Short Form Return from an Income Tax Exempt Organization, and Form 8868, Requesting Extension of Deadline for Filing Tax-Exempt Organization Return.

The IRS encourages organizations to submit these forms electronically. If you are filing Form 990-EZ on paper, you may receive an early CP259A notice of non-filing. If you are submitting Form 8868 on paper, there may be a delay in receiving the CP211A notice confirming approval of your renewal request. If you submitted your return or renewal request on paper, you do not need to take any further action. Please do not submit a second return or contact the IRS regarding the status of your filing. We appreciate your patience.

Register for a free webinar to apply for an exemption – June 23rd

The Tax Exempt and Government Agencies Department would like to invite you to register for the free webinar on how to apply for a tax exemption.

When: Wednesday, June 23, 2021, 1 p.m. – 2 p.m. ET

The webinar will:

• Explain what steps you need to take before applying for tax exempt status with the IRS
• Discuss the different types of tax exemptions available under the Internal Revenue Code and the forms used to apply for them
• Read how to apply for tax exemption recognition, including tips to shorten the application process.

The content of this article is intended to provide general guidance on the subject. Expert advice should be sought regarding your specific circumstances.

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