The country is still on the road to recovering from the COVID-19 pandemic, this was not only the largest public health crisis in modern history, but the impact on the economy was also huge. The effects are still being felt in every industry as Americans struggle to regain their footing.
The nonprofit sector has been impacted in significant ways. With Americans struggling financially during the pandemic, this greatly affected their ability to make donations and volunteer their time due to social distancing requirements. With the need for community services at an all-time high, many organizations have been stretched in terms of staff and funds.
This obviously has made meeting the IRS filing requirements for the 990 Series of tax-exempt returns much more difficult and even impossible for certain nonprofit organizations.
There is good news here!
The IRS announced recently that they would provide COVID late filing penalty relief to nonprofits that have not filed certain 990 returns for the 2019 and 2020 tax years. However, they must file those returns by September 30th, 2022.
Who is this Penalty Relief for?
This tax relief is designed to help certain nonprofit organizations that are required to file nonprofit tax returns on an annual basis with the IRS. Organizations that have fallen behind on IRS filing obligations will have the opportunity to catch up.
This penalty relief only applies to Form 990-PF and 990-T, here is an overview of both of these forms
Form 990-PFis filed by private foundations or organizations that fall under section 4947 (a) (1) Nonexempt Charitable Trust Treated as a Private Foundation used to calculate the taxes based on investment income and to report charitable distributions and activities.
Form 990-T is the Exempt Organization Business Income Tax Return (and Proxy Tax Under Section 6033(e)), which is used to report unrelated business income and tax liabilities.
However, it is important to note that this only applies to tax forms from the 2019 and 2020 tax years, forms for tax year 2021 are not included and are not eligible for this relief. This relief also applies to several other individual and business tax forms. To find out more, check out this IRS Notice
What type of Relief is Available?
It is important to note that this relief only applies to the IRS’ “failure to file” penalty.
For reference, according to the IRS, the penalty for late filing is generally 5% per month or up to 25% of the unpaid tax.
For nonprofit organizations specifically, losing their tax-exempt status can be a huge setback. Organizations that fail to file for three consecutive years are subject to automatic revocation of their tax-exempt status, so those that have fallen behind are being given to avoid this, at least based on tax years 2019 and 2020.
What to do if this applies to your organization
Needing to file these 2019 and 2020 tax returns by September 30th may seem nearly impossible, but not with ExpressTaxExempt. Also, if your organization hasn’t filed a 990 return since 2018, you may not have e-filed before.
The IRS has mandated that all 990 forms be filed electronically now.
We support the 990-PF for Tax Years 2019, 2020, and 2021.
We support all the Schedules that your nonprofit may need to attach
We have direct form entry and interview-style filing options complete with built-in error checks.
You can invite users who could assist you with filing your return
And you are able to share access to the returns you create with your board members for approval
If your return is rejected by the IRS, you have an option to fix the error and re-transmit it at no additional cost.
Don’t Wait, Start Filing!
Get Started with ExpressTaxExempt and file your returns as needed before this September 30th. Filing your 990-PF and/or 990-T returns can be complicated. Simplify the filing process with our Live Customer Support team, they are available to assist you by phone, email, and live chat.