Yesterday, the U.S. Senate unanimously approved the Taxpayer First Act (H.R. 3151), which includes a requirement for all nonprofits to electronically file their annual information returns (Form 990 series) with the Internal Revenue Service (IRS). Although the bill will take effect in the 2020 tax year, the IRS is authorized to delay application of the requirement for up to 2 years for organizations that could unduly burdened. This includes small organizations with annual gross revenues less than $200,000 and assets less than $500,000, and organizations that file Form 990-T due to unrelated business income. The bill also increases penalties for failing to file an annual information return and clarifies that notice the IRS must provide if Form 990 has not been filed for two consecutive years.
Currently, electronic filing is available to all 990 filers but required only for those organizations who file Form 990-N or file at least 250 returns and have assets of $10 million and more. Even though this change may require some adaptations for nonprofits that file paper returns, it would enable the IRS to make open Form 990 data available to the public in machine-readable formats.
From our perspective, the nonprofit sector would benefit from a clearer picture of nonprofit’s activities and financial support.
The bill awaits signature by the President.