Comments Due on Required IRS E-filing by Nonprofits

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January 12, 2005

Comments are due to the IRS on February 28 regarding newly issued temporary regulations requiring tax-exempt entities to begin submitting Form 990 electronically. Exempt organizations with $100 million or more in assets must file electronically beginning with the 2005 tax year. Organizations with $10 million or more must file electronically for the 2006 tax year, and charitable trusts and foundations are required to file electronically beginning with the 2007 tax year. The temporary regulations, which also serve as proposed regulations, were issued on January 12.

The IRS cites a significantly decreased error rate of less than 1 percent for electronic submissions of Form 990 when compared to paper submission error rates of 35 percent. The reduction in error rates is due to required screening of electronic submissions by the IRS prior to acceptance, whereas paper submissions are not subject to screening. Additional error reduction is achieved through the elimination of manual input of Form 990 data by IRS employees. Additional benefits include reduced processing time, reduced audit cycle time, and faster determination of emerging issues and trends by the IRS.

For more information, contact Mary M. Bachinger, NACUBO director of tax policy.