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Library of Congress Cataloging-in-Publication Data is Available:
ISBN 9781119540953 (main edition)
ISBN 9781119873631 (Paperback)
ISBN 9781119873655 (ePDF)
ISBN 9781119873648 (ePub)
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Preface
The IRS's Tax Exempt and Government Entities (TE/GE) Division on an ongoing basis seeks to meet its responsibility to provide the best possible service to taxpayers as it administers its obligation to enforce the rules set forth in the federal tax code. Its role ranges from designing forms to writing instructions and memoranda to explain policies and procedures for filing tax returns, monitoring filing deadlines, and managing a trained staff to administer the tax filing system.
This supplement begins with a worrisome notice from IRS concerning their inability to promptly process and review materials taxpayers dutifully prepared on paper and properly sent to them in a timely manner according to deadlines they set:
The IRS encourages [means requires] organizations to file these forms electronically. If you file Form 990-EZ on paper, you may receive a prematurely-issued CP259A notice of non-filing. If you file Form 8868 on paper, there may be a delay in receiving a CP211A notice confirming approval of your extension request. If you filed your return or extension request on paper, you do not need to take any further action. Please don't file a second return or contact the IRS about the status of your filing. We appreciate your patience.
When it is urgent that IRS approval of tax-exemption as issued on the determination letter be available to a grantee or other interested party, the organization might consider requesting expedited consideration of qualification by the IRS.
CHAPTER 1 Distinguishing Characteristics of Tax-Exempt Organizations
§ 1.4 Role of the Internal Revenue Service
§ 1.8 Developments Responding to COVID-19 (a) CARES and SECURE Acts (b) IRS Delays in Tax Payment and Return Due Dates
§ 1.4 Role of the Internal Revenue Service
p. 15. Add at end of paragraph at top of page:
In preparing this supplement, I found that rereading the instructions gave me facts and IRS directions I was unaware of or had forgotten. Accordingly, the following is a listing of the items I needed to carefully consider as I review returns prepared by others in my office.
The instructions for 990-PF for 2020 begin with the following “What’s New” section:
Reduced tax on net investment income. The Taxpayer Certainty and Disaster Tax Relief Act reduced the 2 percent Internal Revenue Code section 4940(a) excise tax on net investment income of private foundations to 1.39 percent effective for tax years beginning after December 20, 2019. This legislation also repealed Internal Revenue Code section 4940(e), which from January 1, 1985, through December 20, 2019, provided a reduced 1 percent tax when its qualifying distributions for that year exceeded the fair market value of its investment assets multiplied by the private foundation's average percentage payout for the prior five years. The 2020 990-PF form still contained Part V, Reduced Tax on Net Investment Income, which was no longer used and which the instructions said was not necessary to complete.Other various sections are also included in the instructions:
Electronic filing reminder. For tax years beginning on or after July 2, 2019, the Taxpayer First Act, section 3101 of P.L. 116-25, requires that returns by exempt organizations be filed electronically. Accordingly, you must file the return electronically for tax years beginning in 2020.
Reporting standard for net assets updated. Part II of Form 990-PF was updated to reflect the Financial Accounting Standard Board's (FASB's) reclassification of net assets into two classes, net assets without donor restrictions and net assets with donor restrictions. For more information, see Part II. Balance Sheets, Lines 24 Through 30, Net Assets or Fund Balances.
Pub. 15-T. Pub. 15-T, Federal Income Tax Withholding Methods, contains the federal income tax withholding tables that were previously provided in Pubs. 15 and 15-A and explains how to use the tables.
Exception from the excise tax on excess business holdings. Section 4943(g) provides an exception from the excise tax on excess business holdings for certain independently operated enterprises whose voting stock is wholly owned by a private foundation. For more details, see Part VII-B, Line 3a.
Initial Form 990-PF by former public charity. If you are filing Form 990-PF because you no longer meet a public support test under section 509(a)(1) and you haven't previously filed Form 990-PF, check Initial return of a former public charity in Item G of the heading section on page 1 of your return. Before filing Form 990-PF for the first time, you may want to go to IRS.gov/EO for the latest information and filing tips to confirm you are no longer a publicly supported organization.
Automatic revocation. Most tax-exempt organizations, other than churches, are required to file an annual Form 990, 990-EZ, or 990-PF with the IRS, or to submit a Form 990-N e-Postcard to the IRS. If a tax-exempt private foundation fails to file an annual return as required for three consecutive years, it will automatically lose its tax-exempt status and will become a taxable private foundation. See M. Penalty for Failure to File Timely, Completely, or Correctly.
IRS e-Services make taxes
