Internal Revenue Service Electronic Filing Regulations for Government Entities, Tax Exempt Organizations and Employee Plans

The Department of the Treasury recently published final regulations, implementing the reduced electronic threshold under Section 2301 of the Taxpayer First Act of 2019 (TFA). 

Under the regulations found in T.D. 9972, taxpayers who are required to file at least 10 returns of any type during the calendar year must file electronically. 

Generally, the final regulation applies after 2023. See the regulations for detailed dates of applicability to specific returns.

Among others, the regulations apply to the following forms:

Government Entities

• 8596, Information Return for Federal Contracts
• 8038-CP, Return for Credit Payments to Issuers of Qualified Bonds
  

Exempt Organizations

• 5227, Split-Interest Trust Information Return
• 4720, Return of Certain Excise Taxes on Charities and Other Persons Under Chapters 41 and 42 of the IRC (if filed by other than a private foundation)
• 1120-POL, U.S. Income Tax Return for Certain Political Organizations

Employee Plans

• 8955-SSA, Annual Registration Statement Identifying Separated Participants with Deferred Vested Benefits
• 5500-EZ, Annual Return of A One-Participant (Owners/Partners and Their Spouses) Retirement Plan or A Foreign Plan
• 5330, Return of Excise Taxes Related to Employee Benefit Plans

Under Internal Revenue Code Section 6011(e)(2)(B), the regulations take into account the ability of the taxpayer to e-file at reasonable cost. On a year-by-year and form-by-form basis, the IRS may waive the requirement to file electronically in cases of undue hardship. In certain circumstances, a filer may be administratively exempt from the requirement to file electronically. The instructions to each form will set forth details on the waiver. In general, the filer should maintain documentation supporting the undue hardship or other applicable reason for not filing electronically.

Additionally, Section 3101 of the TFA sets forth “mandatory e-filing by exempt organizations,” which is already in effect. This applies to the following forms:

• 4720 (if filed by a private foundation)
• 990, Return of Organization Exempt from Income Tax
• 990-EZ, Short Form Return of Organization Exempt From Income Tax
• 990-PF, Return of Private Foundation or Section 4947(a)(1) Trust Treated as Private Foundation
• 990-T, Exempt Organization Business Income Tax Return