IRS Extends Filing Deadline for Certain Tax-Exempt Organizations

by Proskauer - Not for Profit/Exempt Organizations
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The IRS has granted an automatic extension for certain tax-exempt organizations to file their annual returns electronically. The extension is being provided because the IRS’s electronic filing system (the “Modernized eFile system” or “MeF”) will not be available for filing Forms 990, 990-EZ, 990-PF, and 1120-POL from January 1, 2012 through February 29, 2012 (the “Suspension Period”). The extension is only available for organizations with filing due dates (whether original or extended) during the Suspension Period (“Affected Organizations”). Ordinarily, organizations with a fiscal year ending August 31 or September 30 would have filing deadlines during the Suspension Period. Under Notice 2012-4, Affected Organizations will automatically be granted an extension of time to file electronically to March 30, 2012.

Since the relief is automatic, an Affected Organization does not have to file Form 8868, Application for Extension of Time to File an Exempt Organization Return as long as the organization files its return by March 30, 2012. However, an Affected Organization will still have the option to file a Form 8868 to request an automatic extension of time to file during the Suspension Period. For example, if an Affected Organization’s original deadline to file its Form 990 is on February 15, 2012, the organization may properly complete and file a Form 8868 by such date to receive an automatic three-month extension of time to file ending on May 15, 2012. An Affected Organization that has previously received only one three-month extension of time to file will also continue to have the option to file Form 8868 to request a second automatic three-month extension.  

Because a six-month extension of time to file is the full extension permitted by statute, the automatic extension relief provided by the Notice is not available to an Affected Organization that has already obtained two three-month extensions of time to file. However, any such organization will be considered to have reasonable cause for failing to file on time and, therefore, will not be assessed penalties for failure to timely file if the organization files its return by March 30, 2012. These organizations will not have to file a Reasonable Cause Statement in order to obtain such relief, but each such organization should attach a Reasonable Cause Statement to its return in order to avoid receiving a system-generated penalty notice for late filing. 

Generally, any Affected Organization that is normally permitted to submit a paper filing will be able to do so during the Suspension Period. Additionally, Affected Organizations that are normally required to file electronically and are not eligible for the automatic extension of time to file granted by the Notice because they already obtained two three-month extensions previously will be permitted to submit a paper filing. The IRS noted that while the Notice provides these organizations with relief from any penalties for failure to file timely, some organizations may not feel comfortable relying on the Notice for such relief. 

Notably, small tax-exempt organizations that are required to file Form 990-N (the e-Postcard) will continue to be able to file electronically during the Suspension Period. Accordingly, the extension and penalty relief provided in the Notice does not apply to such organizations. 

 

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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