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New Law Streamlines Form 990 Extensions

Alonza Robertson
Published Date:
Aug 22, 2015

Things just got a little less cumbersome for CPAs filing returns for non-profit organizations.

A new bill, signed into law last month by President Obama, includes a streamlined, automatic 60-day extension request process for federal tax filings of Form 990. The NYSSCPA's Exempt Organizations Committee had made the recommendation to the IRS in a 2014 comment letter.

“We thought the former process of filing and awaiting approvals, of separate three-month extensions, was an unnecessary burden for non-profit groups and additional workload for the IRS,” said Joanne S. Barry, the Society's executive director and CEO. “We made the suggestion to update the process to only a single six-month extension, and Uncle Sam agreed.”

The provision was included in the Surface Transportation and Veterans Health Care Choice Improvement Act of 2015, which was signed July 31 by Obama and provides that the returns of organizations exempt from income tax (non-profit and foundation groups) filing Form 990 will have an automatic six-month extension.

“We have been instrumental in changing the law for nonprofits nationwide. Although we were likely not the only group to request this, there was definitely an obvious juxtaposition between our re-submission and the new law,” said Ethan Kahn, an Exempt Organizations Committee member.

In its letter, the Society suggested that corporate, partner, individual and fiduciary returns move to a single extension for the maximum amount of time allowable associated with their federal returns. In New York, charitable and exempt organizations were recently given a 180-day extension for filing their reports.

Besides the unnecessary burden on the IRS and exempt organizations, Kahn noted the monitoring of two different deadlines for state and federal filings of essentially the same information created confusion and unintended non-compliance.

The advantages of the single six-month extension will provide a cost savings to the IRS, by eliminating the personnel labor required to process the additional forms, and eliminate unnecessary penalties because of mishandled second extension mailings and other inadvertent clerical errors in dealing with the second request.

“It’s satisfying to know this change is in the best interest of the IRS and the tax exempt industry, taxpayers and tax professionals,” Barry said.

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