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White House Advocates for Mandatory Form 990 E-File

2013-federal-budgetIn President Obama’s recently released budget, the White House is asking legislators to pass a law mandating electronic filing for IRS Form 990.  The request asks for any legislation to include a 3-year phase-in period.

Currently, only those nonprofits with more than $10 million or more in assets are required to file electronically.  Approximately 50% of all Form 990s filed are already being e-filed each year.

This news is being met with mostly positive response from the nonprofit community so far, although some of the praise is guarded.  Jennifer Chandler, a representative of the National Council of Nonprofits, while generally supportive, said,

[quote]But we are also concerned about the practical aspect of whether every charitable nonprofit that has a requirement to file a 990 or 990-N can do so electronically. There are still parts of our country where there is still not reliable broadband Internet.[/quote]

Presumably, Ms. Chandler meant to say “990 or 990-EZ”, seeing as Form 990-N can only be filed electronically already.

Greg McRay, EA

Greg McRay is the founder and CEO of The Foundation Group. He is registered with the IRS as an Enrolled Agent and specializes in 501(c)(3) and other tax exemption issues.

This Post Has 2 Comments
  1. Has there ever been talk of requiring all nonprofits to file a 990, essentially doing away with the postcard? Our organization had revenue of less than $6,000 in 2010, and chose to file a 990 because of a grantor mentioned it allowed for easier transparency. 2013, will be the first year we are required to but it will be nice because we have already learned how to do so.

    1. There has been proposals for such, but the reality is that a huge percentage of approved nonprofits fall within the 990-N e-postcard threshold. If they all were required to file actual Form 990s, the IRS would have to hire a legion of people just to manage that. The practical reality is that they simply do not have the time and resources to review data from all NPOs when those organizations do not add to the treasury.

      That does not mean, however, that forward thinking nonprofits shouldn’t file Form 990 even when not required. There’s much to be said about the advantage of transparency. I agree with the grantor’s comments.

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