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Major Changes Coming for Tax-Exempt 8868 Extension (990n Extension)

In regulation released in January 2017, the Internal Revenue Service started a new extension procedure for the organizations that are required to file Form 990, “Return of Organization Exempt from Income Tax”. Tax Exempt Organizations that need an extension at present must file a “single ”IRS 8868 Form to request the automatic six-month maximum extension of time in order to file the annual tax return.Small Charity Organizations May Be Tax Exempted But Not Exempted From Filing Returns IRS 990-N E-Postcard

Earlier, the Tax Exempt Organizations proposed to avail a full statutory extension period, which could be 2 consecutive 3 months’ extensions, give a valid reason for the extension request and sign the extension “under penalty of perjury”

NEW Form 8868 Form Filing Procedure

The new IRS 8868 Form filing procedure will also apply to the tax filers of other annual returns like IRS Form 990PF [“Return of Private Foundation”], IRS Form990 EZ [“Short Form Return of Organization Exempt from Income Tax”], and IRS Form 5227 [“Split-Interest Trust Information Return” used by Charitable Trusts “].

Apart from that, Form 990 T ( Exempt Organization Business Income Tax Return), which is required for the tax-exempt organizations generate Unrelated Business Income Tax ( UBIT) will always be subject to a 6 month extension time and this will continue to proceed under the new IRS 8868 Form process.

The new extension form is applicable initiating with the filing of “ tax returns of 2016 tax year “ during the calendar year 2017 that is fiscal years with the start date in 2016 and it should be filed before the due date for filing of the respective tax return. As a notice, the Form 990 is due 4.5 months initially following the organization’s fiscal year-end. For “affiliate groups or control” a separate extension form should be filed for each organization or affiliate, which has an annual filing requirement.

The required payments must be accompanied by the extension form. At the choice of the tax filer, the Form 8868 can be submitted through regular mail to the Internal Revenue Service (IRS) Center or electronically filed using IRS authorized e-file tax service provider.

In the end, remember that the revised extension procedure is applicable to the annual Federal Form 990N and other similar form filings for a Tax Exempt Organization and it does not affect any state-mandated annual filing requirements directly.

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