How to File the Updated 8868 Extension Form

IRS Form 8868 is a tax extension form for exempt organizations and private foundations needing to increase their filing deadlines for 990 tax returns. The form separates into two sections - Part I and Part II - with each one offering a 3-month extension of time.

For the 2016 filing year, the IRS has eliminated the separate sections and now offers the 8868 form as a single filing that grants an automatic 6-month extension of time. Completing the new 2016 Form 8868 is similar as it was before; however, here are some IRS guidelines to follow when submitting an extension:


Basic Organization Details
Begin the form by adding essential information about your exempt organization or private foundation which includes the following:

• Organization Name
• Organization Address
• Employer Identification Number (EIN) or Social Security Number (SSN)

The IRS added the social security option for individuals filing the form. If you are filing on behalf of a nonprofit or private foundation, you should enter the federal employer identification number.


Return Codes/Books/Group Return
Enter the return code that represents that tax form you want to extend its filing time:

Form 990/990-EZ - 01 Form 990-T (corporation) - 07

Form 990-BL - 02 Form 1041-A - 08

Form 4720 (individual) - 03 Form 4720 (other than individual) - 09

Form 990-PF - 04 Form 5227 - 10

Form 990-T (sec. 401(a) or 408(a) trust) - 05 Form 6069 - 11

Form 990-T (trust other than above) - 06 Form 8870 - 12

You need to enter the full name of the person or officer that manages the organization’s books or financial statements along with the organization’s phone number, fax number, or both. You also have a choice to indicate whether the organization does not have an office or place of business within the United States.

If the extension is for a group return, the IRS requires you to enter the organization’s 4-digit Group Return Number (GEN). You can select if the extension is for the whole group or part of the group. If it’s for part of the group, you should attach a list of names and EINs of those organizations.

Tax Year Period
On Line 1, enter the extended due date which is six months after the initial filing deadline. For example, if your due date is June 15, then your extended date is December 15. Then, you can choose if the extension is for a calendar year or fiscal year. If it’s for a calendar year, then enter the numerical year, i.e. 2016. For fiscal tax years, enter the begin date followed by the end date, i.e. March 1, 2016, to February 28, 2017.

Important: The updated Form 8868 only applies to tax year 2016 and upcoming tax years in the future. If you happen to be filing an extension for 2015, you’ll need to revert to the 2-part form.

For organizations filing for a tax year period less than a full 12 months, you can indicate the reason why on Line 2.


Tax Liabilities
Line 3a, b, and c are for exempt organizations and private foundations with tax amounts owed to the IRS. Enter any tentative taxes minus nonrefundable credits on Line 3a. List refundable credits, estimated tax payments made, and any prior year overpayments as a credit on Line 3b. Subtract your total sum of 3b from 3a to get your “Balance due.” on Line 3c - that’s the amount you have to pay either through EFTPS or with a check or money order.

E-file Tax Extensions
E-filing Form 8868 to the IRS is the best way for both individuals and tax professionals. By using IRS-authorized, e-file services like ExpressTaxExempt or ExpressExtension, you can typically complete and transmit a 2016 8868 form in less than 10 minutes. The IRS processes e-filed forms much quicker than paper filing, so you’ll receive confirmation and a copy of your extension soon after transmitting. And with e-filing, you usually have until Midnight local time of the deadline date to submit your form.

For any questions about your organization’s information, tax year period, tax liabilities, or Form 8868 return codes, you can contact the IRS Tax-Exempt Hotline at 877.829.5500. If you’re interested in e-filing your extension form, you can reach ExpressTaxExempt at 704.839.2321 or via email with support@ExpressTaxExempt.com.

Read More »

What to Do For the May 15 Deadline

There’s about a month left before the May 15 filing deadline for tax-exempt organizations. The due date only applies to groups who operate on a calendar tax year which is from January 1 to December 31.

If this is your first time filing for a nonprofit or charity, or you just can’t remember exactly how to file a 990 form, here are a few tips to get you prepared.

Get Proper Documents Together
Before you even begin with the first page, you need to have the right information readily available or else you’ll waste time looking for papers rather than completing your return. Depending on which 990 form you need to file, you may have to report various details such as revenue and expense amounts, program services, a list of employees, financial statements, governance and more.

Some sections of a 990 tax return require additional information from a Schedule which you attach to your form. Schedules allow you to submit extra details about certain activities conducted by your organization - some schedules may apply to you such as Schedule B for contributions while others may not. For instance, Schedule H is only for hospitals and Schedule N is for terminated tax-exempt groups.

Types of 990 Forms
The IRS offers four main types of 990 forms - certain kinds serve as simpler options to the original 990 long form. Choosing the most appropriate return will save you precious amounts of filing time:

• Form 990-N (e-Postcard) - For organizations reporting gross receipts less than $50,000
• Form 990-EZ (Short Form) - For organizations reporting gross receipts less than $200,000 and total assets less than $500,000
• Form 990 (Long Form) - For organizations reporting gross receipts equal to or greater than $200,000 and total assets equal to or greater than $500,000
• Form 990-PF - For organizations identifying as an exempt private foundation, taxable private foundation, or a nonexempt charitable trust treated as a private foundation

Extension Form 8868
For any reason, if you are not ready for the May 15 deadline, you can extend your filing due date by submitting IRS Form 8868. The 8868 form allows you to increase the time you have to file a 2016 990 form by six months. You are responsible for submitting an extension request before your original due date - any later and the IRS will automatically reject it. There is no explanation required for filing an extension; however, if your organization owes any tax liabilities, it still must be paid by the original filing deadline.

Paper Filing vs. E-filing
Electronic filing is becoming the most preferred method for tax-exempt organizations and tax professionals to send 990 forms to the IRS. With paper filing, you’re sacrificing a significant amount of time to physically prepare financial statements, search and complete schedules, and mail the tax return without any confirmation from the IRS.

E-filing a 2016 Form 990 requires less time to process and is much easier to prepare. Transmitting a 990 tax return with an IRS-authorized, e-file provider - such as ExpressTaxExempt.com - offers more security than postal mailing, and you can receive instant confirmation of your filing status. The IRS also recommends exempt organizations to e-file rather than paper filing.

If you have any intensive tax questions regarding your organization’s revenue, expenses, or activities, you should contact your local tax professional or the IRS Tax-Exempt Hotline at 877.829.5500. For concerns or assistance with e-filing, you can reach out to ExpressTaxExempt at 704.839.2321 or with support@ExpressTaxExempt.com.

Read More »

How to Report Lobbying Expenditures on IRS Form 990/990-EZ

Reporting additional information about political campaign activities or lobbying activities requires exempt organizations to file a Schedule C along with their IRS Form 990 or 990-EZ. 501(c)(3) organizations needing to complete a Schedule C are those that

• Participate in lobbying activities
• Have a Section 501(h) election in effect during the tax year
• Engage in political campaign activities either on behalf or opposition to candidates for public office

Public charities with valid section 501(h) elections can spend a certain amount of its exempt purpose expenditures to influence without paying taxes or losing exemption status. Part II-A of the Schedule C allows any nonprofit organization with a 501(h) election in effect to report lobbying expenditure - even if the organization didn’t engage in lobbying activities for that filing year.

Affiliated Groups
The first section of Part II-A confirms whether the filing organization belongs to an affiliated group with Box A. If so, you need to complete both columns for this section:

• Column A for the filing organization’s totals
• Column B for the affiliated group totals

Tax-exempt groups with limited control provisions need to check Box B and should only complete column A for this section. Organizations that don’t check Box A should not check Box B either.

Later, in Part IV, you can provide a list of each affiliated group member’s name, address, EIN, and expenses. You also need to indicate which members made the election under 501(h), and include the share of the excess lobbying expenditures for each electing member on your list.

Limits on Lobbying Expenditures
The second section is to determine if your organization’s current year lobbying expenditures are subject to tax under section 4911. If so, the IRS requires you to file Form 4720 and pay the excise tax. Complete Lines 1a through 1i in Column A, and any for Column B, if applicable.

For Line 1a, enter the amount the organization spent on grassroots lobbying communications, and then for Line 1b, enter the expense for direct lobbying communication. Add Line 1a and 1b to get your amount for Line 1c. Enter all other amounts, minus lobbying, that your organization spent to achieve its exempt purpose. And then add Line 1c and 1d to get Line 1e, which is the organization's total exempt purpose expenditures.

Follow the table provided on the Schedule C to answer Line 1f and enter 25 percent of that amount on Line 1g. For Line 1h, subtract your value of Line 1g from Line 1a - if there is a negative difference, just enter zero. On Line 1i, subtract Line 1f from Line 1c and put zero if the amount is negative.

If you don’t have any excess lobbying expenditures on Line 1h or 1i for Column B, you should treat each electing member of the affiliated group as having none. But if there are amounts listed for Column B on those lines, then each electing member has that amount for excess lobbying expenditures. In that case, the IRS requires each electing member to file Form 4720 and pay the tax on its share of the affiliated group’s excess lobbying spending.

You can enter proportionate shares in Column A for Line 1h, 1i, or both. And in Part IV, you can show what amounts apply to which group member. For Line 1j, indicate whether your organization filed Form 4720 to report section 4911 tax for the filing year if the amount on Line 1h or 1i is other than zero.

Lobbying Expenditures During 4-Year Averaging Period
Line 2 is to determine whether your organization exceeded lobbying spending limits during a 4-year averaging period. Any exempt organization with a lobbying expenditure election in effect during the filing year must complete Columns A through E for Lines 2a through 2f except for the following circumstances:

• If the filing year is the first year the organization is tax-exempt, you won’t need to complete any of Lines 2a through 2f
• If any of the tax years were before the organization became exempt, you wouldn't need to complete Lines 2a through 2f
• If the filing year is the first year the organization has a section 501(h) election in effect, then you must complete Line 2a for Columns D and E
• If the filing year is the second or third year the organization’s first section 501(h) election is in effect, then you’re required to complete only the columns for the years the election was in effect and enter the totals for those years in Column E

Important: Check the Schedule C Instruction Sheet for more detailed information about these exceptions.

Complete Line 2a through 2f as follows for the filing year and applicable prior years based on the Schedule C for each respective year:

• Line 2a - Enter the amount from Part II-A, Line 1f
• Line 2c - Enter the amount from Part II-A, Line 1c
• Line 2d - Enter the amount from Part II-A, Line 1g
• Line 2f - Enter the amount from Part II-A, Line 1a

Once you finish, you need to enter the total for each line in Column E. If your organization belongs to an affiliated group, you should input the appropriate group totals from Column B, Lines 1a through 1i when entering Line 2a through 2f. If you have any questions regarding details about your organization’s section 501(h) election, spending limits, or affiliated groups, please contact a tax professional or reach out to the IRS Tax-Exempt Hotline at 877.829.5500.

Read More »

Requirements for a Properly Completed IRS 990 Form

Every tax-exempt organization required to file IRS Form 990 or Form 990-EZ must complete Parts I through XII along with a Schedule O and any other schedules applicable to your organization. The same rules apply to tax-exempt groups who aren’t required to file a tax return but choose to do so.

Submitting an incomplete 990 form is similar to filing late - it can cost you thousands of dollars in penalties and late fees or even a loss of exemption status. Here are a few guidelines from the IRS about completing a 990 return correctly.

Signature and Recordkeeping
A 990 form is never complete with a signature - a primary officer that’s filing the form usually signs the return. If you are filing on behalf of an organization, your signature is required along with the primary officer.

Your organization’s records need to be archived and accessible for the provisional administration of the Internal Revenue Code for a minimum of three years - this includes documents supporting an item of income, deduction, credit, or basis of property. It’s also helpful to keep copies of prior year tax returns for future reference or amended filings.

Rounding Off to Whole Dollars
When filing returns and schedules, exempt organizations must round off cents to whole dollars. Increase amounts with 50 cents or higher to the nearest dollar - you can also decrease to the nearest dollar for amounts with less than 50 cents. If you are adding numbers together, you should only round the total sum.

Complete All Lines
You must make an entry for each line that requires an amount or any other information, even if the value is zero. Applicable lines should not be blank unless the instructions expressly say to skip. All Form 990/990-EZ must include a Schedule O which is used to provide explanations or additional information.

Reporting Proper Amounts
Some sections require information you've reported on other IRS forms. If you realize that numbers reported are incorrect, you should enter the correct values on the 990 return and also submit an amended form with the proper information.

The IRS also asks that you not report negative numbers - you should use zero as the value unless the instructions explain otherwise. Report expenses and revenue separately and do not combine related items.

Inclusion of Activities and Items of Disregarded Entities and Joint Ventures
Organizations must report all revenues, expenses, assets, liabilities, and net assets or funds of a disregarded entity or shares of the same items from a joint venture, other investment, or arrangement treated as a partnership. You are also responsible for reporting activities of your disregarded entity or a joint venture on the appropriate parts or schedules of the 990 form.

Reporting Information from Third Parties
There are a few sections that request information you may need to obtain from a third party - this can include various things like compensation paid by related organizations; family and business relationships between officers, directors, trustees, key employees, and individual businesses they own or control, etc.

You are responsible for getting and reporting this information. If you cannot retrieve through reasonable efforts or tax extension, you can explain or give an estimate with your Schedule O.

With ExpressTaxExempt.com, our interview-style process seamlessly guides you through each section of the 990 form and automatically generates appropriate schedules based on your answers. You won’t have to worry about questions that don’t pertain to your organization, and at the end, we present your entire tax return with its proper requirements for you to transmit.

Our U.S. - based support team of e-file professionals is available for questions or assistance with accurately sending your 990 tax return to the IRS. Call us at 704.839.2321, Monday through Friday from 9 a.m. to 6 p.m. EST. And we’re also available via email with support@ExpressTaxExempt.com.

Read More »