Update on Mandatory Electronic Filing for Form 4720 by Private Foundations

Section 3101 of the Taxpayer First Act requires certain exempt organizations to file information and tax returns electronically for tax years beginning after July 1, 2019. Private foundations required to file Form 4720, Return of Certain Excise Taxes Under Chapters 41 and 42 of the Internal Revenue Code, are included in the electronic filing mandate. Pending conversion of Form 4720 to electronic format, the IRS continued to accept the 2019 tax-year version of this return on paper. While software for the electronic version of Form 4720 has been under development, the IRS also continued to accept the 2020 tax-year version of Form 4720 from private foundations on paper. See Notice 2021-01, 2021-2 I.R.B. 315.

The 2020 Form 4720 and its instructions have been updated for e-filing. As of the beginning of June 2021, several providers have made software available to file Form 4720 electronically. Information about software providers supporting electronic filing of Form 4720 can be found on theExempt Organizations Modernized e-File (MeF) Providers page.

Any 2020, and any future year, Form 4720 filed by a private foundation with a due date on or after July 15, 2021, must be filed electronically and not on paper. A limited exception applies for 2020 Form 4720 returns with a due date on or after July 15 that are submitted on paper and bear a postmark date on or before June 16, 2021. Organizations other than private foundations that are required to file Form 4720 are encouraged, but not required, to file Form 4720 electronically.

Information on Notices Received After Paper Filing Form 990-EZ or Form 8868

The IRS is experiencing delays in processing paper returns, including Form 990-EZ, Short Form Return of Organization Exempt from Income Tax, and Form 8868, Application for Extension of Time To File an Exempt Organization Return.

The IRS encourages organizations to file these forms electronically. If you file Form 990-EZ on paper, you may receive a prematurely-issued CP259A notice of non-filing. If you file Form 8868 on paper, there may be a delay in receiving CP211A notice confirming approval of your extension request. If you filed your return or extension request on paper, you do not need to take any further action. Please don't file a second return or contact the IRS about the status of your filing. We appreciate your patience.

Register for Free Webinar on Applying for Exemption - June 23

The Tax Exempt and Government Entities Division would like to invite you to register to watch the free Applying for Exemption Webinar.

When: Wednesday, June 23, 2021 at 1 – 2 pm ET

The webinar will:

  • Explain what steps to take before applying to the IRS for recognition of tax-exempt status
  • Discuss the various types of tax-exempt status available under the Internal Revenue Code and which forms are used to request them
  • Review how to apply for recognition of tax-exempt status, including tips to shorten the application process.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.