May 14, 2018 IRS announces new online tool for accessing exempt organizations' information, including Form 990-T, and provides limited guidance on reporting fringe benefits The IRS has announced (IR-2018-116) a new online tool for accessing information on exempt organizations — Tax Exempt Organization Search (TEOS). The new tool includes some enhancements over its predecessor EO Select Check, such as including images of Section 501(c)(3) organizations' Form 990-T (Exempt Organization Business Income Tax Return). In a related development, the IRS also posted to its website guidance on Form 990-T regarding the reporting of fringe benefits as unrelated business income. TEOS TEOS replaces EO Select Check, which was launched in 2012 (see Tax Alert 2012-0161). TEOS includes all the information previously available on EO Select Check and also makes some data available for the first time. In addition, it is designed to be faster and easier to use than EO Select Check. For the first time, TEOS makes available images of newly-filed Forms 990. Users can access images of organizations' Forms 990, 990-EZ, 990-PF and 990-T (for Section 501(c)(3) organizations only). Forms filed in January and February 2018 will be available initially, with new filings added monthly. TEOS also makes available favorable determination letters issued by the IRS with regard to an organization meeting the requirements for tax-exempt status. While only a limited number of such letters will be available initially, eventually all such letters issued since January 2014 will be available. In addition to the new types of information available, TEOS includes some enhancements for ease of use. It adds a simplified search process and includes the ability to look across multiple data files for information in one search. It is also designed to be mobile-friendly for smartphone and tablet access. Form 990-T guidance The guidance on Form 990-T reporting posted on the IRS website focuses on reporting with respect to new Section 512(a)(7). Section 512(a)(7), added by the Tax Cuts and Jobs Act of 2017 (TCJA), imposes a tax on tax-exempt entities with respect to qualified transportation and parking fringe benefits, in addition to any on-premises athletic facilities (see Tax Alert 2017-2142). It generally treats the funds used to pay for such benefits as unrelated business taxable income (UBTI), provided the amounts are not deductible under Section 274. The guidance posted on the IRS website instructs affected organizations with a fiscal tax year beginning in 2017 to enter the amount of any increase in UBTI as a result of Section 512(a)(7) on line 12 of the 2017 Form 990-T. Implications Tax Exempt Organization Search (TEOS) The IRS is making Form 990 series returns available for public inspection on its website with the new TEOSfeature, replacing EO Select Check. Organizations exempt from tax under Section 501(a) must generally make their annual information returns (Form 990 Series returns) and application for determination of exemption available for public inspection. In the past, the IRS only made these documents available to the public upon request, at the IRS National Office, and by delivery to certain third-party services that organized these forms on their respective websites. Users could search the IRS website's EO Select Check tool to determine only if an organization was eligible to receive tax-deductible contributions, had its status revoked or filed Form 990-N. With TEOS, the public will now have free, unrestricted access to much more information about tax-exempt organizations, including the organizations' exempt-status determination letter (dating back to 2014) and, beginning with returns filed in January 2018, the public inspection copy of their Form 990 series returns. For the first time, this also includes Form 990-T, Exempt Organization Business Income Tax Return, available in a machine-readable format online. Because Form 990-T is not e-filed, the IRS will download an image of each return to its website. Organizations filing Form 990-T may find this significant as Form 990-T details deductions allocated to unrelated business income activities, which is not separately stated on Form 990. Form 990-T often also includes additional information surrounding an organizations' international activity since international compliance forms and other disclosures are commonly attached to Form 990-T filings. The TEOS tool reaffirms the IRS's recent commitment to technology surrounding tax-exempt organizations, and Form 990 series returns. Data from e-filed returns are currently available in machine readable format through Amazon Web Services (see Tax Alert 2016-1183). Also, the IRS recently announced plans to post online approved copies of Form 1023, Application for Recognition of Exemption Under Section 501(c)(3), and Form 1024, Application for Recognition of Exemption Under Section 501(a) (see Tax Alert 2017-2146). The IRS has not stated whether any of this data will be available through TEOS. Form 990-T guidance Until there is a form change or organizations are instructed otherwise, organizations claiming UBTI for qualified transportation and parking fringe benefits, and any on-premises athletic facilities under Section 512(a)(7), should add this income on Part I, Line 12 of Form 990-T — the reporting line for "Other Income." This is likely temporary, and organizations should continue to monitor for future guidance and form and instruction updates. Please contact your EY Professional for additional information. ——————————————— — For more information about EY's Exempt Organization Tax Services group, visit us at www.ey.com/ExemptOrg ———————————————
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