January 29, 2024
Delayed e-filing for Forms 990-T and 1120-POL may require affected taxpayers to file late and request penalty abatement for reasonable cause
The IRS has announced (News Release 2024-15) that system upgrades have delayed e-filing for Form 990-T, Exempt Organization Business Income Tax Return, and Form 1120-POL, US Income Tax Return for Certain Political Organizations (including returns on extension), until March 17, 2024.
Affected taxpayers with original due dates from January 15, 2024 through March 15, 2024 can file an extension request for both forms, or paper file Form 1120-POL. The IRS said approximately 2,000 Forms 990-T and 1120-POL would be affected. Taxpayers with due dates on and after April 15, 2024 will be able to e-file on time.
Form 990-T, Exempt Organization Business Income Tax Return
Organizations subject to unrelated business income tax with a Form 990-T due from January 15, 2024 through March 15, 2024 should request an automatic six-month extension on Form 8868-T, Application for Extension of Time to File an Exempt Organization Return, by the due date of their return, if they have not already done so. Taxpayers should submit any balance due with the extension application to avoid interest and penalties.
Organizations that don't timely submit an extension request — or have an extended due date from January 15 , 2024 through March 15, 2024 and don't timely e-file Form 990-T during that period — should include a request for penalty relief for reasonable cause with their late e-filing. The reasonable-cause request should reference the unavailability of e-filing as of the due date of their return.
1120-POL, US Income Tax Return for Certain Political Organizations
Organizations required to file Form 1120-POL with a due date from January 15, 2024 through March 15, 2024 (including returns on extension) may file a paper return. Those with an original due date during the time e-filing is unavailable should request an automatic six-month extension on Form 7004, Application for Automatic Extension of Time to File Certain Business Income Tax, Information, and Other Returns, and pay the full balance due to avoid interest and penalties.
Filing for elective payment election for clean energy credit
The IRS said the electronic filing delay will not affect government entities and Indian tribal governments not subject to UBIT from timely filing Form 990-T to make elective payment elections (EPE) for clean energy tax credits, because the EPE is only available beginning in the 2023 tax year and returns will not be due until after March 17, 2024.
Tax-exempt organizations that file either Form 990-T or 1120-POL should evaluate their upcoming filing deadlines to determine if any of their filing due dates are affected by the IRS e-filing moratorium.
Filers with original 990-T or 1120-POL due dates from January 15, 2024 through March 15, 2024 will need to timely file an extension request. Those that cannot timely file an extension request will need to e-file after their due dates and include in their filings a request for penalty abatement due to reasonable cause (i.e., IRS e-filing moratorium on and before due date). Filers with extended 990-T/1120-POL due dates from January 15, 2024 through March 15, 2024 will also need to file late and request penalty abatement due to reasonable cause.
Given that the IRS encourages organizations with Forms 990-T/1120-POL due dates during this period to include such an abatement request in their late-filed returns, it is likely that the IRS would grant such requests and not impose late-filing penalties for failure to file Forms 990-T or 1120-POL during this period. In the meantime, organizations should continue monitoring for further updates from the IRS on e-filing availability and restrictions.
As always, we recommend retaining copies of any notifications received from the IRS confirming IRS acceptance of e-filed returns and notices.