Nonprofits: mark your calendars for 2016 – well, actually soon thereafter. Starting with tax years that begin after December 31, 2015, IRS Form 990 filings will be eligible for a longer automatic extension of the submission deadline. Translated from IRS-speak, that means 2016 tax returns filed in 2017 are eligible for the extension.
On July 31, 2015, President Barack Obama signed an extension of the highway funding bill into law. The legislation primarily ensures that federal government will continue to reimburse states for highway and mass transit projects. However, the new law also modifies the due dates for several tax return filings, including the Form 990 series annual information returns for tax-exempt organizations.
Under the current system, nonprofits may obtain a 3-month automatic extension for Form 990 filings simply by filing IRS Form 8868 before the initial due date. The Form 990 filing due date is four months and fifteen days after the organization’s fiscal year-end (e.g., May 15 for calendar fiscal years, and November 15 for fiscal years ending June 30). For an additional three-month extension, nonprofits must make a second filing – this time to ask permission for such additional extension and to demonstrate “reasonable cause” therefor. Given the IRS’s beleaguered condition these days, it can be quite challenging to garner any assistance with such requests. Further, since the penalties for late Form 990 filings can be quite onerous (measured on a per-day late basis), it is generally best to just get the Form 990 filed by the initial due date or no later than the available automatic 3-month extension.
The new law brings welcome relief: the IRS will automatically grant a 6-month extension for 990 filings, upon timely submission of such request. Accordingly, for organizations with a calendar fiscal year that seek such extension by the initial due date of May 15, their filing deadline will effectively change to November 15. Nonprofit organizations thus have good reason to rejoice in Congress’ generosity toward their IRS Form 990 filings!
