The charity reform subtitle of the Pension Protection Act of 2006 revokes the exempt status of an organization that fails to file the required Form 990 for three consecutive years (“auto-revocation”). Under the pandemic, this year the IRS extended filing dates from April 1 through July 14 to July 15, 2020, by Notices 2020-23 (PDF) and 2020-35 (PDF). Due to systemic limitations, we were unable to update this deadline in the program that automatically issues notices of revocation. This caused some revocation notices to be issued prematurely. Nevertheless, the IRS prevented eligible organizations that attempted to file electronically by July 15 from being listed as automatically revoked on IRS.gov, where they are still shown as tax exempt. At the same time, we are processing paper filings which allow the reversal of auto-revocation for those filers. The IRS is reviewing the cases and corresponding with organizations that received the premature notice. Additionally, we have dedicated fax number (855) 247-6123 to receive correspondence from organizations in this situation that wish to present documentation of their applicable filings.

2020 Form 990-T, Exempt Organization Business Income Tax Return

The Form 990-T is being revised for tax year 2020 to allow for e-filing in calendar year 2021 (reporting on tax year 2020), as required by the Taxpayer First Act. Revisions are also being made to improve its utility for reporting unrelated business taxable income consistent with the ‘siloing’ rules of Section 512(a)(6) as put in place by the Tax Cuts and Jobs Act. The 2020 Form 990-T separates the tax computation (which will be on Form 990-T) from reporting of separate unrelated trades or businesses, which will be on as many Schedules A (Form 990-T) as the organization needs. Both Form 990-T and Schedule A (Form 990-T) are now available for preview on the Draft Forms webpage at IRS.gov/DraftForms.

New Technical Advice Memorandum (TAM): Royalty or Service?

Newly released TAM 202039018 (PDF) contemplates whether the Section 512(b)(2) royalty exclusion applies to an online job placement service. The TAM concludes based on the facts and circumstances of that case that the income was not excluded as royalty income under IRC Section 512(b)(2). The operation of an online job placement service constituted income from an unrelated trade or business subject to tax under IRC Section 511.

Issue Snapshot:

IRC Section 4945(g) Individual Grants

If you have a technical or procedural question about Exempt Organizations, visit the Charities and Nonprofits homepage on IRS.gov.

If you have a specific question about exempt organizations, call EO Customer Account Services at 877-829-5500.

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