IRS opens 403(b) determination program; Electronic filing regulations for Tax Exempt & Government Entities

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403(b) Plan Determination Program Opens June 1

Beginning June 1, 2023, the IRS is expanding the determination letter program to include certain 403(b) plans. Plan sponsors that maintain an individually designed 403(b) plan will be permitted to submit a determination letter application for an initial plan determination based on the EIN of the plan sponsor:

• EIN ends in 1, 2 or 3 - submit beginning June 1, 2023.
• EIN ends in 4, 5, 6 or 7 - submit beginning June 1, 2024.
• EIN ends in 8, 9 or 0 - submit beginning June 1, 2025.

Plan sponsors may also submit an application for terminating 403(b) plans beginning June 1, 2023. The IRS may announce other circumstances that would allow 403(b) sponsors to a submit determination application in the future. See Revenue Procedure 2022-40 for more information.

Form 5300, Application for Determination for Employee Benefit Plan, and Form 5310, Application for Determination Upon Termination, will be updated in Pay.gov to reflect the addition of 403(b) plans. 

The user fees for 403(b) determination letter applications are:

• Form 5300 with 100 or more participants: $2,700.
• Form 5300 with less than 100 participants: $300.
• Form 5310: $3,500.

Electronic Filing Regulations for Tax Exempt & Government Entities

Recently, the Department of the Treasury published final regulations, “Electronic-Filing Requirements for Specified Returns and Other Documents,” implementing the reduced electronic threshold under Section 2301 of the Taxpayer First Act of 2019 (TFA). Under the regulations found in T.D. 9972, taxpayers who are required to file at least 10 returns of any type during the calendar year must file electronically. Generally, the final regulation applies after 2023. See the regulations for detailed dates of applicability to specific returns.

Among others, the regulations apply to the following forms:

Exempt Organizations

• 5227, Split-Interest Trust Information Return
• 4720, Return of Certain Excise Taxes on Charities and Other Persons Under Chapters 41 and 42 of the IRC (if filed by other than a private foundation)
• 1120-POL, U.S. Income Tax Return for Certain Political Organizations

Employee Plans

• 8955-SSA, Annual Registration Statement Identifying Separated Participants with Deferred Vested Benefits
• 5500-EZ, Annual Return of A One-Participant (Owners/Partners and Their Spouses) Retirement Plan or A Foreign Plan
• 5330, Return of Excise Taxes Related to Employee Benefit Plans

Government Entities

• 8596, Information Return for Federal Contracts
• 8038-CP, Return for Credit Payments to Issuers of Qualified Bonds

Under Internal Revenue Code Section 6011(e)(2)(B), the regulations take into account the ability of the taxpayer to e-file at reasonable cost. On a year-by-year and form-by-form basis, the IRS may waive the requirement to file electronically in cases of undue hardship. In certain circumstances, a filer may be administratively exempt from the requirement to file electronically. The instructions to each form will set forth details on the waiver. In general, the filer should maintain documentation supporting the undue hardship or other applicable reason for not filing electronically.

Additionally, Section 3101 of the TFA sets forth “mandatory e-filing by exempt organizations,” which is already in effect. This applies to the following forms:

• 4720 (if filed by a private foundation)
• 990, Return of Organization Exempt from Income Tax
• 990-EZ, Short Form Return of Organization Exempt From Income Tax
• 990-PF, Return of Private Foundation or Section 4947(a)(1) Trust Treated as Private Foundation
• 990-T, Exempt Organization Business Income Tax Return