Tax-Exempt Filing Deadline Extended

The IRS released news that they will be temporarily extending the January and February filing deadlines for tax-exempt organizations until March 30, 2012.

Organizations with normal filing deadlines that fall on January 17, 2012 or February 15, 2012 will be given the option to file throughout the month of March instead. According to the IRS, the portion of the electronic filing system related to tax-exempt organizations will be off-line between January 1, 2012 and February 29, 2012. This period of suspension will be used to implement regulatory changes for the tax year 2011. Although e-filing will not be available, organizations may alternatively file on paper through March 30, 2012.

The extension applies to all tax-exempt organizations filing Forms 990, 990-EZ, 990-PF and 1120-POL information returns. Due to the use of differentiated electronic filing systems, however, organizations filing Form 990-N do not receive the extension. In fact, Form 990-N e-Postcards, along with the rest of the e-filing system, will remain active throughout this time. As usual, the IRS urges all individuals and businesses to use electronic filing rather than paper. They encourage organizations to file early, before year-end, although the option of filing on paper will be available throughout the entire suspension period.

Organizations required to file electronically may do so prior to January 1, 2012 or between March 1 and March 30, 2012.

Affected organizations that are not required to file electronically may also file electronically during the acceptable periods of time. Alternatively, they have the option to file on paper any time before the extended deadline of March 30, 2012.

Further details are available in Notice 2012-4, which can be accessed on the IRS website at http://www.irs.gov/pub/irs-drop/n-12-04.pdf.

The extension generally applies to tax-exempt organizations having fiscal year-end dates of August 31, 2011 and September 31, 2011. It also applies to those who have already filed an extension with the first extended due date falling in January or February 2012.

The March 30, 2012 extension will be automatic for those whose original (or first extended) due date falls in January or February. No form is necessary to request the additional time to file; however, organizations should attach a reasonable cause statement with their return to avoid receiving a system-generated late filing penalty notice. The statement should refer to Notice 2012-4, which is where you may also find an appropriate example of a reasonable cause statement. If a late filing notice is erroneously received, please contact the IRS to request abatement of the penalty per Notice 2012-4.

An affected organization that has not yet requested a filing extension, but wants to file after the March 30, 2012 deadline may request a three-month extension by filing Form 8868, Extension of Time to File an Exempt Organization Return, by its original due date. An additional three-month filing extension is also available if Form 8868 is filed by its first extended due date. Organizations should note, however, that only two extensions will be granted for a total of six months delay in filing the return. Organizations with a second extended due date during the suspension period will have reasonable cause for late filing and will not be subject to late filing penalties as long as they file by March 30, 2012.

The IRS wants to remind organizations that an extension of time to file does not extend the time allowed for payment of any tax liability that may be due for the year. Please remember to plan accordingly.

Contact your advisor for further information at (805) 963-7811.