The Internal Revenue Service has given tax-exempt organizations with January and February filing due dates a temporary reprieve until March 30, 2012 to file their annual returns.
The IRS said Friday it is granting the extension because the portion of the e-file system that processes electronically filed returns of tax-exempt organizations will be off-line in January and February. However, the agency said the rest of the e-file system would continue to operate normally. As usual, it is urging all individuals and businesses to use electronic filing rather than paper.
The extension generally applies to tax-exempt organizations whose normal filing deadline is either Jan. 17 or Feb. 15, 2012. Ordinarily, those deadlines would apply to organizations with a fiscal year that ended on Aug. 31 or Sept. 30, 2011, respectively. The extension also applies to organizations that have already obtained an initial three-month filing extension and now have an extended filing deadline that falls on either Jan. 17 or Feb. 15, 2012. The majority of tax-exempt organizations will be unaffected by the extension because they operate on a calendar-year basis and have a May 15 filing deadline.
The extension applies to affected organizations that file Forms 990, 990-EZ, 990-PF, or 1120-POL. However, the IRS said that Form 990-N filers would not be affected. No form needs to be filed to get the March 30 extension.
In order to avoid receiving a late filing penalty notice, the IRS a reasonable cause statement should be attached to the tax return. If organizations receive late-filing penalty notices, they should contact the IRS to abate the penalties. The IRS is encouraging these organizations to consider either e-filing early—before the end of December—or wait until March to file electronically.
Further details are available in Notice 2012-4, which was posted Friday on IRS.gov.
In a separate, but related email Friday to exempt organizations, the IRS noted that its IRS Modernized e-file system will not be available from Jan. 1, 2012 through Feb. 29, 2012 for electronic filing of Forms 990, 990-EZ, 990-PF and 1120-POL information returns. The IRS said it is suspending the availability of the system to implement changes to IRS systems for the 2011 tax year. The 990-N e-postcard filing system will not be affected by the temporary suspension of the MeF system, however.
To minimize the impact on affected organizations, the IRS reiterated that it is granting an extension of time to file to March 30, 2012 to organizations whose due date or first extended due date is Jan. 17 or Feb. 15, 2012.
Organizations required to file electronically may file electronically prior to Jan. 1, 2012 or between March 1, 2012 and March 30, 2012.
Affected organizations that are not required to file electronically may do the same and, alternatively, may file a paper return anytime before March 30, 2012. In addition, as described in Notice 2012-4, certain affected organizations normally required to file electronically will have the option to file a paper return during the suspension period.
An affected organization that has not previously received an extension and wishes to extend its filing due date until after March 30, 2012 may request an automatic three-month extension by filing Form 8868, Extension of Time to File an Exempt Organization Return, by its original due date, the IRS added. If an affected organization has already obtained an automatic three-month extension, the IRS said it would grant the organization an additional three-month extension if the organization properly completes and files Form 8868 by its first extended due date.
Organizations that have already been granted two extensions for a total of six months may not request a further extension.
The IRS also reminded organizations that an extension of the time to file, including the automatic extension to March 30, 2012 provided in the Notice, is not an extension of time to pay any tax liabilities that may be due for the year.
Organizations with a filing due date (or first extended due date) between Jan. 1, 2012, and Feb. 29, 2012 that file their returns by March 30, 2012 will be considered to have timely filed their returns. In the case of an organization with a second extended due date that falls during the suspension period, the organization will have reasonable cause for late filing and will not be subject to late filing penalties if it files by March 30, 2012.
The organization should attach a Reasonable Cause Statement to its return referencing Notice 2012-4, to avoid receiving a system-generated late filing penalty notice from the IRS. An organization generally required to file electronically that has already obtained two three-month filing extensions may be uncomfortable with taking advantage of the late filing penalty relief provided in the notice. In that case, the organization may file its return on paper.
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