Form 8940 now available for e-filing

The Internal Revenue Service issued a revised Form 8940 on Tuesday, allowing tax-exempt organizations, charities, and nonexempt charitable trusts to file requests for miscellaneous determinations with the IRS electronically, as well as private foundations seeking to terminate their status.

The effort is part of the IRS's efforts to make more of its forms available for e-filing and lighten the paper load on the agency as well as improve service for the tax-exempt community.

The IRS is also making available the electronic version of the Form 8940 that exempt organizations use to make miscellaneous determination requests online at Pay.gov, the online portal that provides a secure way to pay federal agencies. The IRS said it will provide a 90-day grace period during which it will continue to accept paper versions of Form 8940 (Rev. 6-2011), but after this grace period ends, the Form 8940 has to be submitted electronically.

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"Electronic filing makes the Form 8940 easier to complete while reducing errors," said Edward Killen, commissioner of the IRS Tax Exempt and Government Entities division, in a statement Tuesday. "Electronic filing also shortens IRS processing time so applicants won't wait as long for a response."

In addition to the miscellaneous requests that were previously made using Form 8940, the following miscellaneous requests can now also be made on Form 8940:

• Government entities requesting voluntary termination of exempt status under section 501(c)(3) (previously a letter request);
• Canadian registered charities requesting inclusion in the Tax Exempt Organization Search database (TEOS) of organizations eligible to receive tax-deductible charitable contributions (Pub. 78 data) or a determination on public charity classification (previously a letter request); and
• Private foundations giving notice only of intent to terminate private foundation status under section 507(b)(1)(B) (previously provided on Form 8940 or by general correspondence).

The required user fees (if any) will vary depending on the type of miscellaneous request. For 2023, the user fees remain at the amounts spelled out in Revenue Procedure 2023-5. Applicants need to pay the fee through Pay.gov when submitting the form. Payments can be made directly from a bank account or by credit or debit card.

Revenue Procedure 2023-12, released Tuesday by the IRS, modifies some of the specific language in Rev. Proc. 2023-5 to allow for the new electronic submission process of the Form 8940, Request for Miscellaneous Determination. The new revenue procedure also provides a 90-day transition relief period, during which paper Form 8940 and letter applications will be accepted and processed by the IRS's Exempt Organizations Determinations unit.

Separately on Tuesday, the IRS's new commissioner, Danny Werfel, was officially sworn in by Treasury Secretary Janet Yellen. Werfel's nomination was approved by Congress last month and he began his term on March 13 (see story). Yellen referred to the IRS's efforts to make more of its services available electronically and the extra $80 billion in funding over 10 years provided to the IRS under last year's Inflation Reduction Act.

"For years, severe underfunding of the IRS meant that it could not deliver the type of service that taxpayers needed," she said. "IRS employees will be the first to tell you that too many calls went unanswered and too many taxpayers went without support. The IRS remained a primarily paper-based agency — one where employees still opened, and in certain cases, transcribed paper returns digit-by-digit. I come to you today with good news. Thanks to the dedication of IRS employees, we've made significant strides in the short eight months since the passage of the Inflation Reduction Act. To start, the IRS has hired 5,000 new customer service staff and improved automated phone and chat features. Taxpayers can now receive refunds directly into their bank account for items like the 1040X amended returns. They can fill out certain forms online rather than on paper. And they can respond to numerous notices on IRS.gov rather than through the mail. The agency is now consistently achieving a level of service with live assistance between 80 and 90%. That's a dramatic improvement compared to around 15 percent during the previous filing season. And as of January, the IRS had worked through more inventory in the previous 12 months than during any one-year period in history."

However, she acknowledged that the IRS has to do more to improve its technology and taxpayer service. "We must invest in technology that unlocks increased productivity for IRS employees, improves automated services for taxpayers, and digitizes many processes that for too long have been handled on paper," said Yellen. "Importantly, these technological improvements will not just speed up processes. They will help taxpayers identify and avoid errors before they file their returns."