Industry Insights

The IRS has announced its Modernized e-File system will not be available from January 1, 2012, through February 29, 2012, for electronic filing of forms 990, 990-EZ, 990-PF and 1120-POL. System availability is being suspended to allow for the implementation of changes needed for the 2011 tax year. The system for filing the Form 990-N e-postcard will not be affected.

As a result of the e-File suspension, the IRS is granting an automatic extension to file affected returns until March 30, 2012. Affected tax-exempt organizations include those with original or extended filing deadlines of January 17 or February 15, 2012. These organizations commonly have fiscal year-ends of August 31 or September 30. Organizations required to file electronically may file electronically prior to January 1, 2012, or between March 1, 2012, and March 30, 2012. Organizations not required to file electronically may do the same or file a paper return before March 30, 2012. 

Organizations with an original filing deadline during the suspension period may request an automatic three-month extension by filing Form 8868, Application for Extension of Time To File an Exempt Organization Return, by their original due date. If an organization already has been granted an automatic three-month extension, the organization may request a second three-month extension by filing Form 8868 by the extended due date. If two three-month extensions have already been granted, the organization may not request further extension. In addition, organizations owing tax should remember an extension of time to file, including the extension to March 30, 2012, is not an extension of time to pay tax liabilities.

An organization with a second extended due date during the suspension period will not be subject to late filing penalties if its return is filed by March 30, 2012. However, the organization should attach a Reasonable Cause Statement referencing Notice 2012-4 to its return to avoid receiving a system-generated late filing penalty notice from the IRS. Organizations that already have received two three-month extensions and are required to file electronically also may choose to file a paper return to avoid this application for late penalty relief.

For more information on this extension, contact your BKD advisor or .