How Nonprofits are Affected by Changes to IRS Form 990-T

IRS Form 990-T

In September 2020, the IRS changed (again!) form 990-T. This was the third update in three years. The redesign is intended to give an overview of a nonprofit’s taxable income made from business ventures unrelated to the organization’s philanthropic mission. The form revisions were done to address tax filing issues brought about by the Tax Cuts and Jobs Act passed in 2017.

Schedule M is Retired and Schedule A is Redesigned

One of the biggest updates to Form 990-T retires Schedule M. But, the IRS redesigned Schedule A to gather much of the same information Schedule M had done previously.

Schedule A has been a part of Form 990-T all along, but with this update, nonprofits will use A for all unrelated trade or business income. In fact, each unrelated business venture of a tax-exempt organization must have a separate Schedule A prepared and attached to the return. Nonprofits must also include a list of how many Schedules A are attached.

Mandatory Electronic Filing Required

Until recently, Form 990-T was submitted as a hard copy via the postal service. In fact, the IRS allowed hardcopy submittals for 2020 returns even though the other changes to 990-T were already effective. This allowance by the IRS was due to the pandemic.

Now that the pandemic and the restrictions related to it have subsided substantially, the IRS mandates that Form 990-T will be submitted electronically beginning in 2022. As with many IRS guidelines, there are some exceptions to the electronic filing requirement, but in most instances, filing electronically is the new norm.

Assistance with Form 990-T

Our firm specializes in the many facets unique to nonprofit accounting, and we would love to help your organization. Whether you need assistance to understand the updated Form 990-T or how to file electronically, we are here to help!

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