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Society pans 990 extension process

Published Date:
Sep 23, 2014

In a comment letter released on Aug. 14, the NYSSCPA urged the Internal Revenue Service (IRS) to streamline the way it handles extensions for exempt organization filings, arguing that the current setup is inefficient and puts an unnecessary burden on entities.

The letter was written by the Society’s Exempt Organizations Committee, in an effort to address what members saw as a long-standing problem that affects most nonprofits.

At the moment, exempt organizations that want more time to file their Form 990s can apply for a three-month extension from the IRS. If they’d like additional time, they must apply for a second three-month extension thereafter. In its comment letter, the Society said it would make more sense if exempt organizations could simply apply for a single six-month extension.

The current system, the Society said, creates additional work for both the filing entity and the IRS, as well as additional waiting time, given that an entity must get confirmation that its request has been granted after the expiration of the first extension. The Society also noted that charities are the only entities that are bound to this pair of three-month filing deadlines; all other filers can apply a single time for a six-month extension. Moreover, the Society said, moving to a six-month extension would be in keeping with other state and federal reporting requirements. California and New Jersey, for example, have already implemented six-month extensions for their filing requirements, as has New York state.

Matt F. Bobman, a member of the Exempt Organizations Committee and one of the comment letter authors, added that if a nonprofit is late with its second extension filing, it can get hit with a $5,000 penalty that, for a smaller organization, can put “enormous stress on its budget.” The penalty, he said, also zaps funds that “could obviously be used for [an entity’s] nonprofit purpose.”

“Basically, we’re trying to reduce the bureaucracy of operating as a small nonprofit,” he said. “If everyone else can get a six-month extension, then the nonprofit world should be entitled to that as well.”

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