Which large tax-exempt organizations are required to file returns electronically?
E-filing of Forms 990 and 990-PF is required for some large tax-exempt organizations. The regulations require tax-exempt organizations with total assets of $10 million or more, who file at least 250 returns annually, to file Forms 990 electronically. In addition, private foundations and charitable trusts are required to file Forms 990-PF electronically regardless of their asset size, if they file at least 250 returns annually. The electronic filing requirement does not apply to the extension Form 8868, even if the filer is required to file its return (Form 990 or 9900-PF) electronically.
The electronic filing requirements apply only to entities that file at least 250 returns, including income tax, excise tax, employment tax, and information returns (including Forms W-2 and 1099), during a calendar year. All original returns filed by a tax-exempt organization during the calendar year are counted. Corrected or amended returns are not counted. Returns filed by the same practitioner or other third party, on behalf of other organizations, are not counted. For example, a bank may serve as trustee for many exempt organizations. The number of returns filed by the bank is irrelevant in determining whether any of its clients are required to file electronically.
Example of an organization meeting the electronic filing requirement: If a tax-exempt organization having $10 million in total assets has 245 employees, it must file Form 990 electronically because each Form W-2 and quarterly Form 941 is considered a separate return. Therefore, the organization in this example would file a total of 250 returns (245 W-2s, four 941s, and one 990).
The controlled group provisions that apply to taxable corporations do not apply to tax-exempt organizations in this context. Thus, the 250 return threshold is determined by reporting entity only.