Please note that this blog is based on laws effective in August 2020 and may not contain later amendments. Please contact Cray Kaiser for most recent information.
With many nonprofits beginning a new fiscal year on July 1, it’s a great time to stay up to date with the ever-changing nonprofit landscape. This year in particular has presented many challenges amidst the COVID-19 pandemic, including the administrative extension and delays for government agencies. Although deadlines in 2020 continue to be moving targets, we’d like to provide you with the most current provisions and timelines to keep you updated and allow you to be proactive in your tax preparations.
As you may already know, the IRS extended all returns with due dates falling in the April to June window to July 15, 2020. This included all 2019 calendar year nonprofits. Any extensions that were filed only extended the returns to the original extension due dates. For calendar year 990s, the extension deadline is still November 15, 2020 unless Congress makes further adjustments.
Although many organizations are already electronically filing their returns, the IRS has made it mandatory to e-file for tax years beginning July 1, 2019. This applies to all Form 990 and 990-PFs, unless you’re one of the few covered by an exception. Form 990-EZ filers have an additional year to meet the e-file mandate.
UBTI “Silo” Rules Guidance
The IRS and treasury department announced proposed regulations, 85 FR 23172, under the Tax Cuts and Jobs Act (TJCA). These regulations provide guidance for tax-exempt organizations with more than one unrelated trade or business on how to calculate unrelated business taxable income (UBTI). They also provide guidance on identifying separate trades or businesses, including investment activities, as well as certain other amounts included in UBTI.
The CARES Act increased limitations on charitable contributions by individuals and corporations. Individuals were increased from 60% of AGI to 100% and corporations were increased from 10% to 25% of taxable income. For those that do not itemize, the CARES Act provided a permanent deduction which allows qualified contributions of up to $300 for individuals that normally use the standard deduction. For these purposes, donations to supporting organizations and donor advised funds are not considered qualified charitable contributions.
Illinois Attorney General’s Office
Unfortunately, the Illinois Attorney General’s office has been nearly dormant during the COVID-19 pandemic. Their offices remain closed to walk-ins and there are limited employees working. Therefore, process delays and response turnaround times are expected to be delayed, especially if correspondence is in paper format.
Illinois did not extend the filing deadline related to COVID-19, therefore Annual Reports are still due six months after the close of the organization’s tax year. The first 60-day extension was due by June 30, 2020 for calendar year filers. The second extension is due by August 30, 2020 and requires additional support materials, including copies of the original federal extension, draft financial statements, and a draft copy of the AG990-IL. The additional requirements encourage organizations to get their AG990 returns completed before the second extension deadline.
If you have any questions about these updates and how they impact your nonprofit organization, please don’t hesitate to contact Cray Kaiser. Our nonprofit team is ready to assist you.