COVID-19 has interrupted nearly every aspect of our daily lives. Undoubtedly, your nonprofit has been impacted in some way. Despite the ubiquitous disruption, some aspects of running an organization continue. We’re talking, of course, about compliance obligations. While some government agencies have adopted measures of leniency during this time, others still expect your nonprofit to operate as though it were “business as usual.”
Today, we’ll share current regulatory updates and how they impact your organization. The aim is to help you maintain compliance with various state and federal agencies during these challenging times.
IRS Extends Form 990 Deadline to July 15, 2020
Most 501(c) organizations are required to file a Form 990 return each year to maintain its exempt status. This is normally due 4 months and 15 days after the close of the organization’s tax year, though additional time to file can be requested by filing Form 8868.
This year, the IRS has announced that nonprofits with a normal due date between April 1 and July 14, 2020 are granted an extension to file until July 15, 2020. For the many organizations with a May 15 deadline (groups with June and December tax year ends), that means you have additional time to file your Form 990, 990-EZ, 990-PF, and 990-T with the IRS.
While this relief may be welcome to many nonprofits, remember that many state agencies, major contributors, and foundations may still require a copy of your Form 990 along the original timetable. It’s best to check with these stakeholders before delaying the decision to file.
Impact of Federal Extension on State Charitable Registration Deadlines
Forty-one states require charities that solicit contributions within their borders to register and report annually with the state charity official. By and large, the information reported each year ties in to the filing of Form 990. As a result of the federal announcement, each state has independently responded with temporary procedures for registered charities within their state.
As you might imagine, each state has issued different guidance. We’ll highlight a few examples, then provide some approaches to understanding and responding to the current situation.
Some states have decided to follow the exact cadence of the IRS. In California, for example, the normal reporting schedule follows the same due dates as Form 990. Since the outbreak of COVID-19, the state has emphatically stated that “The Registry of Charitable Trusts does honor ALL IRS extensions. The new due date to file with the IRS will become the due date to file with the Registry. The Registry status will remain current unless the filing has not been received by the final IRS due date. Please wait until the 990 is complete and submit all of the documents together.”
For organizations that file only in California, this comes as good news. However, other states haven’t followed suit. Many states still require a renewal filing or some notice from your organization by the original due date.
As a matter of normal procedure, Florida requires that organizations renew their solicitation license by their original date of registration. In layperson’s terms, if you registered last year on June 2, 2019, your renewal this year is due June 2, 2020. As part of that renewal process, organizations can request an additional 180 days to submit their Form 990, but a filing and fee are due on the original date.
Some other states have taken an approach of “wait and see.” In Maryland, state charity renewal due dates have been extended until 30 days after the State of Emergency has been lifted. This requires organizations to literally follow the news if they plan to extend Form 990 (or are otherwise unable to file it). In the case of Ohio, their Attorney General’s Office has issued rolling decrees, first extending deadlines for May 31, 2019 tax year organizations, then weeks later granting an automatic extension to June 30, 2019 tax year organizations. Nonprofits that have a July 31, 2019 tax year or beyond are essentially responsible for tracking the state’s announcements.
Other state charity offices, while generally sympathetic to the situation, are unable to effect changes without the state legislature. Tennessee, for example, provides extension relief for December 31, 2019 organizations (who may go online and request a 150 day extension), but not for the June 30, 2019 organizations that have already taken advantage of the 150 days. In the case of the latter, the legislature, which is on recess until June, would have to reconvene to discuss relief options.
For a full list of states and how their deadlines have been affected due to COVID-19, visit this article.
Strategies for Managing the Impacts of COVID-19
We touched upon the IRS extension of Form 990 and the trickle-down effect it has had on state charity registration due dates. Your organization may be registered with other agencies, including secretaries of state and departments of revenue, and have deadlines that are likewise impacted.
The first thing to do is take a deep breath. If there’s any silver lining, compliance deadlines aren’t falling any sooner than you were already expecting. Then, take stock of your current “footprint” of legal entity, tax, charitable solicitation, and other licenses. If you aren’t able to meet the original deadline, at least be prepared to contact each agency to inform them of your situation and see what sort of relief is available.
If you’re using a service provider to handle your state registrations, you can relax even more. Most of these companies file extensions for their clients as part of their engagement. Their staff is in contact with state agencies directly, allowing your organization to spend less time researching and worrying about missing a deadline.
Regardless of any particular agency’s revised procedures and processes, if it’s safe for your organization to do so, be proactive. Filing Form 990 and state registration filings on time reduces the last minute need to collect information, records, and signatures needed to submit these reports and returns. You’ll also beat the inevitable rush that happens at government agencies during peak filing periods.
The coronavirus outbreak has widely changed how the world works. Until we resume a sense of normalcy, it’s important for calm and rational heads to prevail. When it comes to your organization’s compliance, understand that government agencies are responding like anyone else. They’re doing their best to balance the public’s health with protecting your organization and its donors. Nonprofit leadership can do its part through preparation, planning, and poise, until we see each other through these challenging times.
Harbor Compliance does not provide tax, financial, or legal advice. Use of our services does not create an attorney-client relationship. Harbor Compliance is not acting as your attorney and does not review information you provide to us for legal accuracy or sufficiency.