Waiver of Requirement to File Returns Electronically

The IRS has issued guidance on how exempt organizations that are required to file certain returns electornically may obtain a waiver of those requirements.

On January 12, 2005, the IRS released regulations that require certain tax-exempt organizations to file annual exempt organization returns electronically beginning in 2006.  For 2005 returns due in 2006, certain organizations with total assets of $100 million or more are required to e-file.  In 2007, the e-filing requirement will be expanded to include the annual return of certain organizations with total assets of $10 million or more.  These requirements apply only to entities that file at least 250 returns, including income tax, excise tax, employment tax and information returns, during a calendar year.  Thus, for example, if an organization has 245 employees, it must file Form 990 or Form 990-PF electronically because each Form W-2 and quarterly Form 941 is considered a separate return.

Notice 2005-88 outlines the procedure for requesting a waiver from the e-filing requirement where the taxpayer shows that undue hardship would result if it were required to e-file.  Waivers may be based on undue economic burden or technology constraints.

Click here for more information from the IRS website.