Mandatory Electronic Filing for Form 990 and 990-PF

Question: Are corporate foundations required to file electronically the 2006 Form 990 or Form 990-PF?
Answer: Whether or not a corporate foundation is required to file electronically depends on a number of factors. Generally, only foundations with a substantial number of employees or consultants are likely to be required to file. However, since factors other than staff size influence whether electronic filing is mandatory, you should read this document carefully and work with your tax advisor to make that determination. Regardless of whether your foundation is required to file electronically, every corporate foundation should consider whether voluntary electronic filing makes sense.

Which Organizations are Required to File Electronically?
Determining whether your foundation must file electronically is not always a simple matter since it depends on four factors. The checklist below is designed to help.

Question

Yes

No

Was your foundation required to file a Form 990 or Form 990-PF for its 2005 tax year?

 

 

Was your foundation in existence for at least one calendar year prior to the due date (excluding extensions) of the 2006 Form 990 or Form 990-PF?

 

 

Was the foundation required to file at least 250 returns* during the 2006 calendar year?

 

 

Is your foundation either i) a public charity with assets of $10 million or more OR ii) a private foundation?

 

 

* To determine the number of returns filed during the calendar year, include all returns required to be filed with the IRS during the applicable calendar year. This includes information returns (e.g., Form 990), income tax returns (e.g., Form 990-T), excise tax returns (e.g., Form 4720) and employment tax returns (e.g., Form W-2). Other forms such as Form 1099-MISC are also counted.

If your answer to allof the above questions is “yes,” your foundation will be required to file electronically for the 2006 tax year. Most corporate foundations will find they are not required to do so because they do not file at least 250 returns each year. The number of returns is calculated based on returns filed by the foundation alone. The foundation is not required to aggregate the foundation’s returns with those filed by the corporation when determining the number of returns filed.

How Do Foundations File Form 990 or 990-PF Electronically?
Foundations with $10 million or less in assets will be required to use an authorized IRS e-file provider to file their return electronically. Foundations with assets of $10 million or more can file their own return electronically or use an authorized IRS e-file provider.

Where Can I Get More Information on This Topic?
IRS: E-File for Charities and Non-Profits (includes frequently asked questions and approved e-file providers)
IRS e-File for Large Tax-Exempt Entities Filing Their Own Information Returns