Exempt Organization e-File Statistics
Week ending June 27, 2004

Exempt Organization e-File Week Ending 06/27/04 Year-to-Date Annual Projections Percentage Received Accepted Returns/ Extensions - Total 9 557 800 70% Form 990 7 120 300 40% Form 990-EZ 2 169 100 169% Form 1120-POL 0 1 0 n/a Form 8868 0 267 400 67%

top of article | table of contents

	Eisner LLP’s approximately 120 public charity clients – a mix of 501c 3s, 4s, and 6s – will be encouraged to e-file their 990 next year if the firm’s tax preparation software, GoSystem by RIA/Thomson, adds 990 e-filing capability to its 2005 filing season package, says Julie Floch, CPA, Eisner’s Director of Not-For-Profit Services and a newly appointed member of the IRS Advisory Committee on Taxation (ACT). "We'll use the 990 e-filing software as soon as it's offered", says Floch, who expects that the firm's use of tax software will piggyback on the current use of e-filing for the corporate returns. "We would expect that ultimately e-filing will be more efficient than the paper filing process." Enthusiastic about e-filing the 990s, Floch is nevertheless realistic about the transition: “We’ll have to have some training in-house, and expect the typical learning curve.” A former chair of the New York Society of CPAs, Floch continues to be active on the Not-for-Profit Committee, and is helping to organize this year’s Not-for-Profit Conference on December 2, which will include an update and Q&A session on e-filing the 990s.

Adoption of E-filing for 990s to be Faster Than 1040s, Predicts AZ CPA

With an expertise in tax and strategic planning, financial reporting, and management consulting, primarily to nonprofit organizations and technology entrepreneurs for approximately 20 years, Carolyn Sechler, CPA, is not new to electronic filing. One of the many advantages of e-filing is the immediate electronic acknowledgement of receipt, says Sechler, who already e-files her clients’ 1040s. “I’ve known several cases of the IRS losing extension requests and assessing $10K penalties that have nonprofits and their practitioners scrambling for the original documents and proof of mailing receipts.”

Eager and determined to e-file her nonprofit clients’ 990s, Sechler will decide which software she’ll use for the 2005 filing season based on which vendor has a 990 e-filing product. Currently, she’s using Intuit’s ProSeries software, which has yet to announce any plans for 990 e-filing capability. While it integrates well with QuickBooks, Sechler has explored other software packages for her Phoenix, Arizona-based, fully wired virtual accounting firm, whose client base includes approximately 100 nonprofit organizations, both domestic and international.

Sechler, who chairs the Arizona CPA Society’s annual Non Profit Day (this year on September 22) and is active on the society’s nonprofit committee, believes that the time frame for nonprofits and their practitioners to adopt e-filing for the Form 990s will be shorter than the adoption rate for the 1040s.

“As little as two years from now, nonprofits will be clamoring for e-filing,” predicts Sechler, adding that immediate acknowledgement and the cost-savings associated with less paper and copies will be worth the transition. In fact, she is so eager to avoid the burdens of a paper system that she plans to charge those clients who don’t want to e-file.

top of article | table of contents

"Having Electronic Information Available is Critical But Being Able to Do Something with it is Even More Important,” NASCO President Tells Senate Finance Committee Members

The June 22 Senate Finance Committee hearings on charity oversight and reform featured 13 witnesses, including Mark Pacella, Chief Deputy Attorney General for the State of Pennsylvania’s Charitable Trusts & Organizations Section and President of the National Association of State Charity Officials (NASCO). In his oral testimony, Pacella asked Congress to consider three priorities: improving the accuracy and timeliness of the IRS Form 990; passing legislation that allows information sharing between state and federal regulators; and supporting technology initiatives, including electronic filing with the IRS and the Service’s plans for a state retrieval system.

	Senate Finance Committee

“NASCO asks that the IRS State Retrieval project be brought into fruition as soon as possible,” Pacella told members of the Senate Finance committee. “Having electronic information available is critical but being able to do something with it is even more important,” he added. “NASCO is working with GuideStar through a Technology Opportunities Program (TOP) Grant from the U.S. Department of Commerce to create ‘NASCOnet,’ which would make information available to the public and extend state-of-the-art information technologies to all jurisdictions, including those that lack the financial and technical expertise to do so on their own. We currently don't have a sustainability model to support NASCOnet beyond the term of the grant. NASCO strongly supports restoring the 2% excise tax on private foundation income for enforcement purposes and hopes that state charity officials can share in some of those revenues to fund enforcement initiatives such as NASCOnet.”

top of article | table of contents

“There is a gap between what the practitioner files and what’s available for e-filing,” said IRS Electronic Tax Administration Director Bert DuMars, in his opening remarks at the IRS Annual Software Developers Conference in Arlington, VA. Responsible for the continued evolution of the IRS’ e-file program, DuMars was appointed earlier this year to follow in the footsteps of Terry Lutes, who is now Associate CIO for IRS Information Technology Services.

ETA is now looking at e-filing from a product management point of view as well as the practitioner’s perspective, said DuMars, adding that making IRS e-services more user-friendly is a top priority to entice practitioners to participate in the e-file program.

DuMars also highlighted ETA’s focus on funding for the IRS Fed-State project: “It’s a priority that has been raised dramatically,” said DuMars, noting that the project, which would allow filers to submit both federal and state forms in a single electronic transmission, is critical to the e-file program.

The IRS has been working with approximately 20 state partners through the TIGERS group (see EDINews May issue). “We are trying to manage expectations,” said DuMars. The Fed-State project would make IRS Forms 1120 and 990 available, followed by the 1040s, which are currently scheduled for 2010.

Meanwhile, the next rollout of forms for IRS Modernized e-File, confirmed DuMars, includes the 990-PF, with software testing beginning in November, and e-filing capability scheduled for January 2005.

The IRS Software Developers Conference also featured an industry panel comprised of representatives from TaxSoftware.com, Drake, CCH, NCCS/990-EZ-Online, and Creative Solutions, who complimented IRS staff on the close partnership the Service maintained with developers and briefly highlighted the challenges in this year’s launch, including finding reliable validation tools and handling rejections, most of which related to problems in matching names against the IRS database and signature control.

On a positive note, the software developers commented that the error messages, while sometimes verbose, were clear and helpful in diagnosing the problems they encountered during this year’s filing season.

One of the challenges in making e-filing appealing to both practitioner and client, said Susan Reed of CCH, is the discrepancy between what is sent to the IRS and what the taxpayer sees – the old “WYSIWYG” problem (what you see is what you get). “Customers must know exactly what they’re sending,” agreed Jack Gibson for Drake Software, which developed the IRS' electronic test package used by all tax software vendors over the past 7 years.

top of article | table of contents