On July 1, 2019, President Trump signed the Taxpayer First Act into law. The legislation contains extensive IRS reforms that received strong bipartisan support in the House and Senate.
The bill—in part—creates an independent appeal process for taxpayers, places limitations on private debt collectors, enhances information technology at the IRS, and makes permanent the Volunteer Income Tax Assistance (VITA) matching grant program.
One way the legislation directly affects the nonprofit sector is that it mandates all tax-exempt organizations file the annual Form 990 information electronically – a reform that many sector advocates have been requesting for over a decade. Currently, only tax-exempt organizations that have assets greater than $10 million and those that file more than 250 returns with the IRS are required to file Form 990 electronically. The Treasury Secretary would be permitted to provide transition relief for up to two years for certain small organizations and those that file Form 990-T related to unrelated business taxable income. According to the IRS, about two-thirds of nonprofit tax filings in recent years were already submitted electronically.
“The IRS welcomes passage of the Taxpayer First Act, and we are pleased this important legislation received full bipartisan support,” said the IRS in a statement. “IRS leaders have had extensive discussions with Congress about this measure for more than a year as it was being developed. The legislation is wide-ranging and touches on a number of areas across the IRS. We believe these changes and many others in the bill will help the IRS and the nation’s tax administration system move forward.”