a-02-27.pdf

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Part IV - Items of General Interest

Request for Comments Regarding Electronic Filing of Exempt Organization Returns

Announcement 2002-27

The Internal Revenue Service (IRS) is developing an electronic filing system for
tax-exempt organizations’ returns. To ensure that this process considers the needs of
all who have an interest in the information returns filed by tax-exempt organizations, we
are seeking comments from exempt organizations, state regulators, research and
oversight organizations, practitioners, software vendors, and others.

BACKGROUND
The Internal Revenue Service Restructuring and Reform Act of 1998 requires the
IRS to receive 80 percent of all returns electronically by 2007. Available information
suggests that the ability to file exempt organization returns electronically would reduce
the filing burden of organizations, as well as provide easier and quicker access to
information for users of return data. Studies show that 80 percent of Forms 990 and
990-EZ filed are prepared using software. The IRS transcribes (manually inputs) a
large amount of return data which is used by IRS and others.
The returns filed by exempt organizations are unique in several respects. They
are filed by diverse organizations ranging from volunteer membership organizations to

complex hospital systems. In addition, they are primarily information returns rather than
tax returns. As such, they typically include a significant amount of narrative text in
addition to financial data. Another unique aspect is that most exempt organization
information returns are subject to public disclosure. Finally, the returns assist with
federal tax administration, state regulation, and public oversight of exempt
organizations.

REQUEST FOR PUBLIC COMMENT
The success of an electronic filing system for tax-exempt organizations will
depend on the extent to which exempt organizations can use it to fulfill reporting
requirements and the extent to which various stakeholders can use it to satisfy their
information needs. Accordingly, the IRS requests comments from exempt organizations
and all interested stakeholders on factors to be considered in developing an electronic
filing system, including the following:
1. Which Form 990 series returns should be introduced first, and why;
2. What factors or concerns would encourage exempt organizations to file
electronically;
3. What factors or concerns would discourage exempt organizations from filing
electronically;
4. What could be done to address concerns that would discourage exempt
organizations from filing electronically;

5. How will your experience with any other IRS e-file program (for example, Form 941,
Form 1040, or Forms 8871 and 8872) affect your decision to file your exempt
organization returns electronically;
6. Should the system be designed so organizations can use it to satisfy multiple filing
or reporting requirements (for example, state reporting requirements or grant
reports);
7. What specific changes to the current Form 990 series of returns would facilitate
electronic filing of these forms.
Exempt organizations and individuals authorized to submit comments on behalf
of a specific organization are encouraged to include the following information to help
insure that the needs of various types of exempt organizations are met:
1. Organization’s gross receipts and net assets;
2. Who (attorney, accountant, employee, volunteer) prepares the organization's
returns;
3. Form filed (990, 990-EZ, 990-PF, etc.)
4. How the returns are prepared (tax return software, forms software, spreadsheets,
etc.).
Practitioners are encouraged to provide the following information:
1. Size of their organization (for example, sole practitioner, large accounting firm, large
law firm);
2. Reports prepared (for example, 990, charitable solication, grant);
3. Volume of reports prepared on an annual basis.

All other interested parties are encouraged to provide a statement explaining their
interest in an electronic filing system for exempt organization returns and any other
information that will be useful in the development of such a system.
Public comments should be submitted in writing on or before April 18, 2002.
Comments should be sent to the following address:
Internal Revenue Service
1111 Constitution Avenue NW
Washington, DC 20224
Attn: Theresa Pattara
T:EO

Comments may also be sent via electronic mail to tege-eo-efile@irs.gov

DRAFTING INFORMATION
The principal author of this announcement is Theresa Pattara of Exempt
Organizations. For further information regarding this announcement contact Theresa
Pattara at (202) 283-8946 or Cheryl Chasin at (202) 283-8932 (not a toll-free call).