IRS Form 8868 (2020): Extension of Time To File an EOR

What IRS Form 8868 (2020) Is For

IRS Form 8868 (2020) is the official IRS form that tax-exempt organizations use to request an automatic extension of time to file their annual return for a specific tax year. The form provides most nonprofits with a simple way to obtain additional time to file an exempt organization return when they need more preparation time. This filing option applies to a wide range of nonprofit organizations and is commonly used when a group requires a six-month extension of time to complete its annual return.

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When You’d Use IRS Form 8868 (2020)

This section explains the situations when an exempt organization would file IRS Form 8868 (2020).

• Request an automatic extension: The organization may file Form 8868 when it needs additional time to file its exempt organization return and wants to request an automatic extension before the original due date.
  
  
• Organizations on a calendar tax year: An organization may file Form 8868 if its annual return is due in the fifth month after the end of the year and additional time is needed to complete the current return.
  
  
• Organizations on a fiscal year: A nonprofit may request an extension if its budgetary year creates different dates that require more preparation time for the federal filing deadline.
  
  
• Original pre-deadline: Most nonprofits may submit the extension form if they expect delays that will prevent them from completing the required forms by the established due date.
  
  
• Extra time is required: A nonprofit organization may file Form 8868 when it needs a six-month extension of time because the organization requires more time to review records, confirm income, or prepare the return.

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Key Rules or Details for 2020

The following rules apply to IRS Form 8868 (2020) and outline the requirements that organizations must understand before submitting an extension request.

• Automatic 6-Month Extension: The form provides an automatic 6-month extension, provided the extension request is filed on time and the organization follows all filing instructions.
  
  
• An extension does not delay payment: An organization must pay any taxes owed by the original due date, as unpaid balances begin to accrue interest and may result in a penalty, even when an extension is granted.
  
  
• Protecting tax-exempt status: Nonprofit organizations must file each year or use Form 8868, as failure to file returns for three consecutive years results in the loss of tax-exempt status.
  
  
• Applies to multiple exempt returns: Private foundations and other exempt organizations may use the form for several types of returns as long as the correct return code is used for all required forms.
  
  
• Electronic or paper submission: Any organization may choose to e-file or mail the form. The IRS considers the form filed as long as the submission is accepted by the system or postmarked.
  
  
• Record-keeping requirements: Organizations must ensure that all payments, assets, and donor records are accurate, as the IRS may assess penalties for omitting or filing incorrect information.

Step-by-Step Filing Process (High Level)

The steps below outline the general filing process for IRS Form 8868 (2020) when an organization requests an extension of time to file.

1. Identify the correct return type: The organization should determine the exempt organization return that requires an extension, as the proper return code must match the kind of annual return being extended.
   
   
2. Gather required information: The organization should collect identifying details, such as its Employer Identification Number, address, and the organization’s tax year, as the IRS requires this information for processing the extension form.
   
   
3. Estimate the tentative tax: The organization should calculate an estimate of the taxes owed and apply any credits or prior payments, as the balance must still be reported even when additional time to file is granted.
   
   
4. Complete the extension form: The organization should enter all required items on Form 8868 and review the information carefully because missing details may cause delays or rejection.
   
   
5. Submit electronically or by mail: The organization may choose to e-file through approved software or mail the form to the IRS, as both methods are acceptable when submitted before the deadline.
   
   
6. Retain proof of submission: The organization should keep confirmation records, payment receipts, or a locked padlock icon verification from the IRS website because these documents provide evidence that the form was successfully submitted.

Common Mistakes and How to Avoid Them

Organizations often repeat the same errors when requesting an extension, and the points below explain how to prevent these issues.

• Missing the original filing date: An organization can avoid this error by tracking all filing dates and submitting the extension request before the deadline.
  
  
• Forgetting that taxes must still be paid: An organization can prevent penalties by paying the amount owed by the original due date because an extension does not delay the requirement to pay taxes.
  
  
• Incorrect or incomplete entries on the form: To avoid processing delays, an organization should review all lines on the form to ensure that each required item is complete and accurate.
  
  
• Not estimating taxes correctly: An organization can reduce interest and penalties by making a reasonable estimate of taxes owed and paying enough to avoid additional charges.
  
  
• Failing to keep submission proof: An organization can protect itself by maintaining copies of mailed forms, electronic confirmations, and payment receipts to verify that the return and extension were filed correctly.
  
  
• Using the incorrect form for the request: A business or nonprofit can prevent delays by confirming that Form 8868 is the appropriate form for exempt organization returns and that Form 7004 is not used for this filing.

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What Happens After You File

When an organization submits IRS Form 8868, the IRS reviews the extension request and generally grants additional time to file as long as the form was submitted on time. The organization maintains its tax-exempt status during the extension period, and the extension allows the group to complete its tax return without incurring a penalty for late filing. Interest may still apply if taxes were not paid in full by the original due date. 

FAQs

Can an organization rely on IRS Form 8868 (2020) to extend every type of exempt return?

Yes, an organization can rely on the form for most exempt organization returns as long as it selects the correct return code and follows all instructions in the filing process.

Do board members need to sign Form 8868 before it is filed?

No, board members do not need to sign the form because the extension request does not require a signature for most exempt organization filings.

Does the extension affect how a nonprofit manages its funding or assets?

No, the extension does not alter how a nonprofit manages its funding or assets, as it only provides additional time to file the tax return.

Can a nonprofit use tax software to file Form 8868?

Yes, many organizations use approved tax software to file the form because electronic filing provides a secure and efficient way to submit the request.

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