The IRS Released a Draft of Form 8868: What’s New?

Stephanie Glanville | November 13, 2023 | Reading time: 8 minute(s) | Extension Form 8868, Nonprofits, Updates | No Comments

The IRS recently released a new draft of the IRS Tax Extension Form 8868 that includes some notable changes. This form is used by tax-exempt organizations when requesting an extension of time to file their annual tax returns.

These changes, while not yet finalized by the IRS, are a great way to gauge the updates to come and how the filing process of this form will change as a result.

In this blog, we will take a closer look at the purpose of Form 8868, what the projected changes are to this form, and how your organization’s filing process will be updated as a result.

What is Form 8868?

The 8868 is an extension form that tax-exempt organizations, also known as nonprofit organizations, can file to request an extension of up to 6 months from the IRS. This extension applies to all of the 990 series returns, with the exception of the smallest Form 990-N. Also referred to as the 990 e-postcard, this form is not currently eligible for any IRS extension.

This is an automatic extension, meaning that as long as the form is filed with accurate information and submitted to the IRS on or before the deadline, it will be accepted and the extension granted without any further reasoning. No ‘blanket requests’ are permitted. Nonprofits must file a new extension for any and all forms that they need an extension for.

This is a simple extension form that only requires basic information for approval. So – why would the IRS need to update this form?

Draft Version of Form 8868: What’s New?

The new updates to Form 8868 involve Form 5330. Form 5330 is the Return of Excise Taxes Related to Employee Benefit Plans. Nonprofits can file this form to request a determination letter to the IRS for the initial qualification of a defined benefit or a defined contribution plan and the exempt status of any related trust.

So – what does this actually mean? When an employer or a third-party administrator makes an error while managing a benefits plan, they are required to report this and applicable excise taxes to the IRS.

The new draft version of Form 8868 includes the option to extend Form 5330 for an (individual) or (other than individual). If the extension is being filed for Form 5330, they must also enter the ‘Plan Name’, ‘Plan Number’, and the ‘Plan Year Ending’ date.

The next notable update is that Form 8868 will now have three parts. This will include

Part I: Identification
Part II: Exempt Organizations
Part III: 5330 Filers

To check out the IRS draft version of Form 8868, click here.

To check out the IRS draft version of Form 8868 instructions, click here.

The Tax990 team will keep you posted on the changes coming to Form 8868. In the meantime, you can easily complete and transmit your organization’s 8868 extension and 990 series return with the user-friendly and efficient Tax990 filing application!