n-05-88.pdf

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Part IV - Items of General Interest

Form 1120, Form 1120S, Form 990, and Form 990-PF Electronic Filing Waiver Request
Procedures

Notice 2005-88

Background

This Notice provides procedures for corporations, electing small business corporations,
and organizations required to file returns under section 6033 (taxpayers) to request a
waiver of the requirement to electronically file Form 1120, U.S. Corporation Income Tax
Return; Form 1120S, U.S. Income Tax Return for an S Corporation; Form 990, Return
of Organization Exempt From Income Tax; and Form 990-PF, Return of Private
Foundation or Section 4947(a)(1) Trust Treated as a Private Foundation. This Notice
also includes guidance on the timely filing of a return required to be electronically filed
that is rejected.
On January 12, 2005, the Treasury Department and the Internal Revenue Service
(Service) issued temporary regulations that, beginning in 2006, require certain large
corporations, electing small business corporations and organizations required to file
returns under section 6033 to electronically file their income tax or annual information
returns. T.D. 9175, 70 F.R. 2012.
Section 6011(e)(2) provides that the Service may not require an entity to file returns on
electronic media unless the entity is required to file at least 250 returns during the
calendar year. Under the temporary regulations, corporations that meet this threshold
and that have assets of $50 million or more must file their Form 1120 or Form 1120S
returns electronically for taxable years ending on or after December 31, 2005. The
temporary regulations also require that tax exempt organizations with assets of $100
million or more that are required to file returns under section 6033 and that meet the
250 return threshold file their Form 990 electronically for taxable years ending on or
after December 31, 2005. The $50 million and $100 million asset thresholds will
decrease to $10 million for taxable years ending on or after December 31, 2006.
The temporary regulations further require private foundations or section 4947(a)(1)
trusts (regardless of asset size) that are required to file returns under section 6033 and

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that meet the 250 return threshold, to file their Form 990-PF electronically for taxable
years ending on or after December 31, 2006.
Exclusions from the e-File Requirement

Temporary regulations sections 301.6011-5T, 301.6033-4T, and 301.6037-2T and IRS
publications provide for exceptions and hardship waivers from the electronic filing
requirement for corporations, organizations required to file returns under section 6033,
and electing small business corporations. IRS Publication 4163, Modernized e-File
(MeF) Information for Authorized IRS e-file Providers of Forms 1120/1120S, and IRS
Publication 4206, Information for Authorized IRS e-file Providers of Exempt
Organization Filings, contain instructions for filing corporate and tax exempt
organization returns electronically, and exclude certain types of returns from the
electronic filing requirement. For example, for tax year 2005, the Service has excluded
amended returns from the electronic filing requirement. The Service, however, will
accept amended returns through the Modernized e-File (MeF) program effective
January 2007. For a complete and up to date list of the exclusions or for further
information on electronic filing, refer to Publication 4163, Publication 4206, and the
IRS.gov Internet site. The Service will post answers to frequently-asked questions on
this site.

Timely Filing of Rejected e-Filed Returns

If the portion of a return required to be filed electronically is transmitted on or before the
due date (including extensions) and is ultimately rejected, but the electronic return
originator and the taxpayer comply with the following requirements for timely submission
of the return, the return will be considered timely filed and any elections attached to the
return will be considered valid. For taxable years ending on or after December 31,
2005, the Service will allow the taxpayer 20 calendar days from the date of first
transmission to perfect the return for electronic resubmission.

If the electronic return cannot be accepted for processing electronically, the taxpayer
must file a paper return with the Service Center where it would normally be filed. In
order for the paper return to be considered timely, it must be filed by the later of the due
date, or 5 calendar days after the date the Service last gives notification to the taxpayer
that the return has been rejected, as long as the first transmission was made on or
before the due date of the return (including extensions). The paper return should
include an explanation of why the return is being filed after the due date and include a
copy of the Service’s final rejection notification. A paper return filed in accordance with
this paragraph will be considered timely filed and any elections attached to the return
will be considered valid. A waiver request does not have to be filed by the taxpayer
under the perfection procedures described in this paragraph.

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Requests for Waiver of Electronic Filing Requirement
When certain taxpayers required to file over 250 returns fail to file electronically as
required, those taxpayers may be liable for failure to file penalties under I.R.C. §§ 6651
or 6652, unless the taxpayer can establish that the failure to file the return electronically
was due to reasonable cause and not due to willful neglect. The temporary regulations
permit the Service to waive the electronic filing requirement if the taxpayer
demonstrates that undue hardship would result if it were required to file its return
electronically. The regulations require that taxpayers seeking a waiver should request
that waiver in the manner prescribed in applicable revenue procedures or publications.
The Service will approve or deny requests for a waiver of the electronic filing
requirement based on each taxpayer’s particular facts and circumstances. In
determining whether to approve or deny a waiver request, the Service will consider the
taxpayer’s ability to timely file its return electronically without incurring an undue
economic hardship. The Service will generally grant waivers for filing returns
electronically where the taxpayer can demonstrate the undue hardship that would result
by complying with the electronic filing requirement, including any incremental costs to
the filer. Mindful of the software and technological issues in filing electronically, the
Service will also generally grant waivers for filing returns electronically where
technology issues prevent the taxpayer from filing its return electronically. Guidance on
situations in which deviations or exclusions from the electronic filing requirement can be
made without a waiver request (e.g., amended returns) is available in IRS Publication
4163, IRS Publication 4206, and on the IRS.gov Internet site.

Elements of a Waiver Request
To request a waiver, the taxpayer must file a written request containing the following
information:
(1) A notation at the top of the request stating, in large letters, "Form 1120 e-File
Waiver Request,” “Form 1120S e-File Waiver Request,” “Form 990 e-File Waiver
Request,” or “Form 990-PF e-File Waiver Request.”

(2) The taxpayer’s name, federal tax identification number, and mailing address..

(3) The type of form for which the waiver is requested.

(4) The taxable year for which the waiver is requested.

(5) The value of the taxpayer’s total assets at the end of the taxable year as reported
(or to be reported) on the entity’s Form 1120, 1120S, 990, or 990-PF.

(6) A detailed statement which lists:

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a) the steps the taxpayer has taken in an attempt to meet its requirement to timely
file its return electronically,

b) why the steps were unsuccessful,

c) the undue hardship that would result by complying with the electronic filing
requirement, including any incremental costs to the taxpayer of complying with the
electronic filing requirements. Incremental costs are those costs that are above and
beyond the costs to file on paper. The incremental costs must be supported by a
detailed computation. The detailed computation must include a schedule detailing
the costs to file on paper and the costs to file electronically.

(7) A statement as to what steps the taxpayer will take to assure its ability to file future
returns electronically.

(8) A statement (signed by an officer authorized to sign the return, as defined in section
6062 of the Code) with the following language:

Under penalties of perjury, I declare that the information contained in this
waiver request is true, correct and complete to the best of my knowledge
and belief.

Requests from the taxpayer’s tax advisor/preparer must include a valid power of
attorney.

The waiver request should not be attached to the taxpayer ’s paper tax return.
Extension requests or payments should not be submitted with the waiver request.

Time for Filing a Waiver Request

Taxpayers are encouraged to file electronic filing waiver requests for failure to file a
return electronically at least 45 days prior to the due date of the return, including
extensions. This will give the Service time to process the waiver request.

Place for Filing a Waiver Request

Until the Service issues further guidance, taxpayers should file a waiver request with the
Ogden Submission Processing Center.

Use the following address if using the U.S. Postal Service:
Internal Revenue Service
Ogden Submission Processing Center
Attn: Forms 1120 and 990 e-file Waiver Request, Stop 1057

5
Ogden, UT 84201

Use the following address if using an overnight delivery service:
Internal Revenue Service
Ogden Submission Processing Center
Attn: Forms 1120 and 990 e-file Waiver Request, Stop 1057
1973 N. Rulon White Blvd.
Ogden, UT 84404

Taxpayers may also fax the waiver request to the following number: (801) 620-7622.

Corporate taxpayers may email questions about e-file to: largecorporate@irs.gov.
Software developers and vendors may email questions about corporate e-file to:
1120@irs.gov.

Further information is available on the E-file for Charities and Nonprofits webpage at the
IRS.gov Internet site.

The principal author of this announcement is Michael Hara of the Office of Associate
Chief Counsel (Procedure & Administration). For questions concerning a request for
waiver, you may contact the Ogden Service Center by calling 1-866-255-0654 and then
selecting option 1, then 2, and then 5.