IRS EO release addresses auto-revocation issues, royalty income, e-filing expectations

IRS EO release addresses auto-revocation issues

The IRS today released an “EO Update” that addresses the following items:


Related content

  • Auto-revocation issues
  • A technical advice memorandum (TAM) on royalty income
  • Notice of expected e-filing of Form 990-T online in 2021 for 2020 returns
  • A section 4945(g) individual grant issue “snapshot”

Premature auto-revocation notices

Regarding the auto-revocation, the EO Update (October 26, 2020) explains that, although the IRS extended the filing deadlines for Forms 990 otherwise due between April 1 and July 14 to July 15, 2020, it was unable to update this deadline in the program that automatically issues notices of revocation to organizations that fail to file a required Form 990 for three consecutive years.  As a result, some revocation notices were issued prematurely. The IRS states that it prevented eligible organizations that attempted to file electronically by July 15 from being listed as automatically revoked on, where they are still shown as tax exempt. The IRS also states that it is processing paper filings to allow the reversal of auto-revocation for those filers and is reviewing the cases and corresponding with organizations that received the premature notice. The IRS also has a dedicated fax number ((855) 247-6123) to receive correspondence from organizations in this situation that wish to present documentation of their applicable filings.

TAM: Royalty or Service?

TAM 202039018 [PDF 176 KB] addresses whether the section 512(b)(2) royalty exclusion applies to an online job placement service, and concludes (based on the facts and circumstances of that case) that the income was not excluded as royalty income under section 512(b)(2).

2020 Form 990-T

The IRS is revising Form 990-T for tax year 2020 to allow for e-filing in calendar year 2021 (reporting on tax year 2020), as required by the “Taxpayer First Act.” Revisions are also being made to improve its utility for reporting unrelated business taxable income consistent with the “silo-ing” rules of section 512(a)(6) as put in place by the 2017 tax law (the “Tax Cuts and Jobs Act”). The 2020 Form 990-T separates the tax computation (which will be on Form 990-T) from reporting of separate unrelated trades or businesses, which will be on as many Schedules A (Form 990-T) as the organization needs. 

Read the draft version of Form 990-T [PDF 142 KB] and the draft version of Schedule A (Form 990-T) [PDF 157 KB] for 2020. 

Read a KPMG summary of the changes to the draft Form 990-T: TaxNewsFlash

Section 4945(g) individual grant issue “snapshot”

The IRS has provided on a dedicated webpage, a “section 4945(g) individual grant issue snapshot.”

For more information, contact a tax professional with KPMG’s Washington National Tax practice:

Ruth Madrigal | +1 202 533 8817 |

Preston Quesenberry | +1 202 533 3985 |

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