The IRS recently released drafts of the 2020 Form 990-T, Exempt Organization Business Income Tax Return, and new Schedule A (Form 990-T), Unrelated Business Taxable Income From an Unrelated Trade or Business. While a complete understanding of the redesign of the 2020 Form 990-T and accompanying schedules will not be possible until the instructions are released, the updated form and new Schedule A includes moving summary-level information to the beginning of the form. This is similar to the 2008 redesign of Form 990, Return of Organization Exempt From Income Tax. Detailed reporting of an organization’s unrelated business taxable income (UBTI) from one or more unrelated trades or businesses will be made exclusively on Schedules A.
The IRS previously stated that the 2020 revision of Form 990-T is expected to be the first update of the return that will be covered by the Taxpayer First Act’s mandatory electronic filing requirements.
The draft 2020 Form 990-T reflects the next step in the IRS’s implementation of the Section 512(a)(6) UBTI silo rules. The draft form highlights summary-level information on the core form and provides for consistent reporting of UBTI from an organization’s unrelated trades or businesses on Schedules A. These changes should provide a filing organization and other stakeholders with greater visibility into the organization’s unrelated trades or businesses, and its determination of its tax liability.
The changes are intended to make it easier for the IRS to implement the Taxpayer First Act’s mandatory electronic filing requirement. It is important to note that the draft Form 990-T and Schedule A are for information purposes only and should not be used for tax filings with the IRS. We expect to share additional insights regarding the 2020 Form 990-T once the instructions to the form become available and the draft form is finalized.
Health Services Tax Leader, PwC US