Proposed Tax Regulations to End or Restrict Valuation Discounts for Family Gifts

UPDATE:  On October 2, 2017, the Treasury Department informed Pres. Trump that, as part of its review to eliminate burdensome tax regulations, the proposed regulations discussed below will be withdrawn in their entirety.  It is expected that the withdrawal will occur in 60 days by publication in the Federal Register.
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On August 4, 2016, the Treasury Department issued long anticipated “proposed” tax regulations restricting the use of valuation discounts for gifts to family members.  The effective date is expected to be sometime in 2017 when final regulations are issued.  A public hearing on the proposed regulations is scheduled for December 1, 2016.  Already legislation has been proposed in Congress to nullify these controversial regulations.  However, it was Congress that gave Treasury the power to write these regulations in the first place.  When Code Section 2704 was enacted back in 1990, it was intended to eliminate the ability of taxpayers to use artificial means to depress the value of ownership interests in corporations or partnerships gifted to family members when the family retained control of the entity (and therefore the full economic value of the entity).  Congress left the details of how to implement the statute to the Treasury Department.

Valuation discounts are an important part of gift and estate tax reduction strategies.  Valuation discounts are allowed both for minority interests (lack of control) and for lack of marketability.  Over the years, creative advisors and friendly state legislatures have devised strategies and enacted local laws that have allowed taxpayers to get around the intent and reach of Section 2704.  Many court cases have sustained these strategies.  Taxpayers have for many years enjoyed making gifts at values discounted to true fair market value.  After years of trying to get Congress to amend the law to prevent avoidance of Section 2704, the IRS has taken matters into its own hands.  The pendulum now swings back in favor of the government because these regulations make the valuation for gift tax purposes greater than the true fair market value of the gifted interest.  Experts have said that gifts made within a family unit will be valued at a higher gift tax value than what the value of the interest would be if it were sold to an unrelated third party!  The regulations also have application to the estate tax value of retained interests held at death.

The regulations are quite complex and will have unintended consequences.  They are also not fully understood.  Some assumptions and commentary made by leading experts and practitioners may, in the end, not be totally consistent with the intent of the regulations.  Without getting into the technical weeds, some of the highlights include:

·         A transfer (gift) of a minority interest to a family member, where family members remain in control of the business on an aggregate ownership basis, will not qualify for valuation discounts.

o   Control is defined as ownership of at least 50% of capital or profits interests, or any equity interest that can cause the entity to liquidate in whole or in part, or any general partnership interest.

o   Family members, for this purpose, are broadly defined to include the individual's spouse, any ancestor or lineal descendant of the individual or the individual's spouse, any brother or sister of the individual, and any spouse of the foregoing.  This definition does not include nieces and nephews.

·         A new 3-year lookback period is proposed to prevent minority discounts created by transfers made before death.  For example, if father owned 55% of his business entity and made a gift of 6% to his children, his remaining 49% ownership would qualify for a lack of control minority valuation discount at his death.  But if the gift of the 6% occurred within the 3-year period ending on his date of death, his 49% ownership would be valued as if he still owned 55% (meaning no minority interest discount for the 49% he retained).

·         The introduction of “disregarded restrictions” where control remains within the family after the transfer that expand beyond the existing so-called “applicable restrictions” that have been ignored by taxpayers.  Restrictions targeted by these rules include those that:  1) limit the owner’s ability to liquidate his/her ownership interest for cash or property, 2) delay the timing of the liquidation payment for more than six months, 3) allow the liquidation payment to be anything other than cash or property, and 4) limit the liquidation price to an amount below minimum value.  These restrictions will be ignored for purposes of valuing the property that was transferred because they can “lapse” or be removed after the transfer by family members still in control of the entity.

o   Minimum value is defined as the fair market value of assets reduced by liabilities of the entity.

·         An exception to the elimination of the minority interest discount applies if, immediately before the transfer, a nonfamily member owns at least 10% of the entity and the sum of all nonfamily interests total at least 20%, the nonfamily member can redeem its interest for cash or assets with notice of no longer than 6 months, and the nonfamily members have owned their interests for at least 3 years.

·         An exception to the elimination of the minority interest discount also applies if each owner has an enforceable right to liquidate his/her ownership interest within 6 months either in cash or property at minimum value.

What should taxpayers do now?  If you are contemplating making gifts and engaging in estate tax planning strategies, you should do so soon, before publication of the final regulations which is expected sometime in 2017.  But, a gift made to a family member before the effective date to create a minority interest for the decedent will not be effective to create an estate valuation discount if the gift was made within 3 years of death and death occurs after the effective date.  The gift would have received the traditional discounts because it was made before the effective date, but the estate value of the retained interest would not be discounted because death occurred after the effective date and within three years of the gift.

Gifting and estate freezing strategies will still be very effective in reducing estate tax even after publication of the final regulations.  The final regulations will reduce part of the financial benefit of such strategies, but it is the post-gift appreciation outside of the taxpayer’s estate that brings the most financial benefit, and this benefit remains.  For smaller estates that will not incur estate tax, these valuation regulations may represent good news in that the value of retained business interests at death will have a higher value permitting a higher income tax basis under the so-called “step-up in basis” rules.  However, some commentators believe that a higher tax basis step-up because of these regulations is not assured.

Changes to Overtime Pay Rules Effective December 1, 2016

As directed by Pres. Obama, the U.S. Department of Labor published new regulations in May regarding overtime pay under the Fair Labor Standards Act (FLSA) to be effective December 1, 2016.  The FLSA requires employers to pay most employees at least the Federal minimum wage and to pay for overtime, which is the number of hours worked in excess of 40 in a workweek, paid at a rate of 1 ½ times the regular hourly rate.  Federal and Utah minimum wage is currently $7.25 per hour and Utah follows the FLSA overtime rules.  Exemptions from overtime pay is permitted for employees who work in certain administrative, professional, or executive jobs.  An exemption is also provided for highly compensated employees not working in one of these areas.

A minimum “salary-level” test must be met for employees working in executive, administrative, or professional positions to be considered exempt from overtime pay.  On December 1, 2016, the minimum increases to $913 per week ($22.825/hour or $47,476/year) up from the current $455 per week ($11.375/hour or $23,660/year).  The regulations provide for automatic increases to these amounts every three years, the first increase beginning January 1, 2020.

For the highly compensated person not working in one of the three areas, the current compensation level of $100,000 per year is increased on December 1, 2016 to the 90^th percentile of earnings for all full-time salaried employees which is $134,004.  This amount will also be adjusted every three years.

Employers should review their employee classifications to ensure that exempt employees are properly classified.  Be sure that job descriptions accurately reflect the employees’ duties.  Exempt employees earning less than the new annual compensation of $47,476 will need to receive overtime pay starting December 1, 2016.  The regulations permit nondiscretionary bonuses, incentives, and commissions to satisfy up to 10% of the new standard salary level, but these payments must be made quarterly.  If an exempt employee works overtime, and earns close to the new salary level, it may be less expensive to give the employee a raise to meet the new exemption standard instead of making overtime payments, or else prohibit the working of overtime.  Adjusting an employee’s compensation to meet the new standard introduces several other complications to be considered, such as considering whether raises must be given other employees to treat them fairly, and being cognizant of any equal pay issues between men and women having similar duties.

More information can be found on the DOL website here.

Update 

On November 22, 2016, a federal judge in Texas blocked implementation of the new overtime rules pending a court decision on the legal challenge against the rules.  Several business groups and 21 states challenged the legality of the rules issued by the DOL.  While welcome news to employers, it comes very late and employers may have already discussed pay increases with employees which will be very difficult to take back.  More information can be found here.

Revenue Procedure 2016-42 Helps Charitable Remainder Annuity Trusts Qualify in a Low Interest Rate Environment

One of the many consequences of the government’s manipulation of interest rates is the impact on the qualification of charitable remainder annuity trusts (CRATs).  A CRAT is a split-interest trust where the person transferring property to the trust typically retains a fixed annuity payment for life (or a term of years not exceeding 20) with the balance (called the remainder) of the trust passing to a designated charity at the end of the annuity payment term.  Because the CRAT is tax-exempt, it is typically used in tax planning for the sale of appreciated property. 

There are several rules that a CRAT must meet, one of which is the 5% exhaustion test of Revenue Ruling 77-374.  This ruling requires that the probability of the annuity payment depleting the assets of the CRAT, so that nothing remains for the charity, cannot be greater than 5%.  The probability of exhaustion is computed by considering the annuity as a percentage of the initial value of the property transferred to the trust (the amount of the annuity must be at least 5% of the initial value), the IRS valuation interest rate under IRC §7520 (use the highest of the current month (1.40% for August 2016) or of the two preceding months (1.80% each for June and July)) which is used to discount the annuity stream to present value, and the life expectancy of the annuitant over which the annuity will be paid.  In August 2016, it is clear that the CRAT minimum annuity payout percentage of 5% is greater than the IRS valuation rate of 1.80%; therefore, if the time period over which the annuity is paid is too long, the 5% depletion test will be failed.  For a single life annuitant at the 1.80% IRS valuation rate, only a 72-year-old or older person can establish a CRAT.  For a joint life expectancy of a husband and wife, the spouse of a 72-year-old must be at least age 77!  Contrast this to August 2008 when the §7520 rate was 4.20%.  Then a 52-year-old could establish a CRAT without failing the exhaustion test. 

Because the low interest rate environment has rendered CRATs unusable except for the oldest of taxpayers, the IRS published Revenue Procedure 2016-42.  It provides a provision which, if adopted, enables the CRAT to disregard the exhaustion test upon creation.  The provision requires the CRAT to terminate early if the future value of the CRAT, when discounted back to the CRAT formation, drops below 10% of the initial CRAT value.  The formula could cause an early termination and end of the annuity payment if the CRAT were to suffer a decline in value, even if temporary due to market fluctuations.  The provision will require annual monitoring before each year’s annuity payment is made.  If the 10% test is failed, then no annuity is paid for that year and the CRAT pays all of its assets over to the charity and terminates.  While this revenue procedure opens the door for CRATs to be used by younger taxpayers, younger taxpayers may find that a charitable remainder unitrust (CRUT) or charitable gift annuity may be preferable to the CRAT which bears the risk of early termination.  However, in the right situation, this new provision can enable the CRAT to be used.

The New “Death Tax”

The lifetime exemption from Federal estate tax (sometimes called the death tax) was permanently increased to $5.00 million plus inflation adjustments (measured from 2010) as part of the American Taxpayer Relief Act of 2012.  It had been scheduled to drop from $5.12 million to $1.00 million in 2013.  For 2016, the exemption stands at $5.45 million.  Because each spouse has this limit, a married couple effectively has a $10.90 million combined exemption.  The government also permanently enacted “portability” enabling the surviving spouse to elect to “port” or add to her or his own lifetime exemption any unused exemption of the deceased spouse.  The large exemption amounts in effect make the estate tax applicable only to a tiny percentage of taxpayers, estimated to be 0.6% of all taxpayers.  Given that almost no one pays the estate tax, what then is the new death tax?  Answer:  it is the income tax.  The income tax is the tax that most people should plan for in their estate planning documents.  Unique income tax benefits and detriments associated with trusts and estates require careful planning. 

When a person dies, the income tax basis of the assets that are included in the gross estate of the decedent changes to be equal to the fair market value (FMV) as of the date of death (or the “alternate valuation date” if that election is made for a tax-paying estate).  An exception applies to assets that are considered “income in respect of a decedent” (IRD).  IRD assets are typically tax-deferred retirement accounts such as 401(k)s, traditional IRAs, and also accrued income items such as accrued interest and dividend income, and unreported income from installment sale contracts.  These IRD assets do not receive a new income tax basis at death.  In addition, if the new basis conformity reporting isn’t complied with when required (see my blog post here), the tax basis of unreported inherited assets becomes zero.  In most instances the FMV will exceed the tax basis of the assets.  Therefore, changing the tax basis to FMV eliminates the inherent capital gains tax.  The new reality of the high estate tax exemption amount should change the emphasis in estate planning from reducing the estate tax (that most likely won’t be owed) to reducing the income tax (that will be owed). 

Putting the emphasis on income tax reduction when structuring estate plans requires looking at both lives for a married couple.  If the surviving spouse continues to live for a number of years, the FMV of the assets owned by the decedent spouse should continue to increase.  If such assets could be included in the gross estate upon the death of the surviving spouse, the assets in effect receive a “second step-up” in income tax basis.  Below are some planning suggestions.  A variety of factors must be considered before adopting any of these suggestions. 

1.      Consider changing your existing estate plan from using the traditional A-B trust structure to simply leaving all assets of the first spouse to die to the surviving spouse, whether directly or in a qualifying trust, and electing portability.  The traditional structure allocates the first spouse’s assets to the B trust (sometimes called the credit shelter, bypass, or family trust) in an amount equal to the unused estate exemption amount.  The balance of the assets (if any) are left to the A trust for the surviving spouse.  The traditional A-B structure is an attempt to use the deceased spouse’s estate exemption that would be lost if not used.  But now, with the availability of the portability election, any unused exemption will be preserved.  The tax problem with the B trust is that the income tax basis of the trust assets will be frozen at the FMV at the time of the first death.  The B trust is designed not to be included in the gross estate of the surviving spouse; therefore, there is no second step-up upon the death of the second spouse.  Leaving the first spouse’s assets to the surviving spouse, whether directly or in a qualifying trust, enables those assets to receive a second step-up in basis.  Before changing your A-B trust structure, other reasons for the structure, such as asset protection or multi-generational trust purposes must be considered.

2.      If the older/sicker spouse owns an irrevocable grantor trust from prior gifting or estate planning strategies, there will likely be a provision in the trust document that permits the spouse-grantor to substitute or replace assets in the grantor trust with assets of like FMV.  Substituting high basis assets for low basis assets in the trust will bring the low basis trust assets into the spouse’s gross estate for a basis step-up.

3.      If the A-B trusts already exist, or if there are other gifting or estate irrevocable trusts that are nongrantor trusts, then the income tax burden of these trusts can be quite high.  For example, in 2016, the top 39.6% ordinary and 20.0% capital gain tax rates begin at only $12,400 of trust taxable income, whereas for a married couple, such rates don’t begin until $466,950 ($415,050 for single taxpayers).  Distributions of trust taxable income to beneficiaries can often result in less overall tax.  Distributions just for income tax reasons should, however, be consistent with the trustor’s purposes for the trust.

4.      When drafting a trust document, the distribution language should give discretion to the trustee to make distributions from income and principal, and should give the trustee authority to define trust accounting income, such as including capital gains in the definition.

5.      Give the older/sicker spouse ownership of appreciated, low-basis property so that it might receive a basis step-up.  However, a special rule prevents a basis step-up if the deceased spouse received the property within 12 months of death from the person inheriting the property.

6.      Have the older/sicker spouse gift high-basis property having an unrealized loss so that the high basis might be preserved instead of being “stepped down” to FMV upon death.  While there are limitations on how much loss can be triggered on the sale of gifted high-basis property, the preserved basis will be available to reduce the capital gain if the property’s value recovers.

7.      Avoid fractionalizing ownership interests to obtain large valuation discounts.  If you don’t have estate tax, you want high valuations to obtain higher tax basis for the property to be inherited by your heirs.

8.      Elect portability where it makes sense.  Electing portability to preserve the unused lifetime estate tax exemption requires the filing of a timely estate tax return for the deceased spouse.  Preparing an estate tax return is expensive, costing thousands of dollars, so it must fit the family’s circumstances to be worthwhile.

Partners Cannot Be Employees

Temporary tax regulations were issued on May 4, 2016, to halt a perceived abuse where wholly owned limited liability companies (LLCs) were used to enable partners to be treated as employees for purposes of participating in tax-favored employee benefit plans.  Under Revenue Ruling 69-184, partners are not considered employees and therefore should not receive Form W-2 and should not participate as regular employees in employee benefit plans.  However, that ruling was published in 1969, and since that time LLCs have been created and the concept of disregarded entities introduced.  Some taxpayers have used the new developments to plan around the ruling.

Wholly owned or single member LLCs are generally “disregarded” as an entity separate from its owner for both income tax and self-employment tax purposes.  For employee employment tax purposes, prior regulations held that a disregarded entity is treated as a corporation, meaning that the LLC rather than the LLC owner is treated as the employer of its employees.  The prior regulations gave an example of an individual owning 100% of an LLC and stated that the individual was not an employee of the LLC.  But since the regulations did not provide an example of a partnership owning 100% of an LLC, some taxpayers interpreted the regulations as permitting the partnership’s partners to be treated as employees of the LLC and therefore eligible to participate in certain tax-favored employee benefit plans not otherwise available to self-employed individuals.

The temporary regulations require partnerships owning a business in a wholly owned LLC to treat the partners as self-employed individuals rather than as employees of the LLC beginning the later of August 1, 2016, or the first day of the next employee benefit plan year beginning after May 4, 2016.

The publication of these temporary regulations is a good reminder of the IRS’ position that partners should not be part of the payroll system.  Partner compensation is considered to be a “guaranteed payment” that is disclosed on Schedule K-1 rather than reported on Form W-2.  Guaranteed payments are self-employment income not subject to payroll tax withholding.  Therefore, partners will need to make timely estimated tax payments of their income and self-employment taxes in order to avoid a penalty for underpaying estimated tax.

Tax Proposals of the Three Presidential Candidates

Thomson Reuters RIA Checkpoint this week issued a summary of the tax proposals of the three remaining presidential candidates.  The summary is based largely on information provided on the candidate's websites as of May 17, 2016.  Excerpts from their article:

Hillary Clinton 

Individual tax reform: 

1.     Impose the "Buffett rule" requiring taxpayers earning more than $1 million per year to pay at least 30% in taxes, and "broadening the base of income subject to the rule."

2.     Enact the "Fair Share Surcharge"—i.e., an extra 4% surtax on taxpayers who make more than $5 million per year.

3.     Modify the treatment of capital gains for taxpayers in the highest bracket by implementing a graduated holding period where the rate decreases, from 39.6% to 20%, over a 6-year period, to promote long-term investment.

4.     Limit the tax value of certain tax breaks to 28%. 

Business tax reform:  

1.     Restrict corporate inversions by increasing, from 20% to 50%, the post-merger threshold of foreign shareholder ownership for an American company to be considered foreign.

2.     Impose an "exit tax" on companies that undergo an inversion to ensure that U.S. taxes are paid on unrepatriated earnings held overseas.

3.     Create a $1,500 "apprenticeship tax credit" for every new worker that a business trains and hires.

4.     Provide for a new 15% tax credit for employers that share profits with their workers.

5.     End "wasteful tax subsidies" for oil and gas companies. 

Estate tax reform: 

1.     Exempt the first $3.5 million of an individual's estate from estate tax ($7 million for married couples), without adjustment for inflation.

2.     Increase the top rate to 45%.

3.     Cap the lifetime gift tax exemption at $1 million. 

Miscellaneous tax reforms: 

1.     End the "carried interest" loophole (under which private equity and hedge fund managers are taxed at capital gains rather than ordinary income rates on fund income).

2.     Close the loophole under which taxpayers essentially avoid IRA contribution limits by undervaluing contributed assets, and preventing taxpayers with "mega IRAs" from contributing further.

3.     "Ask the wealthiest to contribute more" to Social Security, including "options to tax some of their income above the current Social Security cap, and taxing some of their income not currently taken into account by the Social Security system."  

Bernie Sanders 

Individual tax reform. 

1.     Leave the existing rates in place for married couples with income below $250,000 and single filers with incomes below $200,000. However, he would replace the existing top three rates (of 33%, 35%, and 39.6%) as follows:

a.     37% on income between $250,000 and $500,000;

b.     43% on income between $500,000 and $2 million;

c.      48% on income between $2 million and $10 million; and

d.     52% on income of $10 million and above.

2.     Replace the alternative minimum tax (AMT), personal exemption phase-out (PEP), and "Pease" limitation on itemized deductions with a provision limiting the tax savings for each dollar of deductions to 28¢ for "high-income households."

3.     Repeal the favorable rates on capital gains and dividends for married couples with incomes over $250,000 (which would instead be subject to the otherwise applicable income tax rate), while retaining the existing favorable treatment for taxpayers who fall under that threshold.  Increase the 3.8% surtax [established by the Affordable Care Act] on net investment income to 10%. 

Business tax reform: 

1.     End deferral of foreign-source income, instead requiring corporations to pay U.S. taxes on offshore profits as they are earned.

2.     Not allow a corporation to "claim to be from another country" if its management and control operations are primarily located in the U.S.

3.     Eliminate loopholes and subsidies that benefit oil, natural gas, and coal interests. 

Estate tax reform: 

1.     Exempt the first $3.5 million of an individual's estate from the estate tax.

2.     Establish a new progressive estate tax rate structure: 45% on the value of an estate between $3.5 million and $10 million; 50% for the value of an estate between $10 million and $50 million; and 55% for the value of an estate in excess of $50 million, with an "additional billionaire's surtax" of 10%.

3.     Strengthen the generation-skipping tax by applying it with no exclusion to any trust set up to last more than 50 years.

4.     Limit the annual exclusion from gift tax for gifts made to trusts. 

Miscellaneous tax reforms: 

1.     Enact a "Wall Street" or "financial transaction" tax on trades of stock (0.5%), bonds (0.1%), and derivatives (0.005%).

2.     Eliminate the Social Security wage base (for 2016, $118,500) so that everyone pays the same percentage of their income.

3.     End the "carried interest loophole."

4.     Enact a new payroll tax to fund paid family and medical leave.

5.     Create a 6.2% income-based health care payroll tax paid by employers, and a 2.2% income-based tax paid by households (both referred to as "premiums"), to help fund Medicare for all.  

Donald Trump

Individual tax reform: 

1.     Lower income tax rates as follows:

a.     0% for single filers earning up to $25,000, married filers earning up to $50,000, and heads of household earning up to $37,500;

b.     10% for single filers earning $25,001 to $50,000, married filers earning $50,001 to $100,000, and heads of household earning $37,501 to $75,000;

c.      20% for single earners earning $50,001 to $150,000, married filers earning $100,001 to $300,000, and heads of household earning $75,001 to $225,000; and

d.     25% for single filers earning $150,000 and up, married filers earning $300,001 and up, and heads of household earning $225,001 and up.

2.     Change the long-term capital gains and dividends rates to be:

a.     0% for taxpayers in the 0% and 10% income tax rate brackets;

b.     15% for taxpayers in the 15% income tax rate bracket; and

c.      20% for taxpayers in the 25% income tax rate bracket.

3.     Reduce personal exemptions and deductions.

a.     Taxpayers in the 10% brackets will keep "all or most" of their current deductions,

b.     Those in the 20% bracket will keep "more than half" of their current deductions, and

c.      Those in the 25% bracket will keep "fewer" deductions.

d.     Charitable giving and mortgage interest deductions, will remain unchanged for everyone.

e.     Individuals would also be allowed to fully deduct health insurance premium payments. 

Business tax reform: 

1.     Cut the corporate tax rate to 15% and also create a new "business income tax rate" within the "personal tax code" that would match the 15% corporate tax rate for pass-through businesses.

2.     Provide a one-time deemed repatriation of corporate cash held overseas at a 10% rate.

3.     End deferral of taxes on corporate income earned abroad.

4.     Reduce or eliminate corporate loopholes that "cater to special interests," as well as "deductions made unnecessary or redundant" by the new lower rates, and phasing in a "reasonable cap" on the deductibility of business interest expenses.  

Estate tax reform: 

1.     Eliminate the estate tax. 

Miscellaneous tax reforms:  

1.     End the current tax treatment of carried interest.

2.     Repeal the Affordable Care Act.

May 16, 2016 Due Date for Calendar Year Exempt Organizations

Most tax-exempt organizations (TEOs) are required to file tax returns with the IRS.  The normal due date is 4 ½ months following the end of the tax year.  For TEOs having a calendar or December 31^st year-end, the due date is May 15^th.  Since May 15, 2016 falls on Sunday, the due date is officially May 16^th.  However, if tax is owing, and the TEO uses the Electronic Federal Tax Payment System (EFTPS), the payment must be scheduled before 8 p.m. eastern time the day before the due date in order for the payment to be timely made to the IRS.

TEOs use the Form 990 series to file their tax returns.  The specific version of Form 990 depends upon the nature of the organization and the amount of its gross revenues or assets.  The full Form 990 requires much more time and effort to complete than Form 990-EZ.

Financial Status of TEO	Form to File
Gross receipts normally ≤ $50,000	990-N (e-postcard)
Gross receipts < $200,000 and Total assets < $500,000	990-EZ
Gross receipts ≥ $200,000 or Total assets ≥ $500,000	990
Private foundation—regardless of financial status	990-PF

If the tax return is filed late, daily penalties will accrue.  If a tax return is not filed as required for three consecutive years, the organization automatically loses its tax-exempt status.  Churches are not required to file annual tax returns.  An extension of time may be requested by filing Form 8868 with the IRS by the tax return due date.  An extension of three months is granted automatically.  A second extension of three months may be granted if the IRS deems the explanation satisfactory for why a further extension is necessary.

By law the IRS and most TEOs are required to publicly disclose most parts of the Form 990 filings, including schedules and attachments.  Therefore, the IRS cautions TEOs not to include Social Security Numbers in the information to avoid potential identity theft.  In addition, you may not want to use home addresses of the officers and trustees in the filing.

The IRS offers an online search tool to help users more easily find key information about the federal tax status and filings of TEOs, including whether organizations have had their federal tax exemptions automatically revoked.