Question 3 - How do we fill out the electronic Form 8940?  

A. Currently (late 2023) the IRS is only accepting the April, 2023 version Form 8940.  This is an electronic form that can only be accessed through pay.gov; it is not among the forms available at irs.gov.  To simply view the form, enter 8940 in the search box in the upper right hand corner of the pay.gov landing page.  Click through until you reach the page with the step by step guide to Form 8940, and scroll down to the bottom to find the "Preview Form" box.  Do not be alarmed by the fact that the new, electronic Form 8940 is 46(!) pages long.  You will only need to make entries on pages 1, 2, 3, and 25.  You may want to print these pages so you can prepare a rough draft.

A link to the Form 8940 instructions appears a couple of inches from the top of the pay.gov page with the step-by-step filing guide. That link takes you to an IRS webpage version of the instructions, but the IRS has posted a pdf version of the 2/2023 instructions here: https://www.irs.gov/pub/irs-pdf/i8940.pdf

A number of tax professionals have noted that pay.gov works best if you can do all your data input in one session.  Apparently, if the pay.gov software is updated between your input sessions, new entries may be rejected, forcing you to start over.  It is a good idea to have a rough draft in hand when you sign on to pay.gov, and to prepare your combined PDF attachment before completing Form 8940.  

To actually prepare Form 8940, go to pay.gov and sign into your account (or create one if you do not already have one).  Enter 8940 in the search box and click through until you reach the page with the step by step guide.  Click the box saying "Continue to the Form."

Note that the pay.gov software will not let you proceed from one page of Form 8940 to the next until the page you are on is "complete."  If you hit the "next" box before the software thinks the page is complete, you will receive instructions telling you what part(s) of the page must be completed before you can leave.

Form 8940, Part I (page 1) Identification of Applicant

• The first 14 items in Part I are self-explanatory - name, address, EIN, month tax year ends and contact information. 
• Item 15, User Fee -  According to the instructions, pay.gov will populate this field with the current user fee. Presumably, this will happen after you select your type of request on page 2.  For those seeking reclassification of foundation status, the User Fee for 2023 is $550.
  
• Item 16, asking for the applicant's website url, is new to the electronic Form 8940.  You are not required to have a website.  If you do not have one, enter N/A.
  
• Item 17, asking for the names, titles and addresses of officers, directors, and/or trustees, is also new.  A dropdown arrow will let you specify how many board members you will list.  Note that the person who signs Form 8940 must be among the first five people listed.
  

If your organization has a very small board of directors – just one or two people – you might want to take steps to expand the board.  One of the hallmarks of a public charity, according to the Income Tax Regulations, is a "representative governing body," one that represents the broad interests of the public rather than the personal or private interests of donors/insiders.  For more information, see bottom right of page 33 of IRS Pub 557.

Form 8940, Part II (page2) Type of Request
Organizations wrongly determined to be private foundations will check the seventh box, "Reclassification of foundation status..."
           Related: Question 10 - We were told we need to do a "private foundation termination."

Form 8940, Part III (page 2) Explanation of Request
Before filling out Part III on page 2 of Form 8940, you will want to decide whether your organization is likely to be described in sections 509(a)(1)/170(b)(1)(A)(vi) or 509(a)(2).
           Related:Question 4 – How do we decide which type of public charity status to ask for?

If you are seeking public charity status under sections 509(a)(1) and 170(b)(1)(A)(vi), the most important points to include in your explanation are:

• (Name of Organization) filed Form 1023-EZ on (date submitted). 
• We are submitting Form 8940 because an error was made while preparing Form 1023-EZ. 
  
• We should have checked box 2a in Part IV of Form 1023-EZ to claim public charity status under sections 509(a)(1) and 170(b)(1)(A)(vi), instead of checking box 3.
  
• (Name of Organization) is a new organization, less than five years old, and expects to be able to meet the 509(a)(1)/170(b)(1)(A)(vi) public charity test at the end of its first five years.
  
• If your organization has not received any donations over the 2% limit (Line 5 of Part II, Form 990, Schedule A), mention that fact. 
  

If you are seeking public charity status under section 509(a)(2), the most important points to include in your explanation are:

• (Name of Organization) filed Form 1023-EZ on (date submitted). 
• We are submitting Form 8940 because an error was made while preparing Form 1023-EZ. 
  
• We should have checked box 2b in Part IV, to claim public charity status under section 509(a)(2), instead of checking box 3.
  
• (Name of Organization) is a new organization, less than five years old, and expects to be able to meet the 509(a)(2) public charity test at the end of its first five years.
  
• If your 509(a)(2) organization has not received any donations from disqualified persons or gross receipts in excess of the $5,000/1% limit (Line 7 of Part III, Form 990, Schedule A), mention that.​ 
  

Form 8940, Part IV (page 2) Signature
Check the penalties of perjury box.  To sign this electronic form, type the name of the signer in the space provided and enter the title of the signer and the date.  Then print a copy of the signature page (Part IV, page 2 of Form 8940).  The signer should sign the printed signature page above their typewritten name, and the printed page with the handwritten signature should be included in the PDF file uploaded with Form 8940.

Note that the person signing Form 8940 must be listed as an officer, director, or trustee within the first five entries of Part I, line 17 on page 1 of Form 8940.  Note, as well, that the Upload Checklist on page 3 of Form 8940 does not remind you to include the handwritten signature page.

Form 8940, Upload checklist (page 3)
Organizations seeking reclassification of foundation status after having been wrongly determined to be private foundations are required to attach Form 990, Schedule A, Part II (509(a)(1)/170(b)(1)(A)(vi) organizations) or Form 990, Schedule A, Part III (509(a)(2) organizations), and may also want to attach a "Supplemental Response," and possibly an "Expedited Handling Request."
              Related: Question 4 – (Sched A) How do we decide which type of public charity status to ask for?
              Related:Question 6 - Can we expedite our Form 8940? 

Form 8940, Schedule G (page 25)
Check the first or second box:

"Sections 509(a)(1) and 170(b)(1)(A)(vi) as an organization that receives a substantial part of its financial support in the form of contributions from publicly supported organizations…"
                                                                                              OR
"Section 509(a)(2) as an organization that normally receives not more than one-third of its financial support from gross investment income and receives more than one-third of its financial support from contributions, membership fees, and gross receipts from activities…."
              Related: Question 4 – (Sched A) How do we decide which type of public charity status to ask for?

Supplemental Response Page
The "Explanation of Request" section of Form 8940 (Part III on page 2) limits the number of characters you can enter.  Although it is not strictly required, a "Supplemental Response" will allow you to describe your organization's planned activities and fundraising in greater detail.  Your job is to convince the IRS agent handling your Form 8940 (known as an Exempt Organizations Specialist) that you have a reasonable basis for expecting to receive support from the general public in the coming years.  It is especially important to explain why and how you will generate public support if your organization has not raised much public support to date, has been inactive, or has a small board.  Enter your name and EIN on each page of your supplemental response and identify the schedule/section and line number to which the information relates. 

Here are some ideas for additional information you might want to include...

Organizational structure, programs, activities, method of operation:

• Does your organization have a representative governing body? (see page 33, IRS Pub 557)
• Does your organization provide facilities or services directly for the benefit of the general public on a continuing basis? 
  
• Does your organization allow/encourage public participation in its programs? 
  
• Does your organization provide educational services to the public through the distribution of educational materials or regularly publish widely used scholarly studies? 
  
• Do experts, public officials, or civic or community leaders participate in, or sponsor, your organization's programs? 
  
• Does your organization have a definitive program to accomplish its charitable work in the community? 
  
• Is a significant part of your organization's funds provided by a public charity or governmental agency which holds your organization accountable as a condition of the grant, contract, or contribution?  
  

These questions are paraphrased from Income Tax Regulation 1.170A-9(f)(3) .  No organization is expected or required to satisfy all of the factors.  Additional questions for membership organizations can be found starting at the bottom left of page 34 of IRS Publication 557.

Attraction of public support: Describing your organization's efforts to actually attract public support is clearly a way to convince the E.O. Specialist that your organization reasonably expects to meet a public charity test.  The IRS will be looking for continuous and bona fide efforts to raise funds.  

Does your organization try to attract new/additional public or governmental support on a continuous basis? 
Do you expect your organization to receive an increasing amount of support from the general public?
Has your organization received, or does it expect to receive, support from other public charities or from governmental units? 
Has your organization received, or does it expect to receive, support directly or indirectly from a representative number of persons?  (IRS Pub 557 page 33 discusses Sources of Support.)

If there is a typo in the name or address the IRS is using for your organization, or if the name or address has changed, you can also use the supplemental response page to ask the IRS for corrections.

PDF attachment
Before you submit your Form 8940, all items (other than Form 8940 itself) must be combined into a single PDF document.  This should include:

• your signed signature page,
• your Part II (OR III) of Form 990, Schedule A, along with a list of donors over 2% (if applicable – for 509(a)(1/170(b)(1)(A)(vi) organizations) OR your lists of donations from disqualified persons and gross receipts in excess of the $5,000/1% limit (if applicable - for 509(a)(2) organizations),
  
• your expedited handling request, if any, and
  
• your supplemental response page and/or any other relevant information you wish to submit
  

These must all be combined into a single/consolidated PDF document and uploaded as an attachment to your Form 8940.  Be sure the organization's name and EIN appear on each page.

Now is the time to print a copy, or make an electronic copy, of your Form 8940 and attachments for your records.  Then follow the instructions on pay.gov for paying the User Fee and submitting your Form 8940.  Pay.gov is supposed to send an email acknowledgement of your submission.​​​​​