IRS Form 990C vs. 1120 vs. 1120C

By: Dennis Gardiner, Partner email

For the 2006 filing year, the Internal Revenue Service changed the cooperative tax reporting form from 990C to 1120C.  Almost immediately, problems arose. The IRS was not set up to accept tax deposits for form 1120C so the deposits were recorded as 1120.  The IRS assured us that they would automatically reclassify 1120 payments to 1120C for all taxpayers that had previously filed form 990C. In addition, cooperative taxpayers that asked for an overpayment to be applied to the next tax year received a check instead – a byproduct of the form change. Cooperatives have 8 ½ months to file their form 1120C.  Corporate taxpayers have only 2 ½ months to file their 1120.  Now the IRS is sending out letters to virtually all cooperatives asking where their form 1120 is, and also asking what to do with the 1120 deposits that they have on file.  Because Cooperatives file form 1120C, this letter is incorrect – but because the IRS did not reclassify the deposit payments as appropriate, IRS computers are looking for form 1120. If your cooperative receives a letter like this, please forward it to our office so that we may prepare a response.
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