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Transferee Liability: Private Foundation Excise Taxes

A termination under sec­tion 507(a) does not result from either a transfer of all its assets or a significant disposition of its assets by a private foundation unless it chooses to terminate under section 507(a)(1), or an involuntary termination occurs. If a private foundation incurs any liability for the private foundation excise taxes before or in connection with the transfer, transferee liability may be ap­plied against the transferee organization for pay­ment of those taxes. Liability for those excise taxes is considered to be incurred on the date the act or failure to act occurs that gives rise to the initial tax liability.

A private foundation that transfers all of its net assets must file Form 990-PF, Return of Private Foundation.  However, neither a private foundation nor its managers are required to file this form for any tax year after the tax year in which the last transfer occurs if during those later years the foundation has neither legal nor equitable title to any assets nor engages in any activity.


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Page Last Reviewed or Updated: 25-Apr-2014