Instructions for Form 990-PF (2007)

IRS Resources

General Instructions

Table of Contents

Purpose of form. Form 990-PF is used:

To figure the tax based on investment income, and
To report charitable distributions and activities.

Also, Form 990-PF serves as a substitute for the section 4947(a)(1) nonexempt charitable trust's income tax return, Form 1041, U.S. Income Tax Return for Estates and Trusts, when the trust has no taxable income.

A. Who Must File

Form 990-PF is an annual information return that must be filed by:

Exempt private foundations (section 6033(a), (b), and (c)),
Taxable private foundations (section 6033(d)),
Organizations that agree to private foundation status and whose applications for exempt status are pending on the due date for filing Form 990-PF,
Organizations that made an election under section 41(e)(6),
Foundations that are making a section 507 termination, and
Section 4947(a)(1) nonexempt charitable trusts that are treated as private foundations (section 6033(d)).

Include on the foundation's return the financial and other information of any disregarded entity owned by the foundation. See Regulations sections 301.7701-1 through 3 for information on the classification of certain business organizations including an eligible entity that is disregarded as an entity separate from its owner (disregarded entity).

Other section 4947(a)(1) nonexempt charitable trusts. Section 4947(a)(1) nonexempt charitable trusts that are not treated as private foundations do not file Form 990-PF. However, they may need to file Form 990, Return of Organization Exempt From Income Tax, or Form 990-EZ, Short Form Return of Organization Exempt From Income Tax. With either of these forms, the trust must also file Schedule A (Form 990 or 990-EZ), Organization Exempt Under Section 501(c)(3) (Except Private Foundation), and Section 501(e), 501(f), 501(k), 501(n), or 4947(a)(1) Nonexempt Charitable Trust Supplementary Information. (See Form 990 and Form 990-EZ instructions.)

B. Which Parts To Complete

The parts of the form listed below do not apply to all filers. See How to avoid filing an incomplete return on this page for information on what to do if a part or an item does apply.

Part I, column (c), applies only to private operating foundations and to nonoperating private foundations that have income from charitable activities.
Part II, column (c), with the exception of line 16, applies only to organizations having at least $5,000 in assets per books at some time during the year. Line 16, column (c), applies to all filers.
Part IV does not apply to foreign organizations.
Parts V and VI do not apply to organizations making an election under section 41(e).
Part X does not apply to foreign foundations that check box D2 on page 1 of Form 990-PF unless they claim status as a private operating foundation.
Parts XI and XIII do not apply to foreign foundations that check box D2 on page 1 of Form 990-PF. However, check the box at the top of Part XI. Part XI does not apply to private operating foundations. Also, if the organization is a private operating foundation for any of the years shown in Part XIII, do not complete the portions that apply to those years.
Part XIV applies only to private operating foundations.
Part XV applies only to foundations having assets of $5,000 or more during the year. This part does not apply to certain foreign organizations.

How to avoid filing an incomplete return.

Complete all applicable line items,
Answer “Yes,” “No,” or “N/A” (not applicable) to each question on the return,
Make an entry (including a zero when appropriate) on all total lines, and
Enter “None” or “N/A” if an entire part does not apply.

Sequencing Chart To Complete the Form

You may find the following chart helpful. It limits jumping from one part of the form to another to compute an amount needed to complete an earlier part. If you complete the parts in the listed order, any information you may need from another part will already be entered.

Step	Part	Step	Part
1	IV	8	XII, lines 1-4
2	I & II	9	V & VI
3	Heading	10	XII, lines 5-6
4	III	11	XI
5	VII-A	12	XIII
6	VIII	13	VII-B
7	IX-A - X	14	XIV - XVII

C. Definitions

A private foundation is a domestic or foreign organization exempt from income tax under section 501(a); described in section 501(c)(3); and is other than an organization described in sections 509(a)(1) through (4).

In general, churches, hospitals, schools, and broadly publicly supported organizations are excluded from private foundation status by these sections. These organizations may be required to file Form 990 (or Form 990-EZ) instead of Form 990-PF.
A nonexempt charitable trust treated as a private foundation is a trust that is not exempt from tax under section 501(a) and all of the unexpired interests of which are devoted to religious, charitable, or other purposes described in section 170(c)(2)(B), and for which a deduction was allowed under a section of the Code listed in section 4947(a)(1).
A taxable private foundation is an organization that is no longer exempt under section 501(a) as an organization described in section 501(c)(3). Though it may operate as a taxable entity, it will continue to be treated as a private foundation until that status is terminated under section 507.
A private operating foundation is an organization that is described under section 4942(j)(3) or (5). It means any private foundation that spends at least 85% of the smaller of its adjusted net income (figured in Part I) or its minimum investment return (figured in Part X) directly for the active conduct of the exempt purpose or functions for which the foundation is organized and operated and that also meets the assets test, the endowment test, or the support test (discussed in Part XIV).
A nonoperating private foundation is a private foundation that is not a private operating foundation.
A foundation manager is an officer, director, or trustee of a foundation, or an individual who has powers similar to those of officers, directors, or trustees. In the case of any act or failure to act, the term “foundation manager” may also include employees of the foundation who have the authority to act.
A disqualified person is:
1. A substantial contributor (see instructions for Part VII-A, line 10, on page 19);
2. A foundation manager;
3. A person who owns more than 20% of a corporation, partnership, trust, or unincorporated enterprise that is itself a substantial contributor;
4. A family member of an individual described in a, b, or c above; or
5. A corporation, partnership, trust, or estate in which persons described in a, b, c, or d above own a total beneficial interest of more than 35%.
6. For purposes of section 4941 (self-dealing), a disqualified person also includes certain government officials. (See section 4946(c) and the related regulations.)
7. For purposes of section 4943 (excess business holdings), a disqualified person also includes:
  1. A private foundation that is effectively controlled (directly or indirectly) by the same persons who control the private foundation in question, or
  2. A private foundation to which substantially all of the contributions were made (directly or indirectly) by one or more of the persons described in a, b, and c above, or members of their families, within the meaning of section 4946(d).
8. For purposes of section 4958, a disqualified person also includes donors and advisors relating to donor advised funds, and the investment advisors of sponsoring organizations.
An organization is controlled by a foundation or by one or more disqualified persons with respect to the foundation if any of these persons may, by combining their votes or positions of authority, require the organization to make an expenditure or prevent the organization from making an expenditure, regardless of the method of control. “Control” is determined regardless of how the foundation requires the contribution to be used.

D. Other Forms You May Need To File

Form W-2, Wage and Tax Statement.
Form W-3, Transmittal of Wage and Tax Statements.
Form 940, Employer's Annual Federal Unemployment (FUTA) Tax Return.
Form 941, Employer's Quarterly Federal Tax Return.

These forms are used to report social security, Medicare, and income taxes withheld by an employer and social security and Medicare taxes paid by an employer.

If income, social security, and Medicare taxes that must be withheld are not withheld or are not paid to the IRS, a trust fund recovery penalty may apply. The penalty is 100% of such unpaid taxes.

This penalty may be imposed on all persons (including volunteers, see below) whom the IRS determines to be responsible for collecting, accounting for, and paying over these taxes, and who willfully did not do so.

This penalty does not apply to any volunteer, unpaid member of any board of trustees or directors of a tax-exempt organization, if this member:

Is solely serving in an honorary capacity,
Does not participate in the day-to-day or financial activities of the organization, and
Does not have actual knowledge of the failure to collect, account for, and pay over these taxes.

However, this exception does not apply if it results in no person being liable for the penalty.

Form 990-T, Exempt Organization Business Income Tax Return. Every organization exempt from income tax under section 501(a) that has total gross income of $1,000 or more from all trades or businesses that are unrelated to the organization's exempt purpose must file a return on Form 990-T. The form is also used by tax-exempt organizations to report other additional taxes including the additional tax figured in Part IV of Form 8621, Return by a Shareholder of a Passive Foreign Investment Company or Qualified Electing Fund.

Form 990-W, Estimated Tax on Unrelated Business Taxable Income for Tax-Exempt Organizations (and on Investment Income for Private Foundations). Use of this form is optional. It is provided only to aid you in determining your tax liability.

Form 1041, U.S. Income Tax Return for Estates and Trusts. Required of section 4947(a)(1) nonexempt charitable trusts that also file Form 990-PF. However, if the trust does not have any taxable income under the income tax provisions (subtitle A of the Code), it may use the filing of Form 990-PF to satisfy its Form 1041 filing requirement under section 6012. If this condition is met, check the box for question 15, Part VII-A, of Form 990-PF and do not file Form 1041.

Form 1041-ES, Estimated Income Tax for Estates and Trusts. Used to make estimated tax payments.

Form 1096, Annual Summary and Transmittal of U.S. Information Returns. Used to transmit Forms 1099, 1098, 5498, and W-2G to the IRS. Do not use it to transmit electronically or magnetically.

Form 1098-C, Contributions of Motor Vehicles, Boats, and Airplanes. Information return for reporting contributions of qualified motor vehicles, boats, and airplanes from donors.

Forms 1099-INT, MISC, OID, and R. Information returns for reporting certain interest; miscellaneous income (for example, payments to providers of health and medical services, miscellaneous income payments, and nonemployee compensation); original issue discount; and distributions from retirement or profit-sharing plans, IRAs, SEPs or SIMPLEs, and insurance contracts.

Form 1120, U.S. Corporation Income Tax Return. Filed by nonexempt taxable private foundations that have taxable income under the income tax provisions (subtitle A of the Code). The Form 990-PF annual information return is also filed by these taxable foundations.

Form 1120-POL, U.S. Income Tax Return for Certain Political Organizations. Section 501(c) organizations must file Form 1120-POL if they are treated as having political organization taxable income under section 527(f)(1).

Form 1128, Application To Adopt, Change, or Retain a Tax Year. Form 1128 is used to request approval from the IRS to change a tax year or to adopt or retain a certain tax year.

Form 2220, Underpayment of Estimated Tax by Corporations. Form 2220 is used by corporations and trusts filing Form 990-PF to see if the foundation owes a penalty and to figure the amount of the penalty. Generally, the foundation is not required to file this form because the IRS can figure the amount of any penalty and bill the foundation for it. However, complete and attach Form 2220 even if the foundation does not owe the penalty if:

The annualized income or the adjusted seasonal installment method is used, or
The foundation is a “large organization,” (see General Instruction O) computing its first required installment based on the prior year's tax.

If Form 2220 is attached, check the box on line 8, Part VI, on page 4 of Form 990-PF and enter the amount of any penalty on this line.

Form 4506, Request for Copy of Tax Return. Used by the organization or designated third party to get a complete copy of the organization's return.

Form 4506-A, Request for Public Inspection or Copy of Exempt or Political Organization IRS Form. Used to inspect or request a copy of an exempt or political organization's return, report, notice, or exemption application by the public or the organization.

Form 4720, Return of Certain Excise Taxes Under Chapters 41 and 42 of the Internal Revenue Code. Is primarily used to determine the excise taxes imposed on:

Acts of self-dealing between private foundations and disqualified persons,
Failure to distribute income,
Excess business holdings,
Investments that jeopardize the foundation's charitable purposes,
Making political or other noncharitable expenditures, and
Prohibited tax shelter transactions.

Form 5500, Annual Return/Report of Employee Benefit Plan. Is used to report information concerning employee benefit plans and Direct Filing Entities.

Form 8109, Federal Tax Deposit Coupon. Used by business entities to make federal tax deposits.

Form 8282, Donee Information Return. Required of the donee of “charitable deduction property” that sells, exchanges, or otherwise disposes of the property within 3 years after the date it received the property. Also required of any successor donee that disposes of charitable deduction property within 3 years after the date that the donor gave the property to the original donee. (It does not matter who gave the property to the successor donee. It may have been the original donee or another successor donee.) For successor donees, the form must be filed only for any property that was transferred by the original donee after July 5, 1988.

Form 8275, Disclosure Statement. Taxpayers and tax return preparers should attach this form to Form 990-PF to disclose items or positions (except those contrary to a regulation—see Form 8275-R below) that are not otherwise adequately disclosed on the tax return. The disclosure is made to avoid parts of the accuracy-related penalty imposed for disregard of rules or substantial understatement of tax. Form 8275 is also used for disclosures relating to preparer penalties for understatements due to unrealistic positions or for willful or reckless conduct.

Form 8275-R, Regulation Disclosure Statement. Use this form to disclose any item on a tax return for which a position has been taken that is contrary to Treasury regulations.

Form 8300, Report of Cash Payments Over $10,000 Received in a Trade or Business. Used to report cash amounts in excess of $10,000 that were received in a single transaction (or in two or more related transactions) in the course of a trade or business (as defined in section 162).

Form 8718, User Fee for Exempt Organization Determination Letter Request. Used by a private foundation that has completed a section 507 termination and seeks a determination letter that it is now a public charity.

Form 8822, Change of Address. This form is used by taxpayers to notify the IRS of changes in individual and business mailing addresses.

Form 8886-T. This form is used by an exempt organization to disclose whether it was a party to a prohibited tax shelter transaction.

Form 8868, Application for Extension of Time To File an Exempt Organization Return. This form is used by an exempt organization to request an automatic 3-month extension of time to file its return and also to apply for an additional (not automatic) 3-month extension if the initial 3-month extension is not enough time.

Form 8870, Information Return for Transfers Associated With Certain Personal Benefit Contracts. Used to identify those personal benefit contracts for which funds were transferred to the organization, directly or indirectly, as well as the transferors and beneficiaries of those contracts.

Form 8899, Notice of Income from Donated Intellectual Property. Use this form to report income from qualified intellectual property.

Forms 8921 and 8922. These forms are used by an exempt organization to report its direct or indirect acquisition of certain insurance contracts.

E. Useful Publications

The following publications may be helpful in preparing Form 990-PF:

Publication 525, Taxable and Nontaxable Income,
Publication 583, Starting a Business and Keeping Records,
Publication 598, Tax on Unrelated Business Income of Exempt Organizations,
Publication 910, IRS Guide to Free Tax Services,
Publication 1771, Charitable Contributions—Substantiation and Disclosure Requirements, and
Publication 3833, Disaster Relief, Providing Assistance Through Charitable Organizations.

Publications and forms are available at no charge through IRS offices or by calling 1-800-TAX-FORM (1-800-829-3676).

F. Use of Form 990-PF To Satisfy State Reporting Requirements

Some states and local government units will accept a copy of Form 990-PF and required attachments instead of all or part of their own financial report forms.

If the organization plans to use Form 990-PF to satisfy state or local filing requirements, such as those from state charitable solicitation acts, note the following.

Determine state filing requirements. Consult the appropriate officials of all states and other jurisdictions in which the organization does business to determine their specific filing requirements. “Doing business” in a jurisdiction may include any of the following:

Soliciting contributions or grants by mail or otherwise from individuals, businesses, or other charitable organizations,
Conducting programs,
Having employees within that jurisdiction, or
Maintaining a checking account or owning or renting property there.

Monetary tests may differ. Some or all of the dollar limitations that apply to Form 990-PF when filed with the IRS may not apply when using Form 990-PF instead of state or local report forms. IRS dollar limitations that may not meet some state requirements are the $5,000 total assets minimum that requires completion of Part II, column (c), and Part XV; and the $50,000 minimum for listing the highest paid employees and for listing professional fees in Part VIII.

Additional information may be required. State and local filing requirements may require attaching to Form 990-PF one or more of the following:

Additional financial statements, such as a complete analysis of functional expenses or a statement of changes in net assets,
Notes to financial statements,
Additional financial schedules,
A report on the financial statements by an independent accountant, and
Answers to additional questions and other information.

Each jurisdiction may require the additional material to be presented on forms they provide. The additional information does not have to be submitted with the Form 990-PF filed with the IRS.

If required information is not provided to a state, the organization may be asked by the state to provide it or to submit an amended return, even if the Form 990-PF is accepted by the IRS as complete.

Amended returns. If the organization submits supplemental information or files an amended Form 990-PF with the IRS, it must also include a copy of the information or amended return to any state with which it filed a copy of Form 990-PF.

Method of accounting. Many states require that all amounts be reported based on the accrual method of accounting.

Time for filing may differ. The time for filing Form 990-PF with the IRS may differ from the time for filing state reports.

G. Furnishing Copies of Form 990-PF to State Officials

The foundation managers must furnish a copy of the annual return Form 990-PF (and Form 4720 (if applicable)) to the attorney general of:

Each state required to be listed in Part VII-A, line 8a,
The state in which the foundation's principal office is located, and
The state in which the foundation was incorporated or created.

A copy of the annual return must be sent to the attorney general at the same time the annual return is filed with the IRS.

Other requirements. If the attorney general or other appropriate state official of any state requests a copy of the annual return, the foundation managers must give them a copy of the annual return.

Exceptions. These rules do not apply to any foreign foundation which, from the date of its creation, has received at least 85% of its support (excluding gross investment income) from sources outside the United States. (See General Instruction S for other exceptions that affect this type of organization.)

Coordination with state reporting requirements. If the foundation managers submit a copy of Form 990-PF and Form 4720 (if applicable) to a state attorney general to satisfy a state reporting requirement, they do not have to furnish a second copy to that attorney general to comply with the Internal Revenue Code requirements discussed in this section.

If there is a state reporting requirement to file a copy of Form 990-PF with a state official other than the attorney general (for instance, the secretary of state), then the foundation managers must also send a copy of the Form 990-PF and Form 4720 (if applicable) to the attorney general of that state.

H. Accounting Period

File the 2007 return for the calendar year 2007 or fiscal year beginning in 2007. If the return is for a fiscal year, fill in the tax year space at the top of the return.
The return must be filed on the basis of the established annual accounting period of the organization. If the organization has no established accounting period, the return should be on the calendar-year basis.
For initial or final returns or a change in accounting period, the 2007 form may also be used as the return for a short period (less than 12 months) ending November 30, 2008, or earlier.

In general, to change its accounting period, the organization must file Form 990-PF by the due date for the short period resulting from the change. At the top of this short period return, write “Change of Accounting Period.”

If the organization changed its accounting period within the 10-calendar-year period that includes the beginning of the short period, and it had a Form 990-PF filing requirement at any time during that 10-year period, it must also attach a Form 1128 to the short-period return. See Rev. Proc. 85-58, 1985-2 C.B. 740.

I. Accounting Methods

Generally, you should report the financial information requested on the basis of the accounting method the foundation regularly uses to keep its books and records.

Exception. Complete Part I, column (d) on the cash receipts and disbursements method of accounting.

J. When, Where, and How To File

This return must be filed by the 15th day of the 5th month following the close of the foundation's accounting period. If the regular due date falls on a Saturday, Sunday, or legal holiday, file by the next business day. If the return is filed late, see General Instruction M.

In case of a complete liquidation, dissolution, or termination, file the return by the 15th day of the 5th month following complete liquidation, dissolution, or termination.

To file the return, mail or deliver it to:

Department of the Treasury

Internal Revenue Service Center

Ogden, UT 84201-0027

Private delivery services. You can use certain private delivery services designated by the IRS to meet the “timely mailing as timely filing/paying” rule for tax returns and payments. These private delivery services include only the following.

DHL Express (DHL): DHL “Same Day” Service, DHL Next Day 10:30 AM, DHL Next Day 12:00 PM, DHL Next Day 3:00 PM, and DHL 2nd Day Service.
Federal Express (FedEx): FedEx Priority Overnight, FedEx Standard Overnight, FedEx 2Day, FedEx International Priority, FedEx International First.
United Parcel Service (UPS): UPS Next Day Air, UPS Next Day Air Saver, UPS 2nd Day Air, UPS 2nd Day Air AM, UPS Worldwide Express Plus, and UPS Worldwide Express.

The private delivery service can tell you how to get written proof of the mailing date.

Electronic Filing

The foundation can file its Form 990-PF electronically. However, if the foundation files at least 250 returns during the calendar year, it must file Form 990-PF electronically. If the foundation must file a return electronically but does not, the organization is considered to have not filed its return. See Temporary Regulations section 301.6033-4T for more information. For additional information on the electronic filing requirement, visit www.irs.gov/efile.

The IRS may waive the requirements to file electronically in cases of undue hardship. For more information on filing a waiver, see Notice 2005-88, 2005-48 I.R.B. 1060, available at www.irs.gov/irb/2005-48_IRB/index.html.

K. Extension of Time To File

A foundation uses Form 8868 to request an extension of time to file its return.

An automatic 3-month extension will be granted if you properly complete this form, file it, and pay any balance due by the due date for Form 990-PF.

If more time is needed, Form 8868 is also used to request an additional extension of up to 3 months. However, these extensions are not automatically granted. To obtain this additional extension of time to file, you must show reasonable cause for the additional time requested.

L. Amended Return

To change the organization's return for any year, file an amended return, including attachments, with the correct information. The amended return must provide all the information required by the form and instructions, not just the new or corrected information. Check the “Amended Return” box in G at the top of the return. See the instructions for line 9 of Part VI on page 19.

If the organization files an amended return to claim a refund of tax paid under section 4940 or 4948, it must file the amended return within 3 years after the date the original return was filed, or within 2 years from the date the tax was paid, whichever date is later.

State reporting requirements. See Amended returns under General Instruction F.

Need a copy of an old return or form? Use Form 4506 to obtain a copy of a previously filed return. You can obtain blank forms for prior years by calling 1-800-TAX-FORM (1-800-829-3676).

M. Penalty for Failure To File Timely, Completely, or Correctly

To avoid filing an incomplete return or having to respond to requests for missing information, see General Instruction B.

Against the organization. If an organization does not file timely and completely, or does not furnish the correct information, it must pay $20 for each day the failure continues ($100 a day if it is a large organization), unless it can show that the failure was due to reasonable cause. Those filing late (after the due date, including extensions) must attach an explanation to the return. The maximum penalty for each return will not exceed the smaller of $10,000 ($50,000 for a large organization) or 5% of the gross receipts of the organization for the year.

Large organization. A large organization is one that has gross receipts exceeding $1 million for the tax year.

Gross receipts. Gross receipts means the gross amount received during the foundation's annual accounting period from all sources without reduction for any costs or expenses.

To figure the foundation's gross receipts, start with Part I, line 12, column (a), then add to it lines 6b and 10b, then subtract line 6a from that amount.

Against the responsible person. The IRS will make written demand that the delinquent return be filed or the information furnished within a reasonable time after the mailing of the notice of the demand. The person failing to comply with the demand on or before the date specified will have to pay $10 for each day the failure continues, unless there is reasonable cause. The maximum penalty imposed on all persons for any one return is $5,000. If more than one person is liable for any failures, all such persons are jointly and severally liable for such failures (see section 6652(c)).

Other penalties. Because this return also satisfies the filing requirements of a tax return under section 6011 for the tax on investment income imposed by section 4940 (or 4948 if an exempt foreign organization), the penalties imposed by section 6651 for not filing a return (without reasonable cause) also apply.

There are also criminal penalties for willful failure to file and for filing fraudulent returns and statements. See sections 7203, 7206, and 7207.

N. Penalties for Not Paying Tax on Time

There is a penalty for not paying tax when due (section 6651). The penalty generally is ½ of 1% of the unpaid tax for each month or part of a month the tax remains unpaid, not to exceed 25% of the unpaid tax. If there was reasonable cause for not paying the tax on time, the penalty can be waived. However, interest is charged on any tax not paid on time, at the rate provided by section 6621.

Estimated tax penalty. The section 6655 penalty for failure to pay estimated tax applies to the tax on net investment income of domestic private foundations and section 4947(a)(1) nonexempt charitable trusts. The penalty also applies to any tax on unrelated business income of a private foundation. Generally, if a private foundation's tax liability is $500 or more and it did not make the required payments on time, then it is subject to the penalty.

For more details, see the discussion of Form 2220 in General Instruction D.

O. Figuring and Paying Estimated Tax

A domestic exempt private foundation, a domestic taxable private foundation, or a nonexempt charitable trust treated as a private foundation must make estimated tax payments for the excise tax based on investment income if it can expect its estimated tax (section 4940 tax minus allowable credits) to be $500 or more. The number of installment payments it must make under the depository method is determined at the time during the year that it first meets this requirement. For calendar-year taxpayers, the first deposit of estimated taxes for a year generally should be made by May 15 of the year.

Although Form 990-W is used primarily to compute the installment payments of unrelated business income tax, it is also used to determine the timing and amounts of installment payments of the section 4940 tax based on investment income. Compute separately any required deposits of excise tax based on investment income and unrelated business income tax.

To figure the estimated tax for the excise tax based on investment income, apply the rules of Part VI to your tax year 2008 estimated amounts for that part. Enter the tax you figured on line 10a of Form 990-W.

The Form 990-W line items and instructions for large organizations also apply to private foundations. For purposes of paying the estimated tax on net investment income, a “large organization” is one that had net investment income of $1 million or more for any of the 3 tax years immediately preceding the tax year involved.

Penalty. A foundation that does not pay the proper estimated tax when due may be subject to the estimated tax penalty for the period of the underpayment. (See sections 6655(b) and (d) and the Form 2220 instructions.)

Special Rules

Section 4947(a)(1) nonexempt charitable trusts. Form 1041-ES should be used to pay any estimated tax on income subject to tax under section 1. Form 1041-ES also contains the estimated tax rules for paying the tax on that income.

Taxable private foundations. Form 1120-W should be used to figure any estimated tax on income subject to tax under section 11. Form 1120-W contains the estimated tax rules for paying the tax on that income.

P. Tax Payment Methods for Domestic Private Foundations

Whether the foundation uses the depository method of tax payment or the special option for small foundations, it must pay the tax due (see Part VI) in full by the 15th day of the 5th month after the end of its tax year.

Depository Method of Tax Payment

Some foundations (described below) are required to electronically deposit all depository taxes, including their tax payments for the excise tax based on investment income.

Electronic Deposit Requirement

The foundation must make electronic deposits of all depository taxes (such as employment tax or the excise tax based on investment income) using the Electronic Federal Tax Payment System (EFTPS) in 2008 if:

The total deposits of such taxes in 2006 were more than $200,000, or
The foundation was required to use EFTPS in 2007.

If the foundation is required to use EFTPS and fails to do so, it may be subject to a 10% penalty. If the foundation is not required to use EFTPS, it may participate voluntarily. To enroll in or get more information about EFTPS, call 1-800-555-4477. To enroll online, visit http://www.eftps.gov.

Depositing on time. For deposits made by EFTPS to be on time, the foundation must initiate the transaction at least 1 business day before the date the deposit is due.

Deposits With Form 8109

If the foundation does not use EFTPS, deposit estimated tax payments and any balance due for the excise tax based on investment income with Form 8109, Federal Tax Deposit Coupon. If you do not have a preprinted Form 8109, use Form 8109-B to make deposits. You can get this form only by calling 1-800-829-4933. Be sure to have your employer identification number (EIN) ready when you call.

Do not send deposits directly to an IRS office; otherwise, the foundation may have to pay a penalty. Mail or deliver the completed Form 8109 with the payment to an authorized depositary, such as a commercial bank or other financial institution authorized to accept federal tax deposits.

Make checks or money orders payable to the depositary. To help ensure proper crediting, write the foundation's EIN, the tax period to which the deposit applies, and “Form 990-PF” on the check or money order. Be sure to darken the 990-PF box on the coupon. Records of these deposits will be sent to the IRS.

For more information on deposits, see the instructions in the coupon booklet (Form 8109) and Pub. 583, Starting a Business and Keeping Records.

Special Payment Option for Small Foundations

A private foundation may enclose a check or money order, payable to the United States Treasury, with the Form 990-PF or Form 8868, if it meets all of the following requirements:

The foundation must not be required to use EFTPS,
The tax based on investment income shown on line 5, Part VI of Form 990-PF is less than $500, and
If Form 8868 is used, the amount entered on line 3a of Part I or line 8a of Part II of Form 8868 must be less than $500 and it must be the full balance due.

Be sure to write “2007 Form 990-PF” and the foundation's name, address, and EIN on its check or money order.

Foreign organizations should see the instructions for Part VI, line 9.

Q. Public Inspection Requirements

A private foundation must make its annual returns and exemption application available for public inspection.

Definitions

Annual returns. Annual returns include an exact copy of the following documents as filed with the IRS:

Form 990-PF, including all schedules, attachments, and supporting documents, and any amended return that is 3 or fewer years old from:
1. The date the original return was filed or required to be filed, or
2. The date the return was required to be filed.
Form 990-T, if it was used to report any tax on unrelated business income.

Exemption application. An application for tax exemption includes (except as described, later):

Any prescribed application form (such as Form 1023 or Form 1024),
All documents and statements the IRS requires an applicant to file with the form,
Any statement or other supporting document submitted in support of the application, and
Any letter or other document issued by the IRS concerning the application.

An application for tax exemption does not include:

Any application for tax exemption filed before July 15, 1987, unless the private foundation filing the application had a copy of the application on July 15, 1987, or
Any material that is not available for public inspection under section 6104.

Who Must Make the Annual Returns and Exemption Application Available for Public Inspection?

The foundation's Form 990-PF and exemption application must be made available to the public by the foundation and the IRS. The foundation's Form 990-T must be made available to the public only by the foundation.

How Does a Private Foundation Make Its Annual Returns and Exemption Application Available for Public Inspection?

A private foundation must make its annual returns and exemption application available in two ways:

By office visitation, and
By providing copies or making them widely available.

Public Inspection by Office Visitation

A private foundation must make its annual returns and exemption application available for public inspection without charge at its principal, regional, and district offices during regular business hours.

Conditions that may be set for public inspection at the office. A private foundation:

May have an employee present,
Must allow the individual conducting the inspection to take notes freely during the inspection, and
Must allow an individual to make photocopies of documents at no charge but only if the individual brings photocopying equipment to the place of inspection.

Determining if a site is a regional or district office. A regional or district office is any office of a private foundation, other than its principal office, that has paid employees whose total number of paid hours a week are normally 120 hours or more. Include the hours worked by part-time (as well as full-time) employees in making that determination.

What sites are not considered a regional or district office. A site is not considered a regional or district office if:

The only services provided at the site further the foundation's exempt purposes (for example, day care, health care, or scientific or medical research), and
The site does not serve as an office for management staff, other than managers who are involved only in managing the exempt function activities at the site.

What if the private foundation does not maintain a permanent office? If the private foundation does not maintain a permanent office, it will comply with the public inspection by office visitation requirement by making the annual returns and exemption application available at a reasonable location of its choice. It must permit public inspection:

Within a reasonable amount of time after receiving a request for inspection (normally, not more than 2 weeks), and
At a reasonable time of day.

Optional method of complying. If a private foundation that does not have a permanent office wishes not to allow an inspection by office visitation, it may mail a copy of the requested documents instead of allowing an inspection. However, it must mail the documents within 2 weeks of receiving the request and may charge for copying and postage only if the requester consents to the charge.

Private foundations with a permanent office but limited or no hours. Even if a private foundation has a permanent office but no office hours or very limited hours during certain times of the year, it must still meet the office visitation requirement. To meet this requirement during those periods when office hours are limited or not available, follow the rules above under, What if the private foundation does not maintain a permanent office?

Public Inspection—Providing Copies

A private foundation must provide copies of its annual returns or exemption application to any individual who makes a request for a copy in person or in writing unless it makes these documents widely available.

In-person requests for document copies. A private foundation must provide copies to any individual who makes a request in person at the private foundation's principal, regional, or district offices during regular business hours on the same day that the individual makes the request.

Accepted delay in fulfilling an in-person request. If unusual circumstances exist and fulfilling a request on the same day places an unreasonable burden on the private foundation, it must provide copies by the earlier of:

The next business day following the day that the unusual circumstances end, or
The fifth business day after the date of the request.

Examples of unusual circumstances include:

Receipt of a volume of requests (for document copies) that exceeds the private foundation's daily capacity to make copies,
Requests received shortly before the end of regular business hours that require an extensive amount of copying, or
Requests received on a day when the organization's managerial staff capable of fulfilling the request is conducting official duties (for instance, student registration or attending an off-site meeting or convention) instead of its regular administrative duties.

Use of local agents for providing copies. A private foundation may use a local agent to handle in-person requests for document copies. If a private foundation uses a local agent, it must immediately provide the local agent's name, address, and telephone number to the requester.

The local agent must:

Be located within reasonable proximity to the principal, regional, or district office where the individual makes the request, and
Provide document copies within the same time frames as the private foundation.

Written requests for document copies. If a private foundation receives a written request for a copy of its annual returns or exemption application (or parts of these documents), it must give a copy to the requester. However, this rule only applies if the request:

Is addressed to a private foundation's principal, regional, or district office,
Is delivered to that address by mail, electronic mail (email), facsimile (fax), or a private delivery service approved by the IRS (see Private delivery services on page 5 for a list), and
Gives the address to which the document copies should be sent.

How and when a written request is fulfilled.