Instructions for Form 4720 (2016)

Return of Certain Excise Taxes Under Chapters 41 and 42 of theInternal Revenue Code(Sections 170(f)(10), 664(c)(2), 4911, 4912, 4941, 4942,4943, 4944, 4945, 4955, 4958, 4959, 4965, 4966, and 4967)

Section references are to the Internal Revenue Code unless otherwise noted.

2016


General Instructions

Purpose of Form

Use Form 4720 to figure and pay:

  • The initial taxes on private foundations and self-dealers, under sections 4941 through 4945 for self-dealing, failure to distribute income, excess business holdings, investments that jeopardize charitable purpose, and taxable expenditures (see instructions for Schedules A through E for definitions);

  • The initial tax on certain supporting organizations and donor advised funds for excess business holdings under section 4943;

  • The section 4911 tax on excess lobbying expenditures by public charities that have elected to be subject to section 501(h) regarding expenditures to influence legislation. (Private foundations and section 4947(a) trusts aren't eligible to make this election);

  • The section 4912 tax on disqualifying lobbying expenditures that result in loss of section 501(c)(3) tax-exempt status;

  • The section 4955 tax imposed on any amount paid or incurred by a section 501(c)(3) organization that participates or intervenes in any political campaign on behalf of, or in opposition to, any candidate for public office;

  • The section 4958 initial taxes on disqualified persons and organization managers of section 501(c)(3) (except private foundations), section 501(c)(4), and section 501(c)(29) organizations that engage in excess benefit transactions;

  • The section 4959 tax on the failure by a hospital organization to meet the community health needs assessment requirements under section 501(r)(3);

  • The section 4965 taxes on prohibited tax shelter transactions;

  • The section 4966 taxes on taxable distributions by sponsoring organizations maintaining donor advised funds;

  • The section 4967 taxes on distributions of prohibited benefits from donor advised funds;

  • The section 170(f)(10) tax on any premiums paid on a personal benefit contract in connection with a transfer to an organization or charitable remainder trust for which a charitable deduction isn't allowed to the transferor; and

  • The section 664(c)(2) tax on the unrelated business taxable income of a charitable remainder trust.

Who Must File

Organizations

Private foundations and section 4947(a) trusts.

Generally, Form 4720 must be filed by all organizations, including foreign organizations, that answered "Yes," to question 1b, 1c, 2b, 3b, 4a, 4b, 5b, 6b, or 7b in Part VII-B of Form 990-PF; or "Yes," to question 75b, 75c, 77b, 78a, 78b, 79b, or 80b in Part VI-B, and Item G on page 1 of Form 5227. A trust described in section 4947(a)(2) is considered a private foundation insofar as it is subject to Chapter 42 provisions. (Schedules B through E and Part I, lines 1 through 4, as applicable).



Other organizations owing initial taxes on excess business holdings.

Supporting organizations described in section 4943(f)(3) and donor advised funds described in section 4966(d)(2) that owe the tax reported on Schedule C (section 4943(a)). (Schedule C and Part I, line 2).



Organizations making political expenditures.

All section 501(c)(3) organizations that make a political expenditure must file Form 4720 to report the liability and pay the tax (Schedule F and Part I, line 5). Organization managers may report any first tier tax they owe on Schedule F of Form 4720. (See Schedule F instructions, later, for the definition of political expenditures.)



Public charities making excess lobbying expenditures.

Public charities that made the election under section 501(h) and owe tax on excess lobbying expenditures as figured on Schedule C (Form 990 or 990-EZ), Part II-A, must file Form 4720 to report the liability and pay the tax (Schedule G and Part I, line 6). Certain organizations (and possibly their managers) whose section 501(c)(3) status is revoked because of excess lobbying activities are subject to a 5% excise tax on their lobbying expenditures (Schedule H and Part I, line 7 or Part II-A, column (g), as applicable).



Charitable organizations that make certain premium payments on personal benefit contracts.

Form 4720 must be filed by any organization described in section 170(c) or section 664(d) that answered "Yes," to question 7f in Part V of Form 990, question 6b in Part VII-B of Form 990-PF, question 80b in Part VI-B of Form 5227, or that otherwise paid premiums on a personal benefit contract in connection with a transfer to an organization for which a charitable deduction was not allowed to the transferor (Part I, line 8).



Certain tax-exempt entities that are a party to a prohibited tax shelter transaction (PTST).

Certain tax-exempt entities must file Form 4720 to report the liability and pay the tax due under section 4965(a)(1) (Schedule J and Part I, line 9). This requirement applies to entities described in sections 501(c), 501(d), or 170(c) (other than the United States) or an Indian tribal government (within the meaning of section 7701(a)(40)).

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Any entity described in section 4965(c) that is a party to a PTST must file Form 8886-T.



Sponsoring organizations maintaining donor advised funds.

All section 170(c) organizations (excluding private foundations and government organizations referred to in sections 170(c)(1) and 170(c)(2)(A)) that maintain one or more donor advised funds must file Form 4720 to report the liability and pay the tax owed on any taxable distributions under section 4966 (Schedule K and Part I, line 10).



Charitable remainder trusts.

All charitable remainder trusts described in section 664 that have unrelated business taxable income for the tax year must file Form 4720 to report the liability and pay the tax due (Part I, line 11). Unrelated business taxable income is figured under section 512 and is determined as if Part III of subchapter F applies to such trusts.



Hospital organizations failing to meet the community health needs assessment requirements (Sections 501(r)(3), 4959).

An excise tax is imposed on the failure by a hospital organization to meet the community health needs assessment (“CHNA”) requirements of section 501(r)(3) (Schedule M).



Individuals

Managers, self-dealers, disqualified persons, donors, donor advisors, and related persons.

A manager, self-dealer, disqualified person, donor, donor advisor, or related person who owes tax under Chapter 41 or 42, including an organization manager under section 4965, who has the same tax year (or accounting year, as applicable) as the organization, may report the tax shown on Part II-A of the Form 4720 filed by the organization. A manager, self-dealer, or disqualified person who reports a tax on Part II-A is personally responsible for the accuracy of information set forth on Part II-A, as well as any tax shown there. Each manager, self-dealer, disqualified person, donor, donor advisor or related person paying taxes shown on Part II-A should include his or her own check or money order, payable to the United States Treasury, with Form 4720. The organization must not pay any taxes shown on Part II-A.

A manager, self-dealer, disqualified person, donor, donor advisor, and related person who owes tax under Chapter 41 or 42, including organization managers under section 4965, and who doesn’t have the same tax year (or accounting year, as applicable) or doesn’t sign the return filed by the organization, must file a separate Form 4720 showing the tax owed. A separate Form 4720 filed by a manager, self-dealer, disqualified person, donor, donor advisor or related person who files a separate Form 4720 should include the name of the organization. If applicable, a separate Form 4720 should be filed for each organization for which the manager, self-dealer, disqualified person, donor, donor advisor or related person owes tax. A person filing Form 4720 separate from the organization should enter his or her tax year at the top of Form 4720. Enter the name, address, and taxpayer identification number of the manager, self-dealer, disqualified person, donor, donor advisor or related person in Part II-A. Each manager, self-dealer, disqualified person, donor, donor advisor or related person should complete all the information the form requires, including the schedule(s) applicable to each tax shown on Part II-A, to the extent possible, and as applicable.



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Managers of tax favored retirement plans, individual retirement arrangements, and savings arrangements described in sections 401(a), 403(a), 403(b), 529, 457(b), 408(a), 220(d), 408(b), 530, or 223(d) must report and pay tax due under section 4965(a)(2) on Form 5330.

Where To File

If you are located in Then use the following address

The United States

Department of the Treasury
Internal Revenue Service Center
Ogden, UT 84201-0027

A foreign country or
a U.S. possession

Internal Revenue Service Center
P.O. Box 409101
Ogden, UT 84409

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 Express 9:00, DHL Express 10:30, DHL Express 12:00, DHL Express Worldwide, DHL Express Envelope, DHL Import Express 10:30, DHL Import Express 12:00, and DHL Import Express Worldwide.

  • Federal Express (FedEx): FedEx First Overnight, FedEx Priority Overnight, FedEx Standard Overnight, FedEx 2 Day, FedEx International Next Flight Out, FedEx International Priority, FedEx International First, FedEx International Economy.

  • United Parcel Service (UPS): UPS Next Day Air Early AM, 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.

Private delivery services can't deliver items to P.O. boxes. You must use the U.S. Postal Service to mail any item to an IRS P.O. box address. Private delivery services deliver to:

Internal Revenue Service
1973 Rulon White Blvd.
Ogden, UT 84201



When To File

Part I taxes.

File Form 4720 by the due date (not including extensions) for filing the organization's Form 990-PF, Form 990, Form 990-EZ, or Form 5227. If you aren't required to file any of these forms, file Form 4720 by the 15th day of the 5th month after the organization's accounting period ends.

If the regular due date falls on a Saturday, Sunday, or legal holiday, file by the next business day.

Affiliated group member.

See section 4911(f) and instructions for Schedule G, later, for definition of "affiliated group." For members of an affiliated group of organizations that have different tax years, and who are filing Form 4720 to report tax under section 4911, the tax year of the affiliated group is the calendar year, unless all members of the group elect under Regulations section 56.4911-7(e)(5) to make a member's year the group's tax year.



Part II taxes.

Each manager, self-dealer, disqualified person, donor, donor advisor, or related person, whose tax year ends on the same date as the tax year of the organization, but who files a separate Form 4720 to report and pay the tax, must file Form 4720 by the due date of the Form 990-PF, Form 5227, Form 990, or Form 990-EZ of the organization for the tax period that corresponds to the period reported by the manager, self-dealer, disqualified person, donor, donor advisor, or related person. A manager, self-dealer, disqualified person, donor, donor advisor, or related person whose tax year ends on a date different from that of the organization, or if the organization is not required to file a Form 990, Form 990-EZ, Form 990-PF, or Form 5227, must file a Form 4720 by the 15th day of the 5th month after the end of his or her tax year.

If the regular due date falls on a Saturday, Sunday, or legal holiday, file by the next business day.



Extension

Use Form 8868, Application for Automatic Extension of Time To File an Exempt Organization Return, to request an automatic extension of time to file. The automatic extension will be granted if Form 8868 is properly completed, filed, and any balance due shown on Form 4720 is paid by the due date for Form 4720.

Even though the organization and one or more managers, self-dealers, disqualified persons, donors, donor advisors, or related persons may file the same Form 4720 (see Who Must File, earlier), each person who needs an extension of time to file Form 4720 must file his, her, or its own extension. Each Form 8868 should, indicate his, her, or its share of the balance due. Separating amounts in this way allows us to identify the persons who paid their share of the tax balance due and should avoid potential problems later on in processing of the extensions.

Name, Address, etc.

The name, address, and employer identification number of the organization should be the same as shown on Form 990-PF, Form 5227, Form 990, Form 990-EZ, and Schedule A (Form 990 or 990-EZ). A self-dealer, donor, donor advisor, related person, disqualified person, or manager filing a separate Form 4720 enters his, her or its name, address, and taxpayer identification number in Part II-A.

Include the suite, room, or other unit number after the street address.

If the Post Office doesn't deliver mail to the street address, show the P.O. box number instead of the street address.

If you want a third party (such as an accountant or an attorney) to receive mail for the foundation or charity, enter on the street address line "C/O" followed by the third party's name and street address or P.O. box.

Signature and Verification

If you are a manager, self-dealer, disqualified person, donor, donor advisor, or related person, you should sign only in the spaces that apply, whether you use the return of the foundation or organization as your return, or file separately.

If you are signing on behalf of the foundation or organization and also because of personal tax liability, you must sign twice. You sign:

  1. On behalf of the foundation or organization, and

  2. For your own personal tax liability.

For a corporation (or an association), the form may be signed by one of the following: president, vice president, treasurer, assistant treasurer, chief accounting officer, or other corporate officer (such as tax officer).

For a partnership, the form may be signed by a partner or partners authorized to sign the partnership return.

If the return is filed on behalf of a trust, the authorized trustee(s) must sign it.

A receiver, trustee, or assignee required to file any return on behalf of an individual, a trust, estate, partnership, association, company, or corporation must sign the Form 4720 filed for these taxpayers.

Also, a person with a valid power of attorney may sign for the organization, foundation, manager, self-dealer, donor, donor advisor, or related person. Include a copy of the power of attorney with the return.

Attachments

If you need more space, attach separate sheets showing the same information in the same order as on the printed form. Show the totals on the printed form.

Enter the organization's name and EIN on each sheet. Use sheets that are the same size as the form and indicate clearly the line of the printed form to which the information relates.

Organizations Organized or Created in a Foreign Country

Report all amounts in U.S. currency (state conversion rate used) and give information in English. Report items in total, including amounts and transactions from both inside and outside the United States.

Chapter 42 taxes (including sections 4941 through 4945, 4955, 4958, 4959, and 4965 through 4967) don't apply to foreign organizations that receive substantially all of their support (other than gross investment income) from sources outside the United States. See section 4948(b). These organizations must complete this form and file it in the same manner as domestic organizations. However, these organizations, as well as their foundation managers and self-dealers, don't have to pay any tax that would otherwise be due on this return.

For these purposes, a foreign organization is an organization not created or organized in or under the law of the United States, a U.S. state or possession, or the District of Columbia. Gifts, grants, contributions, or membership fees directly or indirectly from a United States person (as defined in section 7701(a)(30)) are from sources within the United States. See Regulations section 53.4948-1.

Although a foreign organization described in section 4948(b) isn't subject to Chapter 42 taxes, it shall not be exempt from tax under section 501(a) if it engages in a prohibited transaction. See section 4948(c). A prohibited transaction is a transaction that would subject the organization or its disqualified person to a penalty under section 6684 if the foreign organization were a domestic organization. Unless the transaction constitutes a willful and flagrant violation of a Chapter 42 provision, a transaction violating a Chapter 42 provision won't constitute a prohibited transaction except under the following circumstances:

  1. There was a prior Chapter 42 violation that resulted in a warning from the IRS that a second violation would result in a prohibited transaction.

  2. The IRS provides notice that the second transaction will constitute a prohibited transaction unless it is corrected within 90 days of the notice.

  3. The second transaction isn't timely corrected.

Tax Payments

Managers, self-dealers, disqualified persons, donors, donor advisors, and related persons, paying tax on the organization's Form 4720 must pay with the return the tax that applies to them as shown in Part II-A. Managers, self-dealers, disqualified persons, donors, donor advisors, and related persons, who file separate Forms 4720 must pay the applicable tax with their separate returns. When managers don't sign the organization's Form 4720 to report their own tax liability, the amount of tax they owe shouldn't be entered in Part II-B, line 1.

Payment by a private foundation of any taxes owed by the foundation managers or self-dealers will result in additional taxes under the self-dealing and taxable expenditure provisions. Managers and self-dealers should pay taxes imposed on them with their own check or money order.

Disqualified persons and entity managers should pay taxes on excess benefit transactions that are imposed on them with their own check or money order. Any reimbursement of a disqualified person's tax liability from excess benefit transactions by the organization will be treated as an excess benefit transaction subject to the tax unless the organization included the reimbursement in the disqualified person's compensation and the disqualified person's total compensation was reasonable. See the instructions for Schedule I, later, for information on excess benefit transactions.

Rounding Off to Whole Dollars

You may round off cents to whole dollars on your return and schedules. If you do round to whole dollars, you must round all amounts. To round, drop amounts under 50 cents and increase amounts from 50 to 99 cents to the next dollar. For example, $1.39 becomes $1 and $2.50 becomes $3.

If you have to add two or more amounts to figure the amount to enter on a line, include cents when adding the amounts and round off only the total.

Penalties and Interest

There are penalties for failure to file or to pay tax. There are also penalties for willful failure to file, supply information or pay tax, and for filing fraudulent returns and statements, that apply to public charities, private foundations, managers, donors, donor advisors, related persons, and self-dealers who are required to file this return. See sections 6651, 7203, 7206, and 7207. Also, see section 6684 for penalties that relate to tax liability under Chapter 42.

Interest charges for any unpaid tax is charged at the underpayment rate established under section 6621. The interest on underpayments is in addition to any penalties.

Abatement

See section 4962 for rules on abatement, refund, or relief from payment of first tier taxes under sections 4942 through 4945, 4955, 4958, 4966, and 4967. To request abatement, refund, or relief under section 4962, write "Request for Abatement Under Section 4962" in the top margin of Form 4720, page 1.

Initial Tax Liability

If you pay an initial tax on self-dealing or on investments that jeopardize charitable purpose (figured on Schedules A and D of Form 4720, respectively) for tax year 2016, the payment may not satisfy the entire tax liability for an act of self-dealing or an investment that jeopardizes charitable purpose. (For the definition of self-dealing, see the instructions for Schedule A of this form; for the definition of investments that jeopardize charitable purpose, see the instructions for Schedule D of this form.) Paying the tax and filing a Form 4720 are required for each year or part of a year in the taxable period that applies to the act or investment. Generally, the taxable period begins with the date of the act or investment and ends with the date corrective action is completed, a notice of deficiency is mailed, or the tax is assessed, whichever comes first.

Similar rules apply for the initial tax liability resulting from failing to distribute income (Schedule B) and from acquiring excess business holdings (Schedule C). Thus, the initial tax liability for those taxes continues to accrue until the date a notice of deficiency is mailed, the violation is corrected, or the tax is assessed, whichever comes first.

Completing the Schedules

Before completing any of the schedules in this return, read the applicable instructions. If any completed schedule shows taxes owed, enter them on page 1 of this return.

The instructions for Schedules A through M describe acts or transactions subject to tax under Chapter 42. The instructions for Schedules A through M also provide links to helpful information available on www.irs.gov, including information about exceptions that would eliminate any tax liability. Don't complete Schedules A and E if exceptions apply to all the acts or transactions. In general, question A on page 1 and Schedules A, B, C, D, and E don't apply to public charities. However, Schedule C does apply to some public charities including donor advised funds and certain supporting organizations that are treated as private foundations for purposes of section 4943. See the instructions for Schedule C for a description of the public charities to which section 4943 applies.

Before completing Schedule C, determine whether the organization or donor advised fund has excess holdings in any business enterprise. If the organization or donor advised fund has holdings subject to the tax on excess business holdings, complete Schedule C for each enterprise.

Before completing Schedule D, determine whether the investment was program related. If not, complete Schedule D for each investment for which you answered "Yes," to Form 990-PF, Part VII-B, question 4a or b, or Form 5227, Part VI-B, question 78a or b.

Amended Return

To correct a previously filed Form 4720 (including the reporting of additional excise taxes discovered after the original Form 4720 filing), use the same year form as the form you are correcting, and:

  • Write "Amended Return," at the top of page 1.

  • Complete the entire return (not just the part that changed) following the form and instructions for the amended year.

  • Include a statement that identifies the lines and amounts being changed and the reason for each change.

  • Write the entity's name and EIN at the top of each page of the statement.

If the amended return is claiming a refund or requesting an abatement, write "Claim for Refund" or "Request for Abatement," whichever is applicable, near the top of the statement discussed above.

Note.

If you are claiming a refund or requesting an abatement, you may use Form 843, Claim for Refund and Request for Abatement, instead of Form 4720.

Instructions for Form 4720 - Additional Material

Index

A

Amended return, Amended Return

E

Extension, Extension

F

Filing requirements
When to file, When To File
Where to file, Where To File
Who must file, Who Must File
Foreign Organizations or U.S. Possession, Organizations Organized or Created in a Foreign Country

S

Signature and Verification, Signature and Verification

T

Tax Payments, Tax Payments