Instructions for Form 4720 |
2006 Tax Year |
This is archived information that pertains only to the 2006 Tax Year. If you are looking for information for the current tax year, go to the Tax Prep Help Area.
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;
-
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 are not eligible to make this election.);
-
The section 4912 tax on excess 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)
and
section 501(c)(4) organizations that engage in excess benefit transactions;
-
The section 4965 taxes related to prohibited tax shelter transactions;
-
The section 4966 taxes on taxable distributions by sponsoring organizations maintaining donor advised funds;
-
The section 4967 taxes on distribution of prohibited benefits from donor advised funds; and
-
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 is not allowed to the transferor.
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 1b, 1c, 3b, 4a, 4b, or 5b, or 6b in Part VI-B 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.
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 A (Form 990 or
990-EZ), Part VI-A, must file Form 4720 to report the liability and pay the tax (Schedule G).
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.
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. Organization
managers may report any first tier tax they owe on Schedule F of Form 4720. (See Schedule F instructions for the definition of political
expenditures.)
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 (b) in Part X of
Form 990, question 6b in Part VII-B of Form 990-PF, or question 6b in Part VI-B of Form 5227.
Sponsoring organizations maintaining donor advised funds.
All 170(c) organizations (excluding private foundations and government organizations referred to in 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).
Certain tax-exempt entities 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).
This requirement applies to
entities described in section 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)).
Any entity described in section 4965(c) that is a party to a PTST must file Form 8886-T.
Managers, self-dealers, disqualified persons, donors, donor advisors, and related persons.
If you are a manager, self-dealer, disqualified person, donor, donor advisor, or related person who owes tax under
Chapter 41 or 42, including
entity managers under section 4965, and you have the same tax year (or accounting year, as applicable) of the entity, you
may report the tax you owe
on the Form 4720 filed by the entity. Managers, self-dealers, and disqualified persons who do this are responsible for the
parts that relate to taxes
they owe and should include their own check or money order, payable to the United States Treasury, with the return.
Managers, self-dealers, disqualified persons, donors, donor advisors, and related persons who owe tax under Chapter
41 or 42, including entity
managers under section 4965, and do not have the same tax year (or accounting year, as applicable) or do not sign the return
of the entity, must file
a separate return on Form 4720 showing the tax owed and the name of the entity for which you owe tax. If you file a separate
Form 4720, enter your tax
year at the top of the form. Enter your name, address, and taxpayer identification number in Part II-A. Complete all the information
the form
requires, to the extent possible, that applies to your liability.
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 4965(a)(2) on Form 5330.
To file Form 4720, mail or deliver it to:
Internal Revenue Service Center
Ogden, UT 84201-0027
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
are not required to file any of these forms, file Form 4720 by the 15th day of the 5th month after the entity'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.
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.
If you are a manager, self-dealer, disqualified person, donor, donor advisor, or related person, owing taxes under
Chapter 41 or 42 and filing a
separate Form 4720, and your tax year ends on the same date as the organization, you must file by the due date for filing
Form 990-PF, Form 5227, Form
990, or Form 990-EZ of the organization for which you owe tax. If your tax year ends on a date different from that of the
organization, or your
organization is not required to file a Form 990, Form 990-EZ, Form 990-PF, or Form 5227, you must file a Form 4720 by the
15th day of the 5th month
after your tax year ends.
If the regular due date falls on a Saturday, Sunday, or legal holiday, file by the next business day.
If you cannot file Form 4720 by the due date, you may request an automatic 3-month extension of time to file by using Form
8868, Application for
Extension of Time To File an Exempt Organization Return. The 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 4720.
Form 8868 is also used to request an additional extension of time to file; however, these extensions are not automatically
granted.
The name, address, and employer identification number of the organization or entity 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). If you are a self-dealer, donor, donor advisor, related person, disqualified
person, or manager
filing a separate Form 4720, enter your 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 does not 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:
-
On behalf of the foundation or organization, and
-
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.
Any person, firm, or corporation that prepared the return for a fee must also sign it and fill in the address of the preparer.
If a firm or
corporation prepares the return, it should be signed in the name of the firm or corporation.
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 or U.S. Possession
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.
Sections 4941 through 4945 and section 4955 do not apply to foreign private foundations that receive substantially all of
their support (other than
gross investment income) from sources outside the United States. These organizations must complete this form and file it in
the same manner as other
private foundations. However, these organizations, as well as foundation managers and self-dealers, do not have to pay any
tax that would otherwise be
due on this return.
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, page 1. 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 do not
sign the organization's
Form 4720 to report their own tax liability, the amount of tax they owe should not 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 to Schedule I on page 12 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.
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 at the underpayment rate established under section 6621 is charged for any unpaid tax. The interest on underpayments
is in addition to any
penalties.
See section 4962 for rules on abatement, refund, or relief from payment of first tier taxes under sections 4942 through 4945,
4955, and 4958. 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.
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 2006, the payment may not satisfy the entire tax liability for an act of self-dealing or a jeopardy
investment. (For the
definition of self-dealing, see the instructions for Schedule A of this form; for the definition of jeopardy investment, 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.
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 L describe acts or transactions subject to tax under Chapter 42. Also, go to
www.irs.gov/charities/foundations/index.html
http://www.irs.gov/charities/foundations/index.html for a list of exceptions that
eliminate any tax liability that would otherwise be shown on Schedules A and E. Do not 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 do not apply to public charities. However,
for tax years beginning
after August 17, 2006, Schedule C will 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 now 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 4a or b.
Previous | Index | Next
2006 Instructions Main | 2006 Tax Help Archives | Tax Help Archives Main | Home
|
|
|