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                                                                                                                Department of the Treasury
                                                                                                                Internal Revenue Service
2023

Instructions for Form 4720

Return of Certain Excise Taxes Under Chapters 41 and 42 of the
Internal Revenue Code
(Sections 170(f)(10), 664(c)(2), 4911, 4912, 4941, 4942,
4943, 4944, 4945, 4955, 4958, 4959, 4960, 4965, 4966, 4967, and 4968)

Section references are to the Internal Revenue    Contents                                    Page   donor advisor, or related person who 
Code unless otherwise noted.                                                                         owes tax under Chapter 41 or 42, 
                                                  Schedule L—Taxes on Prohibited 
Contents                                  Page    Benefits Distributed From                          (including an entity manager under 
                                                  Donor Advised Funds                                section 4965), may no longer report the 
General Instructions . . . . . . . . . . . . . 2  (Section 4967) .        . . . . . . . . . . .   18 tax on the Form 4720 filed by the 
Purpose of Form . . . . . . . . . . . . . . . 2   Schedule M—Tax on Hospital                         organization. Each taxpayer must file a 
Who Must File  . . . . . . . . . . . . . . . . 2  Organization for Failure to                        separate Form 4720.
Where and How To File .   . . . . . . . . . . 3   Meet the Community Health 
When To File . . . . . . . . . . . . . . . . . 4  Needs Assessment                                   Electronic filing for private founda-
Extension . . . . . . . . . . . . . . . . . . . 4 Requirements (Sections 4959                        tions. Under Regulations section 
                                                  and 501(r)(3)) .      . . . . . . . . . . . .   19 1.6033-2(a)(2)(ii)(J), private foundations 
Name, Address, etc.    . . . . . . . . . . . . 4  Schedule N—Tax on Excess                           are required to report such information 
Signature and Verification .  . . . . . . . . 4   Executive Compensation 
Attachments . . . . . . . . . . . . . . . . . . 4 (Section 4960) .        . . . . . . . . . . .   19 as is required by Form 4720 as part of 
Organizations Organized or                        Schedule O—Excise Tax on Net                       their information reporting requirement 
Created in a Foreign Country .          . . . 4   Investment Income of Private                       under section 6033. Therefore, private 
Tax Payments . . . . . . . . . . . . . . . . . 5  Colleges and Universities                          foundations reporting information 
Rounding Off to Whole Dollars .     . . . . . 5   (Section 4968) .        . . . . . . . . . . .   20 required as to liability for tax imposed 
Penalties and Interest . . . . . . . . . . . . 5  Paid Preparer . . . . . . . . . . . . . . . .   21 under Chapter 42 on the Form 4720 
Abatement . . . . . . . . . . . . . . . . . . . 5 Phone Help .  . . . . . . . . . . . . . . . .   21 (Schedules A-F, J, or N) must file this 
Initial Tax Liability and Correction .  . . . 5   Photographs of Missing Children         . . .   21 form electronically. Other filers of Form 
Completing the Schedules      . . . . . . . . 6   How To Get Forms and                               4720 may be required to file 
                                                  Publications .      . . . . . . . . . . . . .   21
Amended Return .  . . . . . . . . . . . . . . 6                                                      electronically as described in Where 
                                                  IRS e-Services Makes Taxes                         and How To File, later. See Regulations 
Specific Instructions for Page 1 .  . . . . . 6   Easier .    . . . . . . . . . . . . . . . . .   21 section 301.6011-12. Additionally, any 
Schedule A—Initial Taxes on                       Index . . . . . . . . . . . . . . . . . . . . . 23 other filer of Form 4720 who is not 
Self-Dealing (Section 4941) .         . . . . 8
Schedule B—Initial Tax on                                                                            required to file electronically may also 
Undistributed Income (Section                     Future Developments                                voluntarily use the electronic form.
4942) .     . . . . . . . . . . . . . . . . . . 9 For the latest information about 
Schedule C—Initial Tax on Excess                  developments related to Form 4720 and              Entity or person subject to tax filing 
Business Holdings (Section                        its instructions, such as legislation              Form 4720 with respect to more than 
4943) .     . . . . . . . . . . . . . . . . . . 9 enacted after they were published, go to           one organization. Item B in the header 
Schedule D—Initial Taxes on                       IRS.gov/Form4720.                                  area of Form 4720 is revised for use by 
Investments That Jeopardize                                                                          any entity (other than the organization) 
Charitable Purpose (Section                                                                          or person who is required to file Form 
4944) .     . . . . . . . . . . . . . . . . . 12  What’s New
                                                                                                     4720 to report and pay an excise tax 
Schedule E—Initial Taxes on                       Electronic filing for filers that are not          under Chapters 41 or 42 of the Internal 
Taxable Expenditures 
(Section 4945) .       . . . . . . . . . . .  13  private foundations.        Under final            Revenue Code with respect to more 
Schedule F—Initial Taxes on                       regulations (T.D. 9972) issued in                  than one organization. The information 
Political Expenditures                            February 2023, filers of Form 4720 that            entered in Item B will allow IRS systems 
(Section 4955) .       . . . . . . . . . . .  13  are not private foundations are required           to accept and process multiple Form 
Schedule G—Tax on Excess                          to file Form 4720 electronically if they           4720 filings under the same taxpayer 
Lobbying Expenditures                             file 10 or more returns in the aggregate           number (Employer Identification 
(Section 4911) .       . . . . . . . . . . .  14  in a calendar year. The regulations are            Number or Social Security Number).
Schedule H—Taxes on                               effective for returns required to be filed 
                                                                                                     Explanations of corrective action 
Disqualifying Lobbying                            for tax years ending on or after 
Expenditures (Section 4912) .           . .   14                                                     taken. Instead of using Item B to collect 
                                                  December 31, 2023. See Where and 
Schedule I—Initial Taxes on                                                                          information about corrections made (or 
Excess Benefit Transactions                       How To File, for more information.
                                                                                                     not made) on taxable events, Form 4720 
(Section 4958) .       . . . . . . . . . . .  15                                                     is revised to request information about 
Schedule J—Taxes on Being a                       Reminders                                          such corrections in each of Schedules 
Party to Prohibited Tax Shelter                   Forms 4720 filed by private foundations            A, B, C, D, E, F, or I. Now, for each 
Transactions (Section 4965)           . . .   16  are publicly disclosable. Don’t enter              transaction to which an initial tax applies 
Schedule K—Taxes on Taxable                       Social Security Numbers on these                   under sections 4941, 4942, 4943, 4944, 
Distributions of Sponsoring                       publicly disclosable returns.                      4945, 4955, or 4958, the organization or 
Organizations Maintaining 
Donor Advised Funds                               Separate returns.       A manager,                 any other entity or person required to file 
(Section 4966) .       . . . . . . . . . . .  17  self-dealer, disqualified person, donor,           Form 4720 to report one or more such 

Oct 3, 2023                                                     Cat. No. 13023Z

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transactions, must indicate whether a that result in prohibited benefits from a (Form 990), Part II-A, must file Form
correction has been made (or not) on donor advised fund. 4720 to report the liability and pay the
the Schedule where each transaction is • The section 4968 taxes on net tax (Schedule G). Certain organizations
reported. investment income of certain private whose section 501(c)(3) status is
colleges and universities. revoked because of excess lobbying
General Instructions • The section 170(f)(10) tax on any activities (and possibly their managers)
premiums paid on a personal benefit are subject to a 5% excise tax on their
contract in connection with a transfer to lobbying expenditures (Schedule H).
Purpose of Form
an organization or charitable remainder
Charitable organizations that en-
Use Form 4720 to figure and pay the trust for which a charitable deduction
gage in excess benefit transactions.
following. isn't allowed to the transferor.
Form 4720 must be filed by any
• The initial taxes on private The section 664(c)(2) tax on the
• organization that answered “Yes” to
foundations, disqualified persons, or unrelated business taxable income of a
question 25a in Part V of Form 990 or
foundation managers under sections charitable remainder trust.
4941 through 4945 for self-dealing, that otherwise engaged in an excess
failure to distribute income, excess benefit transaction described in section
business holdings, investments that Who Must File 4958. (Schedule I).
jeopardize charitable purpose, and Organizations and Any Related Charitable organizations that make
taxable expenditures (see instructions Organization Subject to Tax certain premium payments on per-
for Schedules A through E for sonal benefit contracts. Form 4720
definitions). Under Chapter 41 or 42
• The initial tax on certain supporting Organizations liable for excise tax under must be filed by any organization
organizations and donor advised funds Chapter 41 or 42 should complete the described in section 170(c) or section
for excess business holdings under schedule(s) described below, as 664(d) that answered “Yes,” to question
section 4943. applicable. Taxes owed by the 7f in Part V of Form 990, question 6b in
• The section 4911 tax on excess organization are reported in Part I only. Part VI-B of Form 990-PF, question 6b in
Part VIII of Form 5227, or that otherwise
lobbying expenditures by public The organization should not paid premiums on a personal benefit
charities that have elected to be subject ! enter any amount(s) in Part II. contract in connection with a transfer to
to section 501(h) regarding CAUTION Part II is used by persons and an organization for which a charitable
expenditures to influence legislation. entities other than the organization to deduction was not allowed to the
(Private foundations and section report and pay excise tax liability relating transferor (Part I, line 8).
4947(a) trusts aren't eligible to make this transactions or activities described in
election). the applicable schedule. Certain tax-exempt entities that are a
• The section 4912 tax on disqualifying party to a prohibited tax shelter
lobbying expenditures that result in loss Private foundations and section transaction (PTST). Certain
of section 501(c)(3) tax-exempt status. 4947(a) trusts. Generally, Form 4720 tax-exempt entities must file Form 4720
• The section 4955 tax imposed on any must be filed by all organizations, to report the liability and pay the tax due
amount paid or incurred by a section including foreign organizations, that under section 4965(a)(1) (Schedule J).
501(c)(3) organization that participates answered “Yes,” to question 1b, 1d, 2b, This requirement applies to entities
or intervenes in any political campaign 3b, 4a, 4b, 5b, 6b, 7b, or 8 in Part VI-B of described in sections 501(c), 501(d), or
on behalf of, or in opposition to, any Form 990-PF; or “Yes,” to question 1b, 170(c) (other than the United States) or
candidate for public office. 1c, 3b, 4a, 4b, 5b, 6b, or 7 in Part VIII of an Indian tribal government (within the
• The section 4958 initial taxes on Form 5227. (Schedules A through E). meaning of section 7701(a)(40)).
disqualified persons and organization Any entity described in section
managers of section 501(c)(3) (except Other organizations owing initial tax-
private foundations), section 501(c)(4), es on excess business holdings. TIP 4965(c) that is a party to a PTST
and section 501(c)(29) organizations Supporting organizations described in must file Form 8886-T.
that engage in excess benefit section 4943(f)(3) and donor advised
transactions. funds described in section 4966(d)(2) Sponsoring organizations maintain-
• The section 4959 tax on the failure by that owe the tax reported on Schedule C ing donor advised funds. All section
a hospital organization to meet the (section 4943(a)). (Schedule C). 170(c) organizations (excluding private
foundations and government
community health needs assessment Organizations making political ex- organizations referred to in sections
requirements under section 501(r)(3). penditures. All section 501(c)(3) 170(c)(1) and 170(c)(2)(A)) that
• The section 4960 taxes on excess organizations that make a political maintain one or more donor advised
tax-exempt organization executive expenditure must file Form 4720 to funds must file Form 4720 to report the
compensation. report the liability and pay the tax liability and pay the tax owed on any
• The section 4965 taxes on prohibited (Schedule F). Organization managers taxable distributions under section 4966
tax shelter transactions. may report any first-tier tax they owe on (Schedule K). In addition, sponsoring
• The section 4966 taxes on taxable Schedule F of Form 4720. (See organizations that have made a
distributions by sponsoring Schedule F instructions, later, for the distribution resulting in a prohibited
organizations maintaining donor definition of political expenditures.) benefit to a donor, donor advisor, or
advised funds. related person must file Form 4720 to
Public charities making excess lob-
• The section 4967 taxes on a donor, report the distribution (Schedule L).
bying expenditures. Public charities
donor advisor, or related party, and a
that made the election under section
manager of a sponsor of a donor Charitable remainder trusts. All
501(h) and owe tax on excess lobbying
advised fund, relating to distributions charitable remainder trusts described in
expenditures as figured on Schedule C section 664 that have unrelated

-2- Instructions for Form 4720 (2023)

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business taxable income for the tax year    educational institution, as defined in     Authorized IRS e-File Providers for 
must file Form 4720 to report the liability section 25A(f)(2);                         Business Returns.
and pay the tax due (Part I, line 11).      • Had at least 500 students during the 
                                                                                       Mandatory electronic filing for pri-
Unrelated business taxable income is        preceding tax year, with more than 50% 
                                                                                       vate foundations. All private 
figured under section 512 and is            of those students located in the United 
                                                                                       foundations reporting information 
determined as if Part III of subchapter F   States; and
                                                                                       required as to liability for tax imposed 
applies to such trusts. Use Form 990-T      • Had an aggregate fair market value, 
                                                                                       under Chapter 42 on the Form 4720 
to compute unrelated business taxable       at the end of the preceding tax year, of 
                                                                                       (Schedules A-F, J, or N) must file this 
income. The charitable remainder trust      assets not used directly in the carrying 
                                                                                       form electronically, regardless of the 
should not submit Form 990-T for            out of the organization’s exempt 
                                                                                       number of other returns the private 
processing as a return. Instead, attach a   purpose, held by the organization and 
                                                                                       foundation must file during the calendar 
copy of the completed Form 990-T and        related organizations, of at least 
                                                                                       year. Form 4720 returns filed on paper 
file it with Form 4720.                     $500,000 per student.
                                                                                       by organizations required to file 
Hospital organizations failing to           Other Filers                               electronically will not be accepted or 
meet the community health needs                                                        processed.
assessment requirements (Sections           Managers, self-dealers, disqualified 
501(r)(3), 4959).  An excise tax is         persons, donors, donor advisors,           Mandatory electronic filing for other 
imposed on the failure by a hospital        and related persons.       A manager,      than private foundations. Filers that 
organization to meet the community          self-dealer, disqualified person, donor,   are not private foundations required to 
health needs assessment (“CHNA”)            donor advisor, or related person who       file at least 10 returns of any type during 
requirements of section 501(r)(3)           owes tax under Chapter 41 or 42,           the calendar year ending with or within 
(Schedule M).                               including an entity manager under          the tax year must file their returns 
                                            section 4965, must file a separate Form    electronically. “Returns” for purposes of 
Certain taxpayers that pay excess           4720 showing the tax owed. The Form        these instructions include information 
executive compensation.     An              4720 filed by a manager, self-dealer,      returns (for example, Forms W-2 and 
applicable tax-exempt organization          disqualified person, donor, donor          Forms 1099), income tax returns, 
(ATEO) that pays to any covered             advisor, or related person should          employment tax returns (including 
employee more than $1 million in            include the name of the organization in    quarterly Forms 941, Employer’s 
remuneration or pays an excess              Part II. If applicable, a separate Form    Quarterly Federal Tax Return), and 
parachute payment during the year must      4720 should be filed for each              excise returns. The failure to file a return 
file Form 4720 to report the liability and  organization for which the manager,        electronically when required is deemed 
pay the excise tax imposed by section       self-dealer, disqualified person, donor,   a failure to file the return even if the filer 
4960. (Schedule N). An ATEO includes        donor advisor, or related person owes      submits a paper return.
section 501(a) exempt organizations,        tax. A person filing Form 4720 should      On a year-by-year and form-by-form 
section 527 political organizations,        enter their tax year at the top of Form    basis, the IRS may waive, in cases of 
section 521 farmers’ cooperatives, and      4720. Enter the name, address, and         undue hardship, the requirement that 
government entities that have income        taxpayer identification number of the      filers other than private foundations that 
excluded under section 115(1). If           manager, self-dealer, disqualified         file 10 or more returns file electronically. 
remuneration from a related                 person, donor, donor advisor, or related   In certain circumstances, a filer may be 
organization is included to determine       person in the address area at the top of   administratively exempt from the 
the tax imposed by section 4960, the        Form 4720. Enter the name of the           requirement to file electronically. The 
related organization must file a separate   organization in the name and address       filer should keep documentation 
Form 4720 to report its share of liability  area in Part II. Each manager,             supporting their undue hardship or other 
for the tax on Schedule N. See the          self-dealer, disqualified person, donor,   applicable reason for not filing 
instructions for Schedule N, later, for the donor advisor, or related person should    electronically in the filer’s records. For 
definition of related organization for      complete all the information the form      more information about mandatory 
purposes of the excise tax under section    requires, including the schedule(s)        electronic filing based on the 10–return 
4960.                                       applicable to each tax shown on Part II,   threshold, waivers, and exemptions, see 
       A governmental entity that is not    to the extent possible, and as             Regulations section 301.6011–12.
TIP    exempt from tax under section        applicable.
                                                                                       Paper filing. For filers submitting paper 
       501(a) and does not exclude              Managers of tax favored                returns:
income under section 115(1) is not an       TIP retirement plans, individual 
ATEO for purposes of section 4960.              retirement arrangements, and 
                                            savings arrangements described in 
Certain private colleges and univer-        sections 401(a), 403(a), 403(b), 529, 
sities subject to the excise tax on         457(b), 408(a), 220(d), 408(b), 530, or 
net investment income (section              223(d) must report and pay tax due 
4968). An applicable educational            under section 4965(a)(2) on Form 5330.
institution must file Form 4720 to report 
the liability and pay the excise tax 
imposed by section 4968. (Schedule O)       Where and How To File
An applicable educational institution is a  Electronic filing. All persons required 
private college or university that:         to file can file Form 4720 electronically. 
• Answered “Yes” to line 16 in Part V of    For general information about electronic 
Form 990 or that otherwise is a private     filing, visit IRS.gov/Efile, and see Pub. 
college or university that is an eligible   4163, Modernized e-file Information for 

Instructions for Form 4720 (2023)                              -3-

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IF you are THEN use the Part II taxes on managers, self-deal- treasurer, assistant treasurer, chief
located in ... following ers, disqualified persons, donors, accounting officer, or other corporate
address ... donor advisors, or related persons. officer (such as tax officer).
Each manager, self-dealer, disqualified For a partnership, the form may be
the United States Department of the person, donor, donor advisor, or related signed by a partner or partners
Treasury person, must file Form 4720 by the 15th authorized to sign the partnership
Internal Revenue day of the 5th month after the end of return.
Service Center their tax year.
For a trust, the form must be signed
Ogden, UT If the regular due date falls on a
by the trustee(s).
84201-0027 Saturday, Sunday, or legal holiday, file
a foreign country or Internal Revenue by the next business day. A receiver, trustee, or assignee
a U.S. territory Service Center required to file any return on behalf of an
P.O. Box 409101 Extension individual, a trust, estate, partnership,
Ogden, UT 84409 Use Form 8868, Application for association, company, or corporation
Automatic Extension of Time To File an must sign the Form 4720 filed for these
Exempt Organization Return or Excise taxpayers.
Private delivery services. You can Taxes Related to Employee Benefit Also, a person with a valid power of
use certain private delivery services Plans, to request an automatic attorney may sign for the organization,
(PDS) designated by the IRS to meet extension of time to file. The automatic foundation, manager, self-dealer, donor,
the “timely mailing as timely filing/ extension will be granted if Form 8868 is donor advisor, or related person.
paying” rule for tax returns and properly completed, filed, and any Include a copy of the power of attorney
payments. Go to IRS.gov/PDS for the balance due shown on Form 4720 is with the return.
current list of designated services. paid by the due date for Form 4720.
The private delivery service can tell Attachments
you how to get written proof of the Name, Address, etc. If you need more space, and are
mailing date. For an organization filing its own Form permitted to file a paper form, attach
Private delivery services can't deliver 4720, the name, address, and employer separate sheets showing the same
items to P.O. boxes. You must use the identification number of the organization information in the same order as on the
U.S. Postal Service to mail any item to should be the same as shown on Form printed form. Show the totals on the
an IRS P.O. box address. Private 990-PF, Form 5227, Form 990, or Form printed form.
delivery services deliver to: 990-EZ, and entered in the address field Enter the organization's name and
at the top of the form. A self-dealer, EIN on each sheet. Use sheets that are
Internal Revenue Service donor, donor advisor, related person, the same size as the form and indicate
1973 Rulon White Blvd. disqualified person, or manager filing a clearly the line of the paper form to
Ogden, UT 84201 separate Form 4720 enters their name, which the information relates.
address, and taxpayer identification
number in the address field at the top of
When To File Organizations Organized
the form. The name and address of the
Part I taxes on the organization. File organization to which taxes reported in or Created in a Foreign
Form 4720 by the due date (not Part II relate is entered in the address Country
including extensions) for filing the field at the top of Part II. Report all amounts in U.S. currency
organization's Form 990-PF, Form 990, (state conversion rate used) and give
Form 990-EZ, or Form 5227. If you Include the suite, room, or other unit
aren't required to file any of these forms, number after the street address. information in English. Report items in
total, including amounts and
file Form 4720 by the 15th day of the 5th If the Post Office doesn't deliver mail transactions from both inside and
month after the organization's to the street address, show the P.O. box outside the United States.
accounting period ends. number instead of the street address.
Chapter 42 taxes (including sections
If the regular due date falls on a If you want a third party (such as an 4941 through 4945, 4955, 4958 through
Saturday, Sunday, or legal holiday, file accountant or an attorney) to receive 4960, and 4965 through 4968) don't
by the next business day. mail for the foundation or charity, enter apply to foreign organizations that
Affiliated group member. See on the street address line “C/O” followed receive substantially all of their support
section 4911(f) and the instructions for by the third party's name and street (other than gross investment income)
Schedule G, later, for definition of address or P.O. box. from sources outside the United States.
“affiliated group.” For the members of an See section 4948(b). These
affiliated group of organizations that Signature and Verification organizations must complete this form
have different tax years, and who are Each taxpayer required to file Form and file it in the same manner as
filing Form 4720 to report tax under 4720 (see Who Must File, earlier) must domestic organizations. However, these
section 4911, the tax year of the file their own return. Each return must organizations, as well as their
affiliated group is the calendar year, be signed by a person authorized to foundation managers and self-dealers,
unless all members of the group elect sign the return as of the date the return don't have to pay any tax that would
under Regulations section 56.4911-7(e) is filed. otherwise be due on this return.
(5) to make a member's year the group's
For a corporation (or an association), For these purposes, a foreign
tax year.
the form may be signed by one of the organization is an organization not
following: president, vice president, created or organized in or under the law

-4- Instructions for Form 4720 (2023)

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of the United States, a U.S. state or disqualified person or manager liable for Rounding Off to Whole
territory, or the District of Columbia. the excise tax under section 4958(a)(1)
Gifts, grants, contributions, or or (2). Disqualified persons and entity Dollars
membership fees directly or indirectly managers should each file their own You may round off cents to whole dollars
from a United States person (as defined return and should pay taxes on excess on your return and schedules. If you do
in section 7701(a)(30)) are from sources benefit transactions that are imposed on round to whole dollars, you must round
within the U.S. See Regulations section them under section 4958 from their own all amounts. To round, drop amounts
53.4948-1. funds. Any reimbursement of a under 50 cents and increase amounts
disqualified person's tax liability from from 50 to 99 cents to the next dollar.
Although a foreign organization For example, $1.39 becomes $1 and
excess benefit transactions by the
described in section 4948(b) isn't $2.50 becomes $3.
organization will be treated as an excess
subject to Chapter 42 taxes, it shall not
benefit transaction subject to the tax
be exempt from tax under section If you have to add two or more
unless the organization included the
501(a) if it engages in a prohibited amounts to figure the amount to enter
reimbursement in the disqualified
transaction. See section 4948(c). A on a line, include cents when adding the
person's compensation and the
prohibited transaction is a transaction amounts and round off only the total.
disqualified person's total compensation
that would subject the organization or its
was reasonable. See the instructions for
disqualified person to a penalty under Penalties and Interest
Schedule I, later, for information on
section 6684 if the foreign organization There are penalties for failure to file or to
excess benefit transactions.
were a domestic organization. Unless pay tax. There are also penalties for
the transaction constitutes a willful and Similarly, an organization that pays a willful failure to file, supply information or
flagrant violation of a Chapter 42 prohibited benefit from a donor advised pay tax, and for filing fraudulent returns
provision, a transaction violating a fund must report the transaction(s) on and statements, that apply to public
Chapter 42 provision won't constitute a Schedule L but must not pay the tax charities, private foundations,
prohibited transaction except under the liability of any donor advisor or manager managers, donors, donor advisors,
following circumstances: liable for the excise taxes under section related persons, and self-dealers who
1. There was a prior Chapter 42 4967. Such persons should each file are required to file this return. See
violation that resulted in a warning from their own return and pay the applicable sections 6651, 7203, 7206, and 7207.
the IRS that a second violation would excise tax under section 4967 from their Also, see section 6684 for penalties that
result in a prohibited transaction. own funds. Any reimbursement of a relate to tax liability under Chapter 42.
donor advisor's tax liability under
2. The IRS provides notice that the Interest on any unpaid tax is charged
section 4967 by the organization will be
second transaction will constitute a at the underpayment rate established
treated an additional prohibited benefit.
prohibited transaction unless it is under section 6621. The interest on
corrected within 90 days of the notice. underpayments is in addition to any
Tax Payments
3. The second transaction isn't penalties.
The organization or a related
timely corrected.
organization liable for the section 4960
excise tax on excess executive Abatement
Reporting Self-Dealing, compensation, reports and computes Use Form 843, Claim for Refund and
Excess Benefit the taxes owed on Part I. The Request for Abatement, to request
Transactions, and organization or related organization abatement, refund, or relief under
pays the applicable taxes on Part III of section 4962. See section 4962 for rules
Prohibited Benefits the organization’s Form 4720. Each on abatement, refund, or relief from
A private foundation that engages in a must file their own return and cannot file payment of first tier taxes under sections
self-dealing transaction must report the jointly. 4942 through 4945, 4955, 4958, 4966,
transaction on Schedule A but must not and 4967.
Managers, self-dealers, disqualified
pay the tax liability of any disqualified Note. If you file Form 4720 on paper,
persons, donors, donor advisors, and
person or manager liable for the excise you can submit the Form 843 with your
related persons, report and compute the
tax under section 4941(a)(1) or (2). Form 4720 or mail it separately, as
applicable taxes on Part II. Such
Payment by a private foundation of any persons pay the applicable tax on Part described in the instructions for that
taxes owed by the foundation managers III, each filing a separate Form 4720. form. If you file Form 4720 electronically,
or self-dealers will result in additional mail Form 843, as described in the
taxes under the self-dealing and taxable Tax payments can be made by check instructions for that form, after receiving
expenditure provisions (sections 4941 or through the Electronic Federal Tax confirmation your electronically filed
and 4945, respectively). In addition, Payment System (EFTPS). For more Form 4720 has been accepted.
these payments could impact the information about EFTPS or to enroll in
foundation's calculation of undistributed EFTPS, visit the EFTPS website at
Initial Tax Liability and
income on Form 990-PF which could EFTPS.gov, or call 800-555-4477. You
subject the foundation to additional can also get Pub. 966, Electronic Correction
taxes under section 4942. Managers Federal Tax Payment System: A Guide If you pay an initial tax under sections
and self-dealers should pay taxes to Getting Started. See below for an 4941 through 4945, 4955, and 4958, for
imposed on them from their own funds. exception to this rule for small tax year 2023, the payment may not
foundations. satisfy the entire tax liability for a taxable
An organization that engages in an event. The taxable event is the act,
excess benefit transaction must report failure to act, or transaction that resulted
the transaction on Schedule I but must in the liability for initial taxes under these
not pay the tax liability of any provisions.

Instructions for Form 4720 (2023) -5-

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  Paying the tax and filing a Form 4720    you are a manager, self-dealer,               year form as the form you are correcting. 
are required for each year or part of a    disqualified person, donor, donor             Check the “Amended Return” box in the 
year in the taxable period that applies to advisor, or related person.                   heading area.
the taxable event. Generally, the taxable 
period begins with the date of the act or  The organization will complete all            Complete the entire return (not just 
investment and ends with the date          parts of each applicable schedule,            the part that changed) following the form 
corrective action is completed, a notice   including computation of the initial tax      and instructions for the amended year.
of deficiency is mailed, or the tax is     on other persons (for example, 
assessed, whichever comes first. Thus,     self-dealers and managers), even              Include a statement that identifies the 
the initial tax liability for those taxes  though the organization is not liable for     lines and amounts being changed and 
continues to accrue until the date a       those tax amounts. Entities other than        the reason for each change.
notice of deficiency is mailed, the        the organization and individuals filing 
violation is corrected, or the tax is      Form 4720 should complete the parts of        If the amended return shows tax due 
assessed, whichever comes first.           a schedule that apply to the                  and you wish to request abatement of 
                                           transaction(s) that give rise to their        the tax reported on Form 4720, see 
  To avoid additional taxes and            liability. Where liability is being allocated Abatement, earlier. If the amended 
penalties, and in some cases, further      among more than one person (for               return results in an overpayment of tax 
initial taxes, a foundation, organization, example, two or more managers                 previously paid, show the amount of the 
disqualified person, or manager must       allocating the initial tax on managers),      overpayment in Part III, line 4. Do not file 
correct the taxable event within the       the person filing the return should show      Form 843, Claim for Refund and 
correction period.                         the full amount of tax and show how the       Request for Abatement, to request a 
                                           liability allocated.                          refund of an overpayment computed on 
  Generally, the correction period                                                       Part III, line 4.
begins on the date the event occurs and    Note. See Liability for Tax (later in Part 
ends 90 days after the mailing date of a   II) regarding allocation of liability among 
notice of deficiency, under section 6212,  twoor more persons liable for an excise       Specific Instructions for
in connection with the second-tier tax     tax under Chapter 42.                         Page 1
imposed on that taxable event. That                                                      An organization filing Form 4720 should 
time is extended by:                       The instructions for Schedules A              check the appropriate box for the type of 
• Any period in which a deficiency can't   through O describe acts or transactions       annual return it files. If filing as an 
be assessed under section 6213(a)          subject to tax under Chapter 42. Don't        individual or taxable entity and the 
because a petition to the Tax Court for    complete Schedules A and E if                 annual return you file isn't shown, 
redetermination of the deficiency is       exceptions apply to all the acts or           subject to a Chapter 42 tax, check 
pending, not extended by any               transactions. In general, question A on       “Other.”
supplemental proceeding by the Tax         page 1 and Schedules A, B, C, D, and E 
Court under section 4961(b), regarding     don't apply to public charities. However,     Question A.      If filing as a person 
whether any correction was made, and       Schedule C does apply to some public          subject to a Chapter 42 tax, answer with 
• Any other period the IRS determines      charities including certain sponsoring        respect to the related organization.
is reasonable and necessary to correct     organizations of donor advised funds          Question B.      Answer “Yes” to question 
the taxable event.                         and certain supporting organizations          B if you are a self-dealer, donor, donor 
                                           that are treated as private foundations       advisor, related person, disqualified 
  The taxable event will be treated as     for purposes of section 4943. See the         person, or manager and you will be filing 
occurring:                                 instructions for Schedule C for a             Form 4720 to report and pay excise 
• For the tax on failure to distribute     description of the public charities to        taxes with respect to more than one 
income (section 4942), on the first day    which section 4943 applies.                   organization. For example, if you are a 
of the tax year for which there was a 
failure to distribute income,              Before completing Schedule C,                 manager of two private foundations, 
• For the tax on excess business           determine whether the organization or         both of which made taxable 
holdings (section 4943), on the first day  donor advised fund has excess holdings        expenditures for which the initial tax on 
on which there were excess business        in any business enterprise. If the            managers is imposed under section 
holdings, or                               organization or donor advised fund has        4945(a)(2), answer “Yes” to question B. 
• In any other case (sections 4941,        holdings subject to the tax on excess         Attach a list showing the name and EIN 
4945, 4955, and 4958), on the date the     business holdings, complete a separate        of each organization.
event occurred.                            Schedule C for each enterprise.               You should also answer "Yes" to 
                                                                                         question B if you are a related 
  Refer to the instructions for the        Before completing Schedule D,                 organization that is reporting your 
applicable schedule for information        determine whether the investment was          ratable share of the section 4960 excise 
relating to corrections made (or not       program related. If not, complete             tax on excess executive compensation 
made) for the applicable excise tax.       Schedule D for each investment for            (reported on Part I) in the same year that 
                                           which you answered “Yes,” to Form             you are a disqualified person or 
Completing the Schedules                   990-PF, Part VI-B, question 4a or b, or       organization manager who must report 
Before completing any of the schedules     Form 5227, Part VIII, question 4a or b.       and pay an excise tax on Part II with 
in this return, read the applicable                                                      respect to the same organization. You 
instructions. If any completed schedule    Amended Return                                cannot combine amounts from Part I 
shows taxes you owe, enter them on         To correct a previously filed Form 4720       and Part II in Part III. Therefore, you will 
Part I if you are the organization (or     (including the reporting of additional        need to file separate returns - one to 
related organization subject to tax under  excise taxes discovered after the             report your ratable share of excess 
section 4960) or Part II of this return if original Form 4720 filing), use the same      executive compensation on Part I, and a 

                                                                -6-                      Instructions for Form 4720 (2023)

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second return to report any excise taxes Line 11 2. Tax for acts of self-dealing in
reported on Part II. which you participated as a manager,
Section 664(c)(2) imposes an excise tax from Schedule A, Part III, column (d).
Note. A complete list of organizations on the unrelated business taxable
with respect to which you will file Form income of a charitable remainder trust. Line 2. Enter the tax on investments
4720 is necessary to ensure that all The excise tax is equal to the trust's that jeopardize charitable purpose from
Form 4720 returns you must file can be unrelated business taxable income. Schedule D, Part II, column (d), that you
accepted for processing. Enter the charitable remainder trust's took part in as a foundation manager.
Part I unrelated business taxable income on Line 3. Enter the tax on taxable
line 11.
Part I is completed by the organization expenditures from Schedule E, Part II,
or a related organization liable for tax Computation of unrelated business column (d), that you took part in as a
under section 4960. taxable income. Charitable remainder foundation manager.
trusts should use Form 990-T to Line 4. Enter the tax on political
An organization filing Form 4720 compute their unrelated business expenditures from Schedule F, Part II,
solely to report activity or transactions taxable income. Complete Form 990-T column (d), that you took part in as an
on Schedule A, Schedule I, or as follows. organization or foundation manager.
Schedule L, should leave lines 1 1. Enter the trust's name under Line 5. Enter the tax on disqualifying
through 14 of Part I blank and enter a “Name of organization” and complete lobbying expenditures from Schedule H,
zero on line 15. item D (EIN) at the top of page 1. Part II, column (d), that you took part in
An organization filing form 4720 to 2. Complete as many Schedules A as an organization manager.
report activity or transactions on (Form 990-T) as needed to calculate the
Schedule A, Schedule I, or Schedule L trust’s unrelated business taxable Line 6. Enter the sum of:
and that also owes excise tax for any income. Leave any line that does not 1. Taxes you owe as a disqualified
transactions reported on other apply blank. Complete the applicable person, from Schedule I, Part II, column
schedules should complete all parts of each Schedule A, including the (d), and
applicable schedules, but report in Part I business activity code for each 2. Tax on excess benefit
only the tax imposed on the Schedule A. Attach forms or other transactions in which you as
organization. attachments required for a complete organization manager participated
Schedule A. However, if Schedule D knowing that the transaction was an
Note. The organization should not (Form 1041) is required, don't complete excess benefit transaction, from
make any entries in Part II. Part V of Schedule D (Form 1041). Schedule I, Part III, column (d).
3. After all Schedules A have been
Line 8 prepared, complete Form 990-T, Part I Line 7. Enter the tax on you as the
only. Don't complete Parts II through V entity manager who approved or
If the organization has an entry or the signature area of Form 990-T. otherwise caused the entity to be a
TIP on this line, it must also file party to a prohibited tax shelter
Form 8870. 4. Enter the amount from Part I,
transaction from Schedule J, Part II,
line 11 of Form 990-T on Part I, line 11
column (d).
of Form 4720.
Enter the total of all premiums paid Line 8. Enter the tax on taxable
by the organization on any personal Part II distributions from sponsoring
benefit contract if the payment of Part II is completed by a manager, self- organizations maintaining donor
premiums is in connection with a dealer, disqualified person, donor, donor advised funds from Schedule K, Part II,
transfer for which a deduction isn't advisor, or related person subject to tax column (d), that you took part in as a
allowed under section 170(f)(10)(A). under sections 4912(b), 4941(a), manager.
Also, if there is an understanding or 4944(a)(2), 4945(a)(2), 4955(a)(2), Line 9. Enter the sum of:
expectation that any person will directly 4958(a), 4965(a)(2), 4966(a)(2), and
or indirectly pay any premium on a 4967(a). Enter the name, address, and 1. Tax imposed on you as a donor,
personal benefit contract for the employer identification number of the donor advisor, or related person, from
transferor, include those premium foundation or organization with respect Schedule L, Part II, column (d), and
payments in the amount entered on this to which tax is owed as a manager, 2. Tax imposed on you as a fund
line. self-dealer, disqualified person, donor, manager who agreed to making of a
donor advisor, or related person, as prohibited benefit distribution from
A personal benefit contract is (to the computed in Schedules A, D, E, F, H, I, Schedule L, Part III, column (d).
transferor) any life insurance, annuity, or J, K, and L.
Liability for tax. A person's liability
endowment contract that benefits
directly or indirectly the transferor, a Note. A related organization that owes for tax as a manager, self-dealer,
member of the transferor's family, or any section 4960 excise tax on excess disqualified person, donor, donor
other person designated by the executive compensation should report advisor, or related person, under
transferor (other than an organization the tax in Part I and should not make sections 4912, 4941, 4944, 4945, 4955,
described in section 170(c)). entries in Part II. 4958, 4966, and 4967 is joint and
several. Therefore, if more than one
Line 1. Enter the sum of: person owes tax on an act as a
For more information, see Notice 1. Taxes you owe as a self-dealer, manager, self-dealer, disqualified
2000-24, 2000-17 I.R.B. 952, at from Schedule A, Part II, column (d), person, donor, donor advisor, or related
IRS.gov/pub/irs-irbs/irb00-17.pdf. and person, they may apportion the tax

Instructions for Form 4720 (2023) -7-

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among themselves. However, when all connection with the initial tax imposed participation was not willful and was due
managers, self-dealers, donors, donor on the self-dealer; to reasonable cause.
advisors, related persons, or • The date the initial tax on the
disqualified persons who are liable for self-dealer is assessed; or Specific Instructions
tax on a particular transaction under • The date any correction of the act of Part I. List each act of self-dealing in
sections 4912, 4941, 4944, 4945, 4955, self-dealing is completed. Part I. In column (c), for each act of
4958, 4966, or 4967 pay less than the self-dealing in Part I, indicate whether
Self-dealing. Self-dealing includes any
total tax due on that transaction, then the act has been corrected. For the
direct or indirect:
the IRS may charge the amount owed to purposes of a self-dealing transaction
one or more of them regardless of the • Sale, exchange, or leasing of property
between a private foundation and a described in section 4941, the term
tax apportionment shown on this return. “correction” generally means undoing
disqualified person (see definitions in
Part III the Form 990-PF instructions), the transaction to the extent possible,
• Lending of money or other extension but in any case, placing the private
Line 1. Organizations and related of credit between a private foundation foundation in a financial position not
organizations owing tax under section and a disqualified person, worse than that in which it would be if
4960 enter the total tax amount from • Furnishing of goods, services, or the disqualified person were dealing
Part I, line 15. Managers, self-dealers, facilities between a private foundation under the highest fiduciary standards.
disqualified persons, donors, donor and a disqualified person, Answer “Yes,” in column (c) if
advisors, or related persons enter the • Payment of compensation (or correction has been made in whole or in
total tax amount from Part II, line 10. payment or reimbursement of part. Answer “No,” only if the transaction
Line 2. List total payments here, expenses) by a private foundation to a has not been corrected in any way.
including amounts paid on extension disqualified person, • If correction has been made, provide
with Form 8868. See the discussion on • Transfer to, or use by or for the benefit a detailed description of any correction
Extensions, earlier, for details on of, a disqualified person of the income made, and the date of each correction. If
amounts paid with extensions. or assets of a private foundation, and correction is partial, explain why
• Agreement by a private foundation to complete correction has not been made.
Line 3. Enter the tax due on this line. make any payment of money or other If correction is made in more than one
Make check(s) or money order(s) property to a government official other transaction, describe each transaction
payable to the United States Treasury. than an agreement to employ or make a separately.
Line 4. This is your refund. Only grant to that individual for any period • If correction has not been made,
persons with a legal right to a refund after the end of government service if provide a detailed explanation of why
should file a refund request here. that individual will be ending correction hasn't been made and what
government service within a 90-day steps are being taken to make the
Amounts from Parts I and Part II correction.
period.
! cannot be combined in Part III. Enter in column (e) the number
CAUTION Exceptions to self-dealing. Go to
IRS.gov Technical Guide 58 Excise designation from Form 990-PF, Part
Taxes on Self-Dealing under IRC 4941 VI-B, question 1a, or Form 5227, Part
Schedule A—Initial Taxes for a description of acts that aren't VIII, question 1a that applies to the act.
on Self-Dealing (Section considered self-dealing. For example, “1a(1)” or “1a(4).”
4941) Initial taxes on self-dealer. An initial Part II. Enter in column (a) the names
tax of 10% of the amount involved is of all disqualified persons who took part
General Instructions charged for each act of self-dealing in the acts of self-dealing listed in Part I.
Requirement. All organizations that between a disqualified person and a If more than one disqualified person
answered “Yes,” to question 1b or 1d in private foundation for each year or part took part in an act of self-dealing, each
Part VI-B of Form 990-PF, or “Yes,” to of a year in the taxable period. Any is individually liable for the entire tax in
question 1b or 1c in Part VIII of Form disqualified person (other than a connection with the act. But the
5227, must complete Schedule A. In foundation manager acting only as disqualified persons who are liable for
addition, a self-dealer or a manager that such) who takes part in the act of the tax may prorate the payment among
participated in an act of self-dealing self-dealing must pay the tax. themselves. Enter in column (c) the tax
to be paid by each disqualified person.
knowing that it was such an act must Initial taxes on foundation manag-
A self-dealer filing Form 4720 should
also complete Schedule A. Complete ers. When a tax is imposed on a
carry the appropriate amount in column
Parts I, II, and III of Schedule A only in foundation manager for an act of
(d) to Part II, line 1.
connection with acts that are subject to self-dealing, the tax will be 5% of the
the tax on self-dealing. amount involved in the act of The organization should not
Paying the tax and filing a Form 4720 self-dealing for each year or part of a ! carry any amount from column
is required for each year or part of a year year in the taxable period. However, the CAUTION (d) to Part II, line 1.
in the taxable period that applies to the total tax imposed for all years in the
act of self-dealing. Generally, the taxable period is limited to $20,000 for Part III. Enter in column (a) the names
taxable period begins with the date on each act of self-dealing. The tax is of all foundation managers who took
which the self-dealing occurs and ends imposed on any foundation manager part in the acts of self-dealing listed in
on the earliest of: who took part in the act knowing that it Part I, and who knew that the acts were
• The date a notice of deficiency is was self-dealing except those self-dealing (except for foundation
mailed under section 6212, in foundation managers whose managers whose participation was not
willful and was due to reasonable
cause).

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  If more than one foundation manager       applicable, indicate whether the election  conducted to produce income from 
took part in the act of self-dealing,       under 4942(h) has been made. See the       selling goods or performing services, 
knowing that it was such an act, and        Instructions for Form 990-PF, Part XII,    that is an unrelated trade or business 
participation was willful and not due to    lines 4b and 4c.                           described in section 513.
reasonable cause, each is individually                                                 The term “business enterprise” 
liable for the entire tax in connection                                                doesn't include a functionally related 
with the act. But the foundation            Schedule C—Initial Tax on 
                                                                                       business, as defined in section 4942(j)
managers liable for the tax may prorate     Excess Business Holdings                   (4). In addition, business holdings don't 
the payment among themselves. Enter         (Section 4943)                             include program-related investments 
in column (c) the tax to be paid by each                                               (such as investments in small 
foundation manager.                         General Instructions                       businesses in economically depressed 
  Carry the total amount in column (d)      Private foundations may be subject to      areas or in corporations to assist in 
for each foundation manager to Part II,     an excise tax on the amount of any         neighborhood renovations) as defined in 
line 1.                                     excess holdings, as described later. For   section 4944(c) and related regulations. 
                                            purposes of section 4943, donor            Also, business enterprise doesn't 
        The organization should not 
                                            advised funds and certain supporting       include a trade or business at least 95% 
  !     carry any amount from column        organizations are considered private       of the gross income of which comes 
CAUTION (d) to Part II, line 1.
                                            foundations. For more information on       from passive sources. For more 
                                            the applicability of Schedule C to such    information, go to IRS.gov TG 61 Taxes 
                                            organizations, see General rules on the    on Investments which Jeopardize 
Schedule B—Initial Tax on                   permitted holdings of donor advised        Charitable Purposes IRC 4944.
Undistributed Income                        funds and certain supporting 
                                                                                       Excess business holdings.         Excess 
(Section 4942)                              organizations in a business enterprise, 
                                                                                       business holdings is the amount of 
Complete Schedule B if you answered         later.
                                                                                       stock or other interest in a business 
“Yes,” to Form 990-PF, Part VI-B,           Requirement. If you answered “Yes,” to     enterprise that the foundation would 
question 2b.                                Form 990-PF, Part VI-B, question 3b;       have to dispose of to a person other 
  An initial excise tax of 30% is           Form 990, Part V, question 8; or Form      than a disqualified person in order for 
imposed on a private foundation's           5227, Part VIII, question 3b, or           the foundation's remaining holdings in 
undistributed income on the first day of    otherwise had excess business              the enterprise to be permitted holdings 
the second or any succeeding tax year       holdings, complete a Schedule C for        (section 4943(c)(1)). Go to IRS.gov TG 
after the tax year in connection with       each business enterprise in which the      60 Taxes on Excess Business Holdings 
which income remains undistributed.         foundation had excess business             IRC 4943 for more information.
                                            holdings for its tax year beginning in 
                                                                                       Sole proprietorships.   In general, a 
  Use the 2023 Form 4720 to report          2023.
the initial tax on undistributed income for                                            private foundation can't have any 
tax years beginning in 2022 or earlier      Taxes. A private foundation that has       permitted holdings in a business 
that remains undistributed at the end of    excess holdings in a business              enterprise that is a sole proprietorship. 
the foundation's current tax year           enterprise may become liable for an        For exceptions, go to IRS.gov TG 60 
beginning in 2023. The initial tax won't    excise tax based on the amount of          Taxes on Excess Business Holdings 
apply to a private foundation's             holdings. The initial tax is 10% of the    IRC 4943. For a definition of sole 
undistributed income:                       value of the excess holdings and is        proprietorship, see Regulations section 
• For any tax year it is an operating       imposed on the last day of each tax year   53.4943-10(e).
foundation (as defined in section 4942(j)   that ends during the taxable period. The 
                                                                                       Corporate voting stock.     This stock 
(3) and related regulations or in section   excess holdings are determined on the 
                                                                                       entitles a person to vote for the election 
4942(j)(5)); or                             day during the tax year when they were 
                                                                                       of directors. Treasury stock and stock 
• To the extent it didn't distribute an     the largest.
                                                                                       that is authorized but unissued isn't 
amount solely because of an incorrect       If the foundation keeps the excess         voting stock for these purposes. See 
valuation of assets, provided the           business holdings after the initial tax    Regulations sections 53.4943-3(b)(1)(ii) 
foundation satisfies the requirements of    has been imposed, the foundation           and 53.4943-3(b)(2)(ii).
section 4942(a)(2); or                      becomes liable for an additional tax of 
                                                                                       For a partnership (including a limited 
• For any year for which the initial tax    200% of the remaining excess business 
                                                                                       partnership) or joint venture, the term 
was previously assessed or a notice of      holdings unless it disposes of them 
                                                                                       “profits interest” should be substituted 
deficiency was issued.                      within the taxable period. However, if the 
                                                                                       for “voting stock.” For any 
Line 3. Undistributed income is             foundation disposes of its excess 
                                                                                       unincorporated business enterprise that 
corrected by making sufficient qualifying   business holdings during the correction 
                                                                                       isn't a partnership, joint venture, or sole 
distributions to compensate for deficient   period, the additional tax won't be 
                                                                                       proprietorship, the term “beneficial 
qualifying distributions for a prior tax    assessed or, if assessed, will be abated 
                                                                                       interest” should be substituted for 
year. You must attach a statement that      and if collected, will be credited or 
                                                                                       “voting stock.” See Regulations section 
describes any qualifying distributions      refunded. For information on the 
                                                                                       53.4943-3(c).
made to correct the undistributed           correction period, go to IRS.gov TG 60 
income and the date(s) those                Taxes on Excess Business Holdings          Nonvoting stock.   Corporate equity 
distributions were made. If no qualifying   IRC 4943.                                  interests that don't have voting power 
                                                                                       should be classified as nonvoting stock. 
distributions have been made to correct     Business enterprise. In general, this 
                                                                                       Evidences of indebtedness (including 
the undistributed income, explain why       means the active conduct of a trade or 
                                                                                       convertible indebtedness), warrants, 
and describe steps you will take to make    business, including any activity regularly 
the necessary qualifying distributions. If                                             and other options or rights to acquire 

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stock shouldn't be considered equity        Disposition of excess business hold-        other than donor advised funds and 
interests. See Regulations section          ings within 90 days. Generally, when        supporting organizations considered to 
53.4943-3(b)(2).                            a private foundation acquires excess        be private foundations for purposes of 
  For a partnership (including a limited    business holdings other than as a result    section 4943, that had business 
partnership) or joint venture, the term     of purchase by the foundation (such as      holdings on May 26, 1969 (or holdings 
“capital interest” should be substituted    an acquisition by a disqualified person),   acquired by trust or will as described 
for “nonvoting stock.” For any              the foundation won't be taxed on those      below), that were more than the current 
unincorporated business that isn't a        excess holdings if it disposes of enough    limits permit, there are transitional rules 
partnership, joint venture, or sole         of them so that it no longer has an         that permit the foundation to dispose of 
proprietorship, references to nonvoting     excess. To avoid the tax, the disposition   the excess over time without being 
stock don't apply for computation of        must take place within 90 days from the     subject to the tax on excess business 
permitted holdings. See Regulations         date the foundation knew, or had reason     holdings.
section 53.4943-3(c)(4).                    to know, of the event that caused it to       During the first phase, no excess 
                                            have excess business holdings. That         business holdings tax was imposed on a 
Attribution of business holdings.      In 
                                            90-day period will be extended to           private foundation for interests held 
determining the holdings in a business 
enterprise of either a private foundation   include the period during which federal     since May 26, 1969, if the foundation 
or a disqualified person, any stock or      or state securities laws prevent the        had excess holdings on that date. The 
other interest owned directly or indirectly foundation from disposing of those          first phase is:
by or for a corporation, partnership,       excess business holdings. See               • A 20-year period beginning on May 
                                            Regulations section 53.4943-2(a).
estate, or trust is considered owned                                                    26, 1969, if on that date the foundation 
proportionately by or for its               General rules on the permitted hold-        and all disqualified persons held more 
shareholders, partners, or beneficiaries.   ings of a private foundation in a           than a 95% voting interest in the 
In general, this rule doesn't apply to      business enterprise. No excess              enterprise (the 20-year first phase 
certain income interests or remainder       business holdings tax is imposed (a) if a   expired on May 25, 1989);
interests of a private foundation in a      private foundation and all disqualified     • A 15-year period beginning on May 
split-interest trust described in section   persons together hold no more than          26, 1969, if on that date the foundation 
4947(a)(2). See Regulations section         20% of the voting stock of a business       and all disqualified persons together 
53.4943-8.                                  enterprise, or (b) on nonvoting stock, if   had more than a 75% voting stock 
                                            all disqualified persons together don't     interest (or more than a 75% profits or 
Taxable period.  The taxable period                                                     beneficial interest of any unincorporated 
                                            own more than 20% of the voting stock 
begins on the first day the foundation                                                  enterprise), or more than a 75% interest 
                                            of the business enterprise.
has excess business holdings and ends                                                   in the value of all outstanding shares of 
on the earliest of:                         If the private foundation and all 
                                                                                        all classes of stock (or more than a 75% 
• The mailing date of a notice of           disqualified persons together don't own 
                                                                                        capital interest of a partnership or joint 
deficiency, under section 6212, in          more than 35% of the enterprise's voting 
                                                                                        venture) in the enterprise (the 15-year 
connection with the initial tax on excess   stock, and effective control is in one or 
                                                                                        first phase expired on May 25, 1984); 
business holdings related to those          more persons who aren't disqualified 
                                                                                        and
holdings;                                   persons in connection with the 
• The date the excess is eliminated; or     foundation, then 35% may be                 • A 10-year period beginning on May 
                                                                                        26, 1969, in all other cases in which the 
• The date the initial tax on excess        substituted for 20% wherever it appears 
                                                                                        foundation had excess business 
business holdings related to those          in the preceding paragraph. See 
                                                                                        holdings on May 26, 1969. The 10-year 
holdings is assessed.                       sections 4943(c)(2) and 4943(c)(3).
                                                                                        first phase expired on May 25, 1979.
  When a notice of deficiency isn't         If a private foundation and all 
                                                                                          During the second phase (the 
mailed because the restrictions on          disqualified persons together had 
                                                                                        15-year period after the first phase), if 
assessment and collection are waived        holdings in a business enterprise of 
                                                                                        the foundation's disqualified persons 
or because the deficiency is paid, the      more than 20% of the voting stock on 
                                                                                        hold more than 2% of the enterprise's 
date of filing the waiver or the date of    May 26, 1969, substitute that 
                                                                                        voting stock, the foundation will be liable 
paying the tax, respectively, will be       percentage for 20% and for 35% (if the 
                                                                                        for tax if the foundation holds more than 
treated as the end of the taxable period.   holding is greater than 35%), using the 
See Regulations section 53.4943-9.          principles of section 4943(c)(4) that       25% of the voting stock or if the 
                                                                                        foundation and its disqualified persons 
                                            apply. However, the percentage 
Exceptions to Tax on Excess                 substituted can't be more than 50%.         together hold more than 50% of the 
                                                                                        voting stock.
Business Holdings                           The percentage substituted under 
                                            the preceding paragraph is (1) subject        However, during the second phase, if 
                                                                                        a foundation's disqualified persons 
2% de minimis rule.   A private             to reductions and limitations (see 
foundation won't be treated as having       sections 4943(c)(4)(A)(ii) and 4943(c)      purchase voting stock in a business 
                                                                                        enterprise after July 18, 1984, causing 
excess business holdings in any             (4)(D)), and (2) applicable, both in 
enterprise in which it, together with       connection with the voting stock and,       the combined holdings of the 
                                                                                        disqualified persons to exceed 2% of 
related foundations, as described in the    separately, in connection with the value 
instructions for Form 990-PF (under the     of all outstanding shares of all classes of the enterprise's voting stock, the 
                                                                                        foundation has 5 years to reduce its 
definition for “disqualified person” in the stock (see section 4943(c)(4)(A)(iii)).
                                                                                        holdings in the enterprise to below its 
General Instructions), owns not more        Interests held by a private founda-         second phase limit before the increase 
than 2% of the voting stock and not         tion (other than donor advised funds        will be treated as held by the foundation. 
more than 2% in value of all outstanding    and supporting organizations) on            See sections 4943(c)(4)(D) and 4943(c)
shares of all classes of stock.             May 26, 1969. For private foundations,      (6).

                                                          -10-                              Instructions for Form 4720 (2023)

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The first-phase periods must be             holdings. However, the date of August      holdings to disqualified persons, as long 
suspended pending the outcome of any        17, 2006, will be substituted for May 26,  as the sales price equals or is more than 
judicial proceeding the private             1969.                                      fair market value.
foundation brings and which is                                                           The excess business holdings 
                                            Donor advised fund. In general, a 
necessary to reform, or to excuse it from                                              involved are interests that are subject to 
                                            donor advised fund is a fund or account 
compliance with its governing                                                          the section 4941 transitional rules for 
                                            separately identified by reference to 
instrument or similar instrument in effect                                             May 26, 1969, holdings. These interests 
                                            contributions of a donor or donors that is 
on May 26, 1969. See section 4943(c)                                                   would also be subject to the excess 
                                            owned and controlled by a sponsoring 
(4)(C) and Regulations section                                                         business holdings tax if they were not 
                                            organization and for which the donor 
53.4943-4.                                                                             reduced by the required amount.
                                            has or expects to have advisory 
Holdings acquired by trust or will.         privileges concerning the distribution or  Specific Instructions
Holdings acquired under the terms of a      investment of the funds. See 
trust that was irrevocable on May 26,       Schedule K for further details.            Complete columns (a) and (b) of 
1969, or under the terms of a will                                                     Schedule C if sections 4943(c)(4), 
                                            Sponsoring organization.     A 
executed by that date, are treated as                                                  4943(c)(3) (using the principles of 
                                            sponsoring organization is any section 
held by the foundation on May 26, 1969,                                                4943(c)(4)), or 4943(c)(5) apply.
                                            170(c) organization other than 
except that the 15- and 10-year periods                                                  Complete column (a) and column (c) 
                                            governmental entities (described in 
of the first phase for the holdings start                                              (if applicable) if sections 4943(c)(2) or 
                                            section 170(c)(1) and (2)(A)) that isn't a 
on the date of distribution under the trust private foundation, as defined in section  4943(c)(3) (using the principles of 
or will instead of on May 26, 1969. See                                                4943(c)(2)) apply.
                                            509(a)(3), that maintains one or more 
section 4943(c)(5) and Regulations 
                                            donor advised funds. See section 
section 53.4943-5. See section 4943(d)                                                   Complete Schedule C for that day 
                                            4966(d)(1).
(1) and Regulations section 53.4943-8                                                  during the tax year when the 
for rules relating to constructive holdings Supporting organizations.    Only          foundation's excess holdings in the 
held in a corporation, partnership,         certain supporting organizations are       enterprise were largest.
estate, or trust for the benefit of the     subject to the excess business holdings    Line 1. Enter in column (a) the 
foundation.                                 tax under section 4943. These include      percentage of voting stock the 
                                            (1) Type III supporting organizations that 
Gifts or bequests of business hold-                                                    foundation holds in the business 
                                            aren't functionally integrated, and (2) 
ings. Except as provided in the                                                        enterprise.
                                            Type II supporting organizations that 
exception regarding Holdings acquired                                                    If the foundation is using the rules or 
                                            accept any gift or contribution from a 
by trust or will (discussed above), there                                              principles for determining present 
                                            person who by himself or in connection 
is a special rule for private foundations                                              holdings under section 4943(c)(4)(A) or 
                                            with a related party controls the 
that have excess business holdings as a                                                (D) (or rules similar to that for donor 
                                            supported organization that the Type II    advised funds and certain supporting 
result of a change in holdings after May    supporting organization supports. (See     organizations), enter in column (b) the 
26,1969. This rule applies if the change 
                                            the 2023 Instructions for Schedule A 
is other than by purchase by the                                                       percentage of value the foundation 
                                            (Form 990), Part I, question 11, for help 
foundation or by disqualified persons                                                  holds in all outstanding shares of all 
                                            in determining the type of your 
(such as through gift or bequest) and                                                  classes of stock.
                                            supporting organization.)
the additional holdings result in the                                                    Don't include in either column (a) or 
foundation having excess business           Readjustments, distributions, or           (b) stock treated as held by disqualified 
holdings. In that case, the foundation      changes in relative value of different     persons:
has 5 years to reduce these holdings or     classes of stock. See Regulations          • Under section 4943(c)(6) or 
those of its disqualified persons to        section 53.4943-4(d)(10) for special       Regulations sections 53.4943-6 and 
permissible levels to avoid the tax. See    rules whereby increases in the             53.4943-10(d), or
section 4943(c)(6) and Regulations          percentage of value of holdings in a       • During the first phase if the first phase 
section 53.4943-6.                          corporation that result solely from        is still in effect (see Regulations sections 
A private foundation that received an       changes in the relative values of          53.4943-4(a), (b), and (c)).
unusually large gift or bequest of          different classes of stock won't result in 
business holdings after 1969, and that      excess business holdings.                  Line 2. If the foundation is using the 
                                                                                       rules or principles for determining 
has made a diligent effort to dispose of    See Regulations section                    present holdings under section 4943(c)
excess business holdings, may apply for     53.4943-6(d) for rules on treatment of     (4) (or rules similar to that for donor 
an additional 5-year period to reduce its   increases in holdings due to               advised funds and certain supporting 
holdings to permissible levels if certain   readjustments, distributions, or           organizations), refer to that section and 
conditions are met. See section 4943(c)     redemptions.                               Regulations section 53.4943-4(d) to 
(7).                                        See Regulations section 53.4943-7          determine which entries to record in 
General rules on the permitted hold-        for special rules for readjustments        columns (a) and (b). Enter in column (a) 
ings of donor advised funds and cer-        involving grandfathered holdings.          the excess of the substituted combined 
tain supporting organizations in a          Exceptions from self-dealing taxes         voting level over the disqualified person 
business enterprise. Rules similar to       on certain dispositions of excess          voting level. Enter in column (b) the 
those described above for interests held    business holdings. Section 101(I)(2)       excess of the substituted combined 
by private foundations on May 26, 1969,     (B) of the Tax Reform Act of 1969          value level over the disqualified person 
will be applied to determine if donor       provides for a limited exception from      value level.
advised funds or certain supporting         self-dealing taxes for private foundations   If the foundation is using the rules or 
organizations with interests as of August   that dispose of certain excess business    principles for determining permitted 
17, 2006, have any excess business                                                     holdings under section 4943(c)(2), refer 

Instructions for Form 4720 (2023)                        -11-

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to that section to determine which transaction, describe each transaction See section 4944(c) and Regulations
entries to record in column (a). Enter in separately. section 53.4944-3.
column (a) the percentage, using the • If correction has not been made,
Initial taxes on foundation. The initial
general rule (section 4943(c)(2)(A)) or provide a detailed explanation of why
tax is 10% of the amount invested for
the 35% rule (see section 4943(c)(2) correction hasn't been made and what
each year or part of a year in the taxable
(B)), if applicable, of permitted holdings steps are being taken to make the
period.
the foundation may have in the correction.
enterprise's voting stock. If the Initial taxes on foundation manag-
foundation determines the permitted ers. When a tax is imposed on an
holdings under section 4943(c)(2)(B), Schedule D—Initial Taxes investment that jeopardizes the
attach a statement showing effective on Investments That charitable purpose of the foundation,
the tax will be 10% of the investment for
control by a third party. Jeopardize Charitable
each year or part of a year in the taxable
Line 3. Enter the value of any stock, Purpose (Section 4944) period, up to $10,000 for any one
interest, etc., in the business enterprise
that the foundation is required to General Instructions investment. It is imposed on all
foundation managers who took part in
dispose of so the foundation's holdings Requirement. Complete Schedule D if the act, knowing that it was such an act,
in the enterprise are permitted. See you answered “Yes,” to Form 990-PF, except for foundation managers whose
section 4943 and related regulations. Part VI-B, question 4a or b; or Form participation was not willful and was due
A private foundation using the 5227, Part VIII, question 4a or b. Each to reasonable cause. Any foundation
section 4943(c)(4) rules, or a donor manager of the organization or trust that manager who took part in making the
advised fund or supporting organization answered "Yes," to Form 990-PF, Part investment must pay the tax.
using rules similar to that, has excess VI-B, question 4a or b; or Form 5227,
holdings if line 1 is more than line 2 in Part VIII, question 4a or b and who took Specific Instructions
either column (a) or column (b). Don't part in making the investment should Part I. Complete this part for all taxable
include in column (b) the value of any also complete Schedule D. Report each investments. Investments that
voting stock included in column (a). investment separately. Paying tax and jeopardize the carrying out of the
A private foundation using the filing a Form 4720 are required for each foundation’s exempt purpose are
section 4943(c)(2) rules has excess year or part of a year in the taxable corrected by selling or otherwise
holdings if line 1 is more than line 2 in period that applies to the investments disposing of the investment, and holding
column (a) or if the private foundation that jeopardize the foundation's the proceeds of such sale or other
holds nonvoting stock and all charitable purpose. Generally, the disposition in investments that do not
disqualified persons together own more taxable period begins with the date of jeopardize the carrying out of the
than 20% (or 35%, if applicable) of the the investment and ends with the date foundation's exempt purpose. In column
enterprise's voting stock, interest, etc. In corrective action is completed, a notice (c), for each act of investment listed in
the latter case, enter in column (c) the of deficiency is mailed, or the initial tax Part I, indicate whether the investment
value of all nonvoting stock the is assessed, whichever comes first. has been corrected. Answer “Yes,” if
foundation holds. Therefore, in addition to investments correction has been made in whole or in
made in 2023, include all investments part. Answer “No,” only if the investment
Line 4. Enter the value of excess subject to tax that were made before has not been corrected in any way.
holdings disposed of under the 90-day 2023 if those investments were not • If correction has been made, provide
rule in Regulations section 53.4943-2(a) removed from jeopardy before 2023 and a detailed description of any correction
(1)(ii). If other conditions preclude the initial tax was not assessed before made, and the date of each correction. If
imposition of tax on excess business 2023. correction is partial, explain why
holdings, include the value of the
nontaxable amount on this line and Taxable investments. An investment complete correction has not been made.
check the appropriate boxes on the to be taxed on this schedule is an If correction is made in more than one
statement page attached to the investment by a private foundation that transaction, describe each transaction
electronic version of Form 4720. jeopardizes the carrying out of its separately.
Organizations not required to file exempt purposes (for example, if it is • If correction has not been made,
electronically may attach an determined that the foundation provide a detailed explanation of why
explanation. managers, in making the investment, correction hasn't been made and what
didn't exercise ordinary business care steps are being taken to make the
Line 5. Compute the excess holdings in and prudence, under prevailing facts correction.
a business enterprise subject to tax. and circumstances, in providing for the Part II. Enter in column (a) the names
Line 8. Excess business holdings are long- and short-term financial needs of of all foundation managers who took
corrected by taking action as needed the foundation to carry out its exempt part in making the investments listed in
such that the foundation no longer has purposes). See Regulations section Part I. See Initial taxes on foundation
excess business holdings in a business 53.4944-1(a)(2). An investment isn't managers, earlier.
enterprise. Answer “Yes,” if the excess taxed on this schedule if it is a
If more than one foundation manager
business holdings have been corrected program-related investment; that is, one
is listed in column (a), each is
in whole or in part. whose primary purpose is one or more
individually liable for the entire amount
• If correction has been made, provide of those described in section 170(c)(2)
of tax in connection with the investment.
a detailed description of any correction (B) (religious, charitable, educational,
However, the foundation managers who
made, and the date of each correction. If etc.). A significant purpose of such an
are liable for the tax may prorate
correction is made in more than one investment can't be the production of
payment among themselves. Enter in
income or the appreciation of property.

-12- Instructions for Form 4720 (2023)

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column (c) the tax each foundation Exceptions. Section 4945(d)(4)(B) If correction is made in more than one
manager will pay. provides an exception to taxable transaction, describe each transaction
A foundation manager filing this Form expenditures that applies to certain separately.
4720 should carry the appropriate grants to organizations when the • If correction has not been made,
amount in column (d) to Part II, line 2. granting foundation exercises provide a detailed explanation of why
expenditure responsibility described in correction hasn't been made and what
section 4945(h). Additional information steps are being taken to make the
Schedule E—Initial Taxes on special rules and exceptions to the correction.
on Taxable Expenditures definition of taxable expenditures given Part II. Enter in column (a) the names
(Section 4945) above can be found at IRS.gov TG 62 of all foundation managers who agreed
Excise Taxes on Taxable Expenditures to make the taxable expenditure. See
General Instructions under IRC 4945. Initial tax on foundation managers,
Requirement. Complete Schedule E if Initial tax on foundation. An initial tax earlier. If more than one foundation
you answered “Yes,” to Form 990-PF, of 20% is imposed on each taxable manager is listed in column (a), each is
Part VI-B, question 5b, or Form 5227, expenditure of the foundation. individually liable for the entire tax in
connection with the expenditure.
Part VIII, question 5b. Complete Parts I Initial tax on foundation managers. However, the foundation managers who
and II of Schedule E only for When a tax is imposed on a taxable are liable for the tax may prorate the
expenditures that are subject to tax. expenditure of the foundation, a tax of payment among themselves. Enter in
Note. Also, see Schedule F, Initial 5% of the expenditure will be imposed column (c) the tax each foundation
Taxes on Political Expenditures. on any foundation manager who agreed manager will pay.
to the expenditure and who knew that it
A foundation manager filing this Form
Taxable expenditures. With certain was a taxable expenditure. Foundation
4720 should carry the appropriate
exceptions, this means any amount a managers whose participation was not
amount in column (d) to Part II, line 3.
private foundation pays or incurs: willful and was due to reasonable cause
1. To carry on propaganda or aren't liable for the tax. Any foundation
otherwise influence any legislation manager who took part in the Schedule F—Initial Taxes
through: expenditure and is liable for the tax must
pay the tax. The maximum total amount on Political Expenditures
a. An attempt to influence general
of tax on all foundation managers for (Section 4955)
public opinion or any segment of it, and
any one taxable expenditure is $10,000.
b. Communication with any member If more than one foundation manager is General Instructions
or employee of a legislative body, or with liable for tax on a taxable expenditure, Requirement. Complete Schedule F if
any other government official or all those foundation managers are jointly you answered “Yes,” to question 5a(2)
employee who may take part in and severally liable for the tax. and 5b of Form 990-PF, Part VI-B.
formulating legislation; Complete Schedule F if you entered an
2. To influence the outcome of any Specific Instructions amount on line 2 of Schedule C (Form
specific public election, or to conduct, Part I. Complete this part for all taxable 990), Part I-A. Complete Schedule F if
directly or indirectly, any voter expenditures. Enter in column (f) the you are otherwise a section 501(c)(3)
registration drive; number designation from Form 990-PF, organization that made a political
3. As a grant to an individual for Part VI-B, question 5a, or Form 5227, expenditure.
travel, study, or other purposes; Part VIII, line 5 that applies to the act; for Political expenditures. These include
example, “5a(1).”
4. As a grant to an organization not any amount paid or incurred by a
described in section 509(a)(1), (2), or A taxable expenditure is corrected by section 501(c)(3) organization that
(3) or that isn't an exempt operating (a) recovering part or all of the participates or intervenes in (including
foundation (as defined in section expenditure to the extent recovery is the publication or distribution of
4940(d)(2)). This includes grants to: possible, and where full recovery isn't statements) any political campaign on
possible, such additional corrective
a. Type I, Type II, and Type III behalf of, or in opposition to, any
action as is prescribed by regulations; or
functionally integrated supporting candidate for public office. The tax is
(b) if the taxable expenditure is due to
organizations (as described in section imposed even if the political expenditure
failure to comply with requirements
4942(g)(4)(B) and (C)) if a disqualified gives rise to a revocation of the
described in section 4945(h)(2) or (3)
person of the foundation controls such organization's section 501(c)(3) status.
(expenditure responsibility), obtaining or
supporting organization or the These taxes apply in the case of both
making the report in question. In column
supported organizations of such public charities and private foundations.
(d), for each act of taxable expenditure
supporting organizations, and When tax is imposed under this
listed in Part I, indicate whether the provision in the case of a private
b. Type III supporting organizations investment has been corrected. Answer foundation, however, the expenditure in
(as described in section 4943(f)(5)(A)) “Yes,” if correction has been made in question won't be treated as a taxable
that aren't functionally integrated with whole or in part. Answer only “No,” if the expenditure under section 4945.
their supported organizations; or taxable expenditure has not been
5. For any purpose other than corrected in any way. For an organization formed primarily
religious, charitable, scientific, literary, • If correction has been made, provide to promote the candidacy or prospective
educational, or public purposes, or the a detailed description of any correction candidacy of an individual for public
prevention of cruelty to children or made, and the date of each correction. If office (or that is effectively controlled by
animals. correction is partial, explain why a candidate or prospective candidate
complete correction has not been made. and is used primarily for such

Instructions for Form 4720 (2023) -13-

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purposes), amounts paid or incurred for Part II. Enter in column (a) the names An electing member of an affiliated
any of the following purposes are of all managers who took part in making group that is included in a group return,
deemed political expenditures: the political expenditures listed in Part I. should enter on line 1 its share of the
• Remuneration to the candidate or See Initial tax on organization managers excess grass root lobbying expenditures
prospective candidate for speeches or or foundation managers, earlier. of the affiliated group, and on line 2 its
other services; share of the excess lobbying
• Travel expenses of the individual; If more than one manager is listed in expenditures of the affiliated group. Take
• Expenses of conducting polls, column (a), each is individually liable for these amounts from the schedule of
surveys, or other studies, or preparing the entire amount of tax on the excess lobbying expenditures that must
papers or other material for use by the expenditure. However, the managers be attached to Schedule C (Form 990).
individual; who are liable for the tax may prorate See the Instructions for Schedule C
• Expenses of advertising, publicity, payment among themselves. Enter in (Form 990), Part II-A, for a discussion of
and fundraising for such individual; and column (c) the tax each manager will the lobbying provisions, including how to
• Any other expense which has the pay. figure the taxable amount.
primary effect of promoting public An organization manager filing this
recognition or otherwise primarily Form 4720 should carry the appropriate
accruing to the benefit of the individual. amount in column (d) to Part II, line 4. Schedule H—Taxes on
Initial tax on organization or founda- Disqualifying Lobbying
tion. The initial tax on the organization Schedule G—Tax on Expenditures (Section
or foundation is 10% of the amount 4912)
Excess Lobbying
involved.
Expenditures (Section General Instructions
Initial tax on organization managers
or foundation managers. An initial tax 4911) Requirement. Schedule H must be
of 2.5% of the amount involved (up to Requirement. Schedule G must be completed by certain organizations
$5,000 of tax on any one expenditure) is completed by eligible section 501(c)(3) whose section 501(c)(3) status is
imposed on any manager who agrees to organizations that elected to be subject revoked because of excess lobbying
an expenditure, knowing that it is a to the limitations on lobbying activities.
political expenditure, unless the expenditures, under section 501(h) and Exceptions. These taxes aren't
agreement isn't willful and is due to that made excess lobbying expenditures imposed on a private foundation (whose
reasonable cause. as defined in section 4911(b). lobbying expenditures may be subject to
Any manager who agreed to the Except as noted below, follow the line the tax on taxable expenditures). These
expenditure must pay the tax. instructions on Schedule G. taxes also aren't imposed on any
Specific Instructions Affiliated groups. Two or more organization for which a section 501(h)
organizations are members of an election was in effect at the time of the
Part I. Complete this part for all political affiliated group of organizations for the lobbying expenditures or that was not
expenditures. A political expenditure purposes of section 4911 only if: eligible to make a section 501(h)
described in section 4955 is corrected The governing instrument of one election.
•
by recovering part or all of the organization requires it to be bound by Tax on organization. A tax of 5% of
expenditure to the extent recovery is decisions of the other organization on the lobbying expenditures is imposed on
possible, establishment of safeguards to legislative issues; or the organization whose section 501(c)
prevent future political expenditures, The governing board of one (3) status is revoked because of excess
•
and where full recovery isn't possible, organization includes persons who are lobbying activities.
such additional corrective action as is specifically designated representatives
Tax on organization managers. A tax
prescribed by the regulations. In column of another such organization or are
of 5% of the lobbying expenditures is
(d), for each act of political expenditure members of the governing board,
also imposed on any manager who
listed in Part I, indicate whether the officers or paid executive staff members
willfully and without reasonable cause
investment has been corrected. Answer of such other organization, and who, by
consented to the lobbying expenditures,
“Yes,” if correction has been made in aggregating their votes, hold sufficient
knowing that they would likely result in
whole or in part. Answer “No,” only if the voting power to cause or prevent action
the organization no longer qualifying
political expenditure has not been on legislative activities by the first
under section 501(c)(3).
corrected in any way. organization. See section 4911(f) and
• If correction has been made, provide Regulations section 56.4911-7. There is no limit on the amount of this
a detailed description of any correction tax that may be imposed against either
made, and the date of each correction. If A nonelecting member of an affiliated
the organization or its managers. Any
correction is partial, explain why group doesn’t file Form 4720.
organization manager who agreed to the
complete correction has not been made. Electing members of an affiliated expenditure must pay the tax.
If correction is made in more than one group may file a group return or may file
transaction, describe each transaction separately. An electing member of an Specific Instructions
separately. affiliated group that files a separate Part I. Complete this part for all
• If correction has not been made, return, should enter on line 1 the amount disqualifying lobbying expenditures.
provide a detailed explanation of why from Schedule C (Form 990), Part II-A,
correction hasn't been made and what column (a), line 1h. Enter on line 2 the Part II. Enter in column (a) the names
steps are being taken to make the amount from Schedule C (Form 990), of all organization managers who took
correction. Part II-A, column (a), line 1i. part in making disqualifying lobbying

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expenditures listed in Part I. See Tax on Tax on disqualified persons. The loan, compensation, or other similar
organization managers, earlier. tax is 25% of the excess benefit and is payment. Also, any loan provided to a
If more than one organization paid by any disqualified person who disqualified person that isn't an
manager is listed in column (a), each is improperly benefited from the excess organization described in section 509(a)
individually liable for the entire amount benefit transaction. (1), (2), or (4) or a supported
organization of the supporting
of tax in connection with the Tax on organization managers. organization exempt under section
expenditure. However, the managers When tax is imposed on a disqualified 501(c)(4), (5), (6) and described in the
who are liable for the tax may prorate person for any excess benefit last sentence of section 509(a) is
payment among themselves. Enter in transaction, then tax is also imposed on considered an excess benefit
column (c) the tax each manager will any manager who knowingly transaction.
pay. participated in the excess benefit
A manager filing this Form 4720 transaction. The tax is 10% of the Donor advised fund transactions
should carry the appropriate amount in excess benefit, not to exceed $20,000 occurring after August 17, 2006. Any
column (d) to Part II, line 5. for each transaction. grant, loan, compensation, or other
similar payment from any donor advised
Taxable period. Taxable period fund to a donor, donor advisor, family
Schedule I—Initial Taxes means the period beginning with the member, or 35% controlled entity is an
date on which the excess benefit excess benefit transaction. The amount
on Excess Benefit transaction occurs and ending on the of the excess benefit is the amount of
Transactions (Section earlier of: such grant, loan, compensation, or other
4958) 1. The date a notice of deficiency similar payment.
was mailed to the disqualified person for
General Instructions Excess benefit. Excess benefit
the initial tax on the excess benefit
Requirement. Schedule I must be transaction, or means the excess of the economic
benefit received from the applicable
completed by any Applicable 2. The date on which the initial tax organization over the consideration
organization or Disqualified person on the excess benefit transaction for the given (including services) by a
that engaged in an Excess benefit disqualified person is assessed. disqualified person, except in the
transaction, and by any fund manager
who knowingly participated in the Excess benefit transaction. An immediately preceding special rules
excess benefit transaction. These terms excess benefit transaction is any where the entire amount of the grant,
are discussed below. Each person must transaction in which: loan, compensation, or other similar
payment is considered the excess
file separately. 1. An economic benefit is provided benefit.
Applicable organization. In by the organization directly or indirectly
general, an applicable organization is to or for the use of, any disqualified However, an economic benefit won't
any section 501(c)(3) (except a private person, if the value of the economic be treated as compensation for services
foundation), 501(c)(4), or 501(c)(29) benefit provided exceeds the value of unless the applicable organization
organization. the consideration (including the clearly indicates its intent to treat the
Also, an applicable organization performance of services) received for economic benefit (when paid) as
includes any organization that was a providing such benefit, or compensation for a disqualified person's
services. See Regulations section
section 501(c)(3) (except a private 2. The amount of any economic 53.4958-4(c) for more information.
foundation), 501(c)(4), or 501(c)(29) benefit provided to, or for the use of, a
organization at any time during a 5-year disqualified person is determined in Exception. Generally, section 4958
period ending on the date of an excess whole or in part by the revenues of the doesn't apply to any fixed payment
benefit transaction (the lookback organization and violates the private made to a person under an initial
period). inurement prohibition rules (to the extent contract. See Regulations section
provided in regulations). 53.4958-4(a)(3) for details.
Initial taxes. Excise taxes are imposed
under section 4958 on each excess Until final regulations are issued Special rule. The initial and additional
taxes of this section don't apply if the
receives an excess benefit from an CAUTION revenue sharing transactions
benefit transaction. If a manager ! regarding the special rules for transaction described in 1 under Excess
excess benefit transaction, the manager described in 2 above, these transactions benefit transaction was pursuant to a
may be liable for the tax on disqualified will only be subject to section 4958 written contract in effect on September
persons and the tax on the organization liability under the general rule described 13, 1995, and at all times after that date
manager. The applicable organization in 1 above. until the time that the transaction occurs.
must complete Schedule I. However, the However, if a written contract is
excise tax under section 4958 is Supporting organization materially modified, it is treated as a
imposed on the disqualified person. The transactions occurring after July 25, new contract entered into as of the date
organization completing Schedule I 2006. For any supporting organization, of the material modification. A material
should not report the initial tax amount as defined in section 509(a)(3), any modification includes amending the
on Part II and should not pay the tax grant, loan, compensation, or other contract to extend its term or to increase
liability of any disqualified person or similar payment provided to a the compensation payable to a
organization manager. See Abatement, substantial contributor (defined later), disqualified person.
earlier, for information on abatement, family member, or 35% controlled entity
Disqualified person. For purposes of
refund, or relief from this tax. will be considered an excess benefit
this Schedule I, a disqualified person
transaction. The amount of the excess
means:
benefit is the amount of such grant,

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1. Any person (at any time during Investment advisor. Investment correction is partial, explain why
the 5-year period ending on the date of advisor means for any sponsoring complete correction has not been made.
the transaction) in a position to exercise organization, any person compensated If correction is made in more than one
substantial influence over the affairs of by such organization (but not an transaction, describe each transaction
the organization, employee of such organization) for separately.
2. A family member of an individual managing the investment of, or • If correction has not been made,
described in 1 above, and providing investment advice for assets provide a detailed explanation of why
maintained in donor advised funds correction hasn't been made and what
3. A 35% controlled entity of a maintained by such sponsoring steps are being taken to make the
person described in 1 or 2 above. organization. correction.
Family members. Family members Sponsoring organization. See the For organization managers, the tax is
of a disqualified person described in 1 Schedule K instructions for a definition the lesser of 10% of the excess benefit
above include a disqualified person's of sponsoring organization. or $20,000. This tax is computed on
spouse, ancestors, children, each transaction.
grandchildren, great grandchildren, and Substantial contributor. In
brothers and sisters (whether by whole- general, a substantial contributor means Part II. Enter in column (a) the names
or half-blood). It also includes the any person who contributed or of all disqualified persons who took part
spouse of the children, grandchildren, bequeathed an aggregate of more than in the excess benefit transactions. If
great grandchildren, brothers, or sisters $5,000 to the organization, if that more than one disqualified person took
(whether by whole- or half-blood). amount is more than 2% of the total part in an excess benefit transaction,
contributions and bequests received by each is individually liable for the entire
35% controlled entity. The term the organization before the end of the tax on the transaction. But the
35% controlled entity means: tax year of the organization in which the disqualified persons who are liable for
• A corporation in which a disqualified contribution or bequest is received by the tax may prorate the payment among
person described in 1 or 2 above owns the organization from such person. A themselves. Enter in column (c) the tax
more than 35% of the total combined substantial contributor includes the to be paid by each disqualified person.
voting power, grantor of a trust. Carry the total amount in column (d)
• A partnership in which such persons for each disqualified person to Part II,
own more than 35% of the profits Specific Instructions line 6.
interest, or
• A trust or estate in which such Part I. List each excess benefit Part III. Enter in column (a) the names
persons own more than 35% of the transaction in Part I, column (d). Enter of all managers who knowingly took part
beneficial interest. the date of the transaction in column (b) in the excess benefit transactions listed
and the amount of the excess benefit in
In determining the holdings of a in Part I. If more than one manager
column (e). Compute the tax on the
business enterprise, any stock or other knowingly took part in an excess benefit
excess benefit for disqualified persons
interest owned directly or indirectly shall transaction, each is individually liable for
and enter it in column (f). Compute any
apply. the entire tax in connection with the
tax on the excess benefit for transaction. But the managers liable for
For donor advised funds, sponsor- organization managers and enter the the tax may prorate the payment among
ing organizations, and certain sup- amount in column (g). The organization themselves. Enter in column (c) the tax
porting organization transactions reporting one or more excess benefit to be paid by each organization
occurring after August 17, 2006. The transactions should not carry totals from manager.
following persons will be considered column (f) or column (g) to Part II, line 6.
A manager filing this Form 4720
disqualified persons along with certain An excess benefit transaction is should carry the appropriate amount in
family members and 35% controlled corrected by undoing the excess benefit column (d) to Part II, line 6.
entities associated with them: to the extent possible and taking any
additional measures necessary to place
• Donors of donor advised funds, the organization in a financial position Schedule J—Taxes on
• Donor advisors of donor advised not worse than that in which it would be Being a Party to Prohibited
funds, if the disqualified person had been
• Investment advisors of sponsoring dealing under the highest fiduciary Tax Shelter Transactions
organizations, and standards, except that in the case of any (Section 4965)
• Disqualified persons of a section correction of an excess benefit
509(a)(3) supporting organization for the transaction involving a donor advised General Instructions
organizations that organization fund no amount repaid in a manner Requirement.
supports. prescribed by the Secretary may be 1. Complete Schedule J if you are
held in any donor advised fund. In an entity described in section 501(c),
For certain supporting column (c), for each act of excess 501(d), or 170(c) (other than the United
organization transactions occurring benefit transaction in Part I, indicate States) or an Indian tribal government
after July 25, 2006. Substantial whether the act has been corrected. (within the meaning of section 7701(a)
contributors to supporting organizations Answer “Yes,” if correction has been (40)) and you received proceeds from or
will also be considered disqualified made in whole or in part. Answer “No,” have net income attributable to a
persons along with their family members only if the transaction has not been prohibited tax shelter transaction
and 35% controlled entities. corrected in any way. (PTST).
Donor advised fund. See the • If correction has been made, provide
Schedule K instructions for a definition a detailed description of any correction 2. Complete Schedule J if you are
of donor advised fund. made, and the date of each correction. If an entity manager of such an entity who

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approved the entity listed in section Allocation of net income and pro- Part V of Form 990, or if you are a fund
4965(c) as (or otherwise caused the ceeds to a tax year. The net income manager of a sponsoring organization
entity to be) a party to a PTST at any and proceeds attributable to a who agreed to the making of a taxable
time during the tax year and who knew prohibited tax shelter transaction must distribution knowing that it was a taxable
(or had reason to know) that the be allocated to a particular tax year in a distribution. Report each taxable
transaction is a PTST. manner consistent with the entity's distribution separately. These terms are
See the following guidance and any established method of accounting for discussed below.
future guidance for details. federal income tax purposes. If an entity Taxable distribution. A taxable
• Notice 2006-65, 2006-31 I.R.B. 102; hasn't established a method of distribution is any distribution from a
• Notice 2007-18, 2007-9 I.R.B. 608; accounting for federal income tax donor advised fund to any natural
• T.D. 9334, 2007-34 I.R.B. 382; and purposes, the entity must use the cash person or to any other person if:
• T.D. 9492, 2010-33 I.R.B. 242. receipts and disbursements method to
1. The distribution is for any purpose
determine the amount and timing of net
other than one specified in section
Managers of tax favored income and proceeds attributable to a
170(c)(2)(B), or
TIP retirement plans, individual prohibited tax shelter transaction.
retirement arrangements, and 2. The sponsoring organization
If an entity has an established
savings arrangements described in maintaining the donor advised fund
method of accounting other than the
sections 401(a), 403(a), 403(b), 529, doesn't exercise expenditure
cash method, the entity may use the
457(b), 408(a), 220(d), 408(b), 530, or responsibility with respect to such
cash method to determine the amount
223(d) must report and pay tax due distribution in accordance with section
of the net income and proceeds
under section 4965(a)(2) on Form 5330. 4945(h).
attributable to a prohibited tax shelter
Prohibited tax shelter transaction. In transaction. However, a taxable distribution
doesn't include a distribution from a
general, a prohibited tax shelter Specific Instructions donor advised fund to:
transaction means any listed transaction
(including a subsequently listed Part I. Complete this part for each 1. Any organization described in
transaction) and any prohibited transaction if during the tax year the section 170(b)(1)(A) (other than a
reportable transaction. entity received proceeds from or has net disqualified supporting organization),
income attributable to a PTST.
Listed transaction. A listed 2. The sponsoring organization of
transaction includes any transaction that Figure the tax for each transaction as such donor advised fund, or
is the same as or substantially similar to follows. 3. Any other donor advised fund.
one of the types of transactions that the • If column (e) was answered “Yes,”
IRS has determined to be a tax then enter the larger of the column (f) or Sponsoring organization. A
avoidance transaction. These column (g) amount in column (h). sponsoring organization is a section
transactions are identified by notice, • If column (e) was answered “No,” then 170(c) organization that isn't a
regulation, or other form of published multiply the larger of the amount in government organization (as referred to
guidance as a listed transaction. For column (f) or column (g) by 21% (0.21) in section 170(c)(1) and (2)(A)) or a
existing guidance, see Notice 2009-59, and enter the result in column (h). private foundation and maintains one or
2009-31 I.R.B. 170. After the tax has been figured for all more donor advised funds.
For updates to this list, go to the IRS PTSTs entered on Schedule J, then total
Donor advised fund. A donor advised
website at IRS.gov/businesses/ column (h) and enter the amount on the
fund is a fund or account:
corporations/abusive-tax-shelters-and- Total line and on line 9 of Part I.
1. Which is separately identified by
transactions. The listed transactions in Part II. Enter in column (a) the names reference to contributions of a donor or
the above notices and rulings will also of all entity managers who approved the donors,
be periodically updated in future issues entity as (or otherwise caused the entity
of the Internal Revenue Bulletin. to be) a party to a PTST at any time 2. Which is owned and controlled by
during the tax year and who knew or a sponsoring organization, and
Subsequently listed transaction. 3. For which the donor (or any
had reason to know that the transaction
A subsequently listed transaction is a person appointed or designated by the
is a PTST.
transaction that is identified in published donor) has or expects to have advisory
guidance as a listed transaction after A manager filing this Form 4720
the entity has entered into the should carry the appropriate amount in privileges concerning the distribution or
transaction and that was not a column (d) to Part II, line 7. investment of the funds held in the
donor advised funds or accounts
confidential transaction or transaction because of the donor's status as a
with contractual protection at the time donor.
the entity entered into the transaction. Schedule K—Taxes on
Taxable Distributions of Exception. A donor advised fund
Prohibited reportable transaction. A doesn't include:
prohibited reportable transaction is any Sponsoring Organizations
confidential transaction or any Maintaining Donor 1. A fund or account that makes
distributions only to a single identified
transaction with contractual protection Advised Funds (Section organization or governmental entity, or
that is a reportable transaction. See
Regulations sections 1.6011-4(b)(3) 4966) 2. Any fund or account with respect
and (4), and the Instructions for Form General Instructions to which a donor or donor advisor (as
8886-T, Disclosure by Tax-Exempt Entity defined in the Schedule L instructions)
Regarding Prohibited Tax Shelter Requirement. Complete Schedule K if gives advice about which individuals
Transaction, for more information. you answered “Yes,” to question 9a in

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receive grants for travel, study, or similar party who received the benefit are jointly
purposes, if: Schedule L—Taxes on and severally liable for the tax.
a. Such person's advisory privileges Prohibited Benefits Tax on fund managers. If a tax is
are performed exclusively by such Distributed From Donor imposed on a prohibited benefit
person in their capacity as a committee received by a donor, donor advisor, or
member of which all the committee Advised Funds (Section
related person, a tax of 10% of the
members are appointed by the 4967) amount of the prohibited benefit is
sponsoring organization, imposed on any fund manager who
General Instructions
b. No combination of donors, donor agreed to the distribution knowing that it
advisors, or persons related (as defined Requirement. A sponsoring would confer a prohibited benefit. Any
in the Schedule L instructions) to donors organization of donor advised funds that fund manager who took part in the
or donor advisors, directly or indirectly answered “Yes,” to Form 990, Part V, distribution and is liable for the tax must
control the committee, and line 9b, or that otherwise distributed pay the tax. The maximum amount of
prohibited benefits under section 4967,
c. All grants from the fund or tax on all fund managers for any one
must complete Schedule L. In addition,
account are awarded on an objective taxable distribution is $10,000. If more
a donor, donor advisor, or related party
and nondiscriminatory basis according than one fund manager is liable for tax
that (1) advised a distribution that
to a procedure approved in advance by on a taxable distribution, all such
provided a prohibited benefit under
the board of directors of the sponsoring managers are jointly and severally liable
section 4967, or (2) that received such a
organization. The procedure must be for the tax.
benefit, and any fund manager who
designed to ensure that all grants meet Exception. If a tax is imposed under
agreed to the distribution knowing that it
the requirements of section 4945(g)(1), section 4958 for the same transaction,
would confer a prohibited benefit, must
(2), or (3). then no additional tax is imposed under
complete Schedule L. Report each
Tax on sponsoring organization. A distribution separately. Complete Parts I, section 4967 on that transaction.
tax of 20% of the amount of each II, and III of Schedule L only in Specific Instructions
taxable distribution is imposed on the connection with distributions made by a
sponsoring organization. sponsoring organization from a donor Part I. Complete this part for all
advised fund which results in a prohibited benefits.
Tax on fund manager. If a tax is prohibited benefit. (See the instructions Part II. Enter in column (a) the names
imposed on a taxable distribution of the for Schedule K for definitions of the of all donors, donor advisors, and
sponsoring organization, a tax of 5% of terms sponsoring organization and related persons who received a
the distribution will be imposed on any donor advised fund). An organization prohibited benefit or advised as to the
fund manager who agreed to the reporting a prohibited benefit on distribution of such benefit. If more than
distribution knowing that it was a taxable Schedule L is not liable for the tax and one donor, donor advisor, or related
distribution. Any fund manager who took should not report any tax amount on person is listed in column (a) for one
part in the distribution and is liable for Part II, line 9. distribution, each is individually liable for
the tax must pay the tax. The maximum the entire tax for that distribution.
amount of tax on all fund managers for Prohibited benefit. If any donor, donor
any one taxable distribution is $10,000. advisor, or related party advises the However, the donors, donor advisors, or
If more than one fund manager is liable sponsoring organization about making a related persons who are liable for the
for tax on a taxable distribution, all such distribution which results in a donor, tax may prorate the payment among
managers are jointly and severally liable donor advisor, or related party receiving themselves. Enter in column (c) the tax
for the tax. (either directly or indirectly) a more than each donor, donor advisor, or related
incidental benefit, then such benefit is a person will pay for each distribution for
Specific Instructions prohibited benefit. which such donor, donor advisor, or
related person owes a tax.
Part I. Complete this part for all taxable Donor advisor. A donor advisor is any
distributions. person appointed or designated by a A donor, donor advisor, or related
donor to advise a sponsoring person filing this Form 4720 should
Part II. Enter in column (a) the names carry the apportioned amount in
organization on the distribution or
of all fund managers who agreed to Schedule L, Part II, column (d) to Part II,
investment of amounts held in the
make the taxable distribution. If more line 9.
donor's fund or account.
than one fund manager is listed in
column (a) for one distribution, each is Related party. A related party includes Part III. Enter in column (a) the names
individually liable for the entire tax in any family member or 35% controlled of all fund managers who agreed to
connection with that distribution. entity. See the General Instructions for make the distribution conferring the
However, the fund managers who are Schedule I for a definition of those prohibited benefit. If more than one fund
liable for the tax may prorate the terms. manager is listed in column (a) for one
distribution, each is individually liable for
payment among themselves. Enter in Tax on donor, donor advisor, or rela- the entire tax for that distribution.
column (c) the tax each manager will ted person. A tax of 125% of the However, the fund managers who are
pay for each distribution for which such benefit resulting from the distribution is liable for the tax may prorate the
manager owes a tax. imposed on both the party who advised payment among themselves. Enter in
A fund manager filing this Form 4720 as to the distribution (which might be a column (c) the tax each donor advisor,
should carry the apportioned amount in donor, donor advisor, or related party) or related person will pay for each
column (d) to Part II, line 8. and the party who received such benefit distribution for which such donor, donor
(which might be a donor, donor advisor, advisor, or related person owes a tax.
or related party). The advisor and the

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A fund manager filing this Form 4720 line 1 on line 2 and on Part I, line 12. Remuneration exceptions. For
should carry the total amount in This is the CHNA excise tax under purposes of this provision, remuneration
Schedule L, Part III, column (d) to Part II, section 4959. does not include:
line 9. • Designated Roth contributions (as
defined in section 402A(c)),
Schedule N—Tax on • The portion of any remuneration paid
Schedule M—Tax on Excess Executive to a licensed medical professional
Hospital Organization for Compensation (Section (including a veterinarian) which is for the
performance of medical or veterinary
Failure to Meet the 4960) services by such professional, or
Community Health Needs • Remuneration the deduction for
General Instructions
Assessment Requirements which is not allowed by reason of
Requirement. Complete Schedule N if
(Sections 4959 and 501(r) section 162(m).
you answered “Yes” to question 15 in
(3)) Part V of Form 990, question 8 of Part Remuneration from related
General Instructions VI-B of Form 990-PF, or if you are an organizations. Remuneration of a
ATEO (as defined earlier) or a related covered employee by an ATEO includes
Requirements. Section 4959 imposes organization but only if you are liable for any remuneration paid with respect to
an excise tax on hospital organizations the tax under section 4960(a). Section employment of such employee by any
that fail to meet the section 501(r)(3) 4960(a) imposes an excise tax of 21% related person or governmental entity,
requirements in any tax year. on the amount of remuneration paid by whether taxable or tax-exempt.
Section 501(r)(3) requirements an ATEO with respect to employment of For this purpose, a person or
pertain to a hospital organization any covered employee in excess of $1 governmental entity is related to an
conducting a community health needs million and on any excess parachute ATEO if it:
assessment (CHNA). The requirements, payment paid by such organization to • Controls, or is controlled by, the
which apply separately to each hospital any covered employee. ATEO;
facility the hospital organization • Is controlled by one or more persons
operates, are as follows. Note. You may be required to file 2 who control the ATEO;
Form 4720 returns if you are a related • Is a supported organization (as
1. To conduct a CHNA this tax year, organization liable for the tax under defined in section 509(f)(3)) or
or in either of the 2 prior tax years. The section 4960(a), which is reported on supporting organization (as defined in
CHNA must take into account input from Part I, line 13, and you are a disqualified section 509(a)(3)) with respect to the
persons who represent the broad person or organization manager of the ATEO during the taxable year; or
interests of the community served by organization with respect to which you • In the case of an ATEO that is a
the hospital facility, including people are a related organization and you are section 501(c)(9) voluntary employees’
with special knowledge of or expertise in liable for a Chapter 41 or 42 excise tax beneficiary association (VEBA),
public health. The CHNA must be made as a disqualified person or organization establishes, maintains, or makes
widely available to the public. manager, which is reported on Part II. contributions to the ATEO.
2. To adopt an implementation See the instructions for Page 1,
strategy to meet the community health Question B, earlier. Liability for tax in case of
needs identified through the CHNA. remuneration from more than one
Form 4720, Schedule N, is used employer. In any case in which
See Notice 2011-52, 2011-30 I.R.B. TIP to report and pay any section remuneration from more than one
60; Final Regulations, T.D. 9708, 79 4960 tax owed. Because there employer is taken into account under
Fed. Reg. 78954 (Dec. 31, 2014), is no requirement to make estimated tax the rule above, each related employer is
2012-32 I.R.B. 126; Notice 2014-2, payments for the section 4960 tax, Form liable for the tax in an amount which
2014-3 I.R.B. 407; Notice 2014-3, 990-W does not apply to the section bears the same ratio to the total tax as
2014-3 I.R.B. 408; as well as any future 4960 tax. the ratio of (1) the amount of
related guidance for details. For remuneration that employer paid with
additional information on the CHNA Covered employee. A covered respect to such employee, to (2) the
requirements, see Schedule H (Form employee means any employee of an amount of remuneration paid by all
990), Hospitals, Part V, Section B. ATEO (including any former employee) related employers to the employee.
that is one of the ATEO’s five highest Each related employer must file their
Specific Instructions compensated employees for the tax own Form 4720, complete Schedule N
Part I. For each hospital facility, list the year or was the ATEO’s (or a and report their ratable share of tax on
following information in the relevant predecessor’s) covered employee for Part I, line 13.
column: (b) name of facility, (c) any preceding tax year beginning after
description of the failure to meet section 2016. Excess parachute payment. For
purposes of this provision, an excess
501(r)(3), (d) tax year hospital facility Remuneration. Remuneration means parachute payment equals the excess of
last conducted a CHNA, and (e) tax wages (as defined in section 3401(a)). any parachute payment over the portion
year hospital facility last adopted an Remuneration also includes amounts of the base amount allocated to such
implementation strategy. required to be included in gross income payment.
Part II. On line 1 enter the number of under section 457(f). Remuneration
hospital facilities operated by the shall be treated as paid when there is no Parachute payment. A parachute
hospital organization that failed to meet substantial risk of forfeiture (within the payment is any payment in the nature of
the CHNA requirements of section meaning of section 457(f)(3)(B)) of the compensation to (or for the benefit of) a
501(r)(3). Enter $50,000 multiplied by rights to such remuneration. covered employee if the payment:

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• Is contingent on such employee’s amount of any excess parachute 4968 defines “related organization” to
separation from the employment with payment you paid. include only the following organizations.
the employer, and • Organizations that control or are
• Has an aggregate present value of For each covered employee reported controlled by the educational institution.
the payments in the nature of in column (b), enter in column (e) the Organizations that are controlled by
•
compensation to (or for the benefit of) sum of columns (c) and (d). one or more of the same persons who
such individual which are contingent on control the educational institution.
such separation that equals or exceeds Schedule O—Excise Tax • A supported organization (as defined
three times the base amount. in section 509(f)(3)) during the tax year
on Net Investment Income with respect to the educational
Base amount. Rules similar to the of Private Colleges and institution.
rules of section 280G(b)(3) shall apply Supporting organizations described
for purposes of determining the base Universities (Section 4968) •
in section 509(a)(3) during the tax year
amount. General Instructions with respect to the educational
Property transfers. Rules similar to Requirement. An applicable institution.
the rules of section 280G(d)(3) and (4) educational institution that answered When calculating the net investment
shall apply to property transfers. “Yes” to Form 990, Part V, line 16, or that income of a related organization,
Exception from excess parachute is otherwise subject to the section 4968 exclude (1) net investment income of
payments. An excess parachute tax on net investment income, must any related organization to the extent
payment does not include any complete Schedule O. that such net investment income is
taken into account with respect to
payments: Organizations subject to the section another educational institution; and (2)
• Described in section 280G(b)(6) 4968 excise tax. A private college or net investment income from assets that
(relating to exemption for payments university is subject to a 1.4% excise tax are not intended, or are not available for
under qualified plans), on net investment income under section the use or benefit of the educational
• Made under or to an annuity contract 4968 if all four of the following threshold institution, unless the related
described in section 403(b) or a plan tests are met. organization is controlled by the
described in section 457(b), • The organization must be an eligible educational institution, or unless the
• To a licensed medical professional educational institution (as defined in related organization is a supporting
(including a veterinarian) to the extent section 25A(f)(2)). Section 25A(f)(2) organization with respect to the
that such payment is for the defines “eligible educational institution” educational institution.
performance of medical or veterinary as an institution that is described in
services by such professional, or section 481 of the Higher Education Act Net investment income. Net
• To an individual who is not a highly of 1965 (20 U.S.C. section 1088), as in investment income is the amount by
compensated employee as defined in effect on August 5, 1997; and is eligible which the sum of the gross investment
section 414(q). to participate in a program under Title IV income and the capital gain net income
Specific Instructions of such Act (20 U.S.C. sections 1070 et exceeds the administrative expenses
seq.). allocable to gross investment income
Enter in column (b) the name of each • The organization must have had at and capital gain net income.
covered employee who was paid more least 500 tuition-paying students, based To determine net investment income,
than $1 million in renumeration or was upon a daily average student count, including certain exceptions to gross
paid an excess parachute payment during the preceding tax year. investment income and modifications to
during the year. If more than five • More than 50% of those students allowable deductions, see Regulations
covered employees, attach a statement must have been located in the United section 53.4968-2.
with the information required by the States.
schedule and show the total amounts • The aggregate fair market value, at Basis. As described in Regulations
for column (e) on line 6. the end of the preceding tax year, of the section 53.4968-2(d)(2), in the case of
For each covered employee reported assets not used directly in carrying out property held by an applicable
in column (b), enter in column (c) the the organization’s exempt purpose, held educational institution on December 31,
amount of remuneration you paid that by the organization and related 2017, and continuously thereafter to the
exceeded $1 million. Do not include any organizations, must be at least date of its disposition, the basis for
excess parachute payment reported in $500,000 per student. determining gain shall be deemed not to
be less than the fair market value of
column (d). If remuneration from related Form 4720, Schedule O, is used such property on December 31, 2017,
employer(s) was taken into account in TIP by applicable educational plus or minus all adjustments after
determining that remuneration institutions to report and pay December 31, 2017, and before the
exceeded $1 million, enter your any section 4968 tax owed. Because date of disposition consistent with the
proportional share of the amount of there is no requirement to make regulations under section 4940(c).
remuneration that exceeded $1 million, estimated tax payments for the section However, for purposes of determining
based on your proportional share of 4968 tax, Form 990-W does not apply to loss, basis rules that are consistent with
total remuneration paid to the covered the section 4968 tax. the regulations under section 4940(c)
employee. Also, attach a statement to will apply.
Form 4720 with the name and EIN of the Related organizations. The net
related employer(s). investment income of related Modified capital gain net income.
For each covered employee reported organizations is taken into account Column (d) can reflect capital losses
in column (b), enter in column (d) the under certain circumstances. Section from sales or other dispositions of
property in one organization only to the

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extent of capital gains from such sales     • Sign the return in the space provided     service is available Monday through 
or other dispositions in all the other      for the preparer's signature,               Friday.
organizations (modified capital gain net    • Enter the preparer information,
income). See Regulations section            • Enter the preparer tax identification     Photographs of Missing 
53.4968–2. Amounts listed in column         number (PTIN), and                          Children
(d), for the filing organization and any    • Give a copy of the return to the 
related organization, may indicate a net    organization, in addition to the copy to    The Internal Revenue Service is a proud 
loss. However, the amount carried to        be filed with the IRS.                      partner with the National Center for 
line 6, column (d) must be the greater of                                               Missing & Exploited Children® 
                                                     Any paid preparer whose 
the modified capital gain net income or                                                 (NCMEC). Photographs of missing 
                                                     identifying number must be 
zero. Do not take into account capital      CAUTION!                                    children selected by the Center may 
                                                     listed on Form 990-PF can 
loss carrybacks. Capital loss carryovers                                                appear in instructions on pages that 
                                            apply for and obtain a PTIN. You can 
are allowed.                                                                            would otherwise be blank. You can help 
                                            apply for a PTIN online or by filing Form   bring these children home by looking at 
Specific Instructions                       W-12, IRS Paid Preparer Tax                 the photographs and calling 
                                            Identification Number (PTIN)                1-800-THE-LOST (1-800-843-5678) if 
Line 1. Use Line 1 to report the gross      Application and Renewal. For more           you recognize a child.
investment income , capital gain net        information about applying for a PTIN 
income (or loss), and associated            online, visit the IRS website at IRS.gov/   How To Get Forms and 
allocable administrative expenses of the    PTIN.
filing organization.                                                                    Publications
Lines 2–5. Use Lines 2–5 to report the      Paid Preparer Authorization                 Internet. You can access the IRS 
gross investment income, capital gain       On the “Sign Here” line, check “Yes,” if    website 24 hours a day, 7 days a week, 
net income (or loss), and associated        the IRS can contact the paid preparer       at IRS.gov to:
allocable administrative expenses from      who signed the return to discuss the        • Download forms, including talking tax 
related organizations during the related    return. This authorization applies only to  forms, instructions, and publications.
organizations’ tax years that end with or   the individual whose signature appears      • Order IRS products online.
within the tax year of the organization. If in the Paid Preparer Use Only section of    • Research your tax questions online.
a related organization is a partner in a    Form 4720. It doesn't apply to the firm, if • Search publications online by topic or 
partnership or a shareholder of an S        any, shown in that section.                 keyword.
corporation, include the pertinent items                                                • Sign up to receive local and national 
of income, gain, loss, or deduction from      By checking the “Yes” box, the            tax news by email.
the entity's Schedule K-1 (Form 1065 or     organization is authorizing the IRS to      • You can order forms and publications 
1120-S) for the tax year of the entity      contact the paid preparer to answer any     by downloading from the IRS website at 
ending with or within the tax year of the   questions that arise during the             IRS.gov/OrderForms.
filing organization.                        processing of the return. The 
                                            organization is also authorizing the paid   IRS e-Services Makes 
Report income from related                  preparer to:
organizations in descending order from      • Give the IRS any information missing      Taxes Easier
most income to least income. If there       from the return;                            Now more than ever before, businesses 
are more than three related                 • Call the IRS for information about        can enjoy the benefits of filing and 
organizations, attach a schedule to your    processing the return; and                  paying their federal taxes electronically. 
Form 4720 showing the information for       • Respond to certain IRS notices about      Whether you rely on a tax professional 
columns (a) through (e) for each related    math errors, offsets, and return            or handle your own taxes, the IRS offers 
organization and enter the total amounts    preparation.                                you convenient programs to make taxes 
from the schedule in line 5, columns (c)                                                easier. Use these electronic options to 
through (e).                                  The organization isn't authorizing the    make filing and paying easier.
                                            paid preparer to bind the organization to   • You can efile your Form 990 or Form 
Line 6. Total the amounts in columns        anything or otherwise represent the         990-PF; Form 940 and 941 employment 
(c), (d), and (e). See Notice 2018-55,      organization before the IRS.                tax returns; Forms 1099; and other 
2018-26 I.R.B. 773.
                                              The authorization will automatically      information returns. Visit IRS.gov/E-File 
Add 6(c) and 6(d), subtract 6(e), and                                                   for details. For tax years beginning on or 
                                            end no later than the due date 
enter the total in 6(f).                                                                after July 2, 2019, section 3101 of P.L. 
                                            (excluding extensions) for filing of the 
Line 7. Multiply line 6(f) by 0.014         organization's 2024 Form 4720. If the       116-25 requires that returns by exempt 
(1.4%) and enter the amount in box 7f       organization wants to expand the paid       organizations be filed electronically. 
and on Part I, line 14.                     preparer's authorization or revoke it       Organizations filing Form 990 or Form 
                                            before it ends, see Pub. 947, Practice      990-PF for a tax year beginning on or 
                                            Before the IRS and Power of Attorney.       after July 2, 2019 must file the return 
Paid Preparer                                                                           electronically. For tax years ending on or 
Generally, anyone who is paid to              Check “No,” if the IRS should contact     after July 31, 2021, Form 990-EZ must 
prepare the return must sign the return     the organization listed on the first page   also be filed electronically. Limited 
and fill in the other blanks in the Paid    of the Form 4720, rather than the paid      exceptions apply. See When, Where, 
Preparer Use Only area. An employee         preparer.                                   and How To File, in the Instructions for 
of the filing organization isn't a paid                                                 Form 990, Form 990-PF or 990–EZ for 
preparer.                                   Phone Help                                  more information.
                                            If you have questions and/or need help      • You can pay taxes online or by phone 
The paid preparer must:                     completing this form, please call           using the free Electronic Federal Tax 
                                            877-829-5500. This toll-free telephone 

Form 4720 Instructions                                       -21-

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Payment System (EFTPS). Visit require you to provide the requested subject to the Paperwork Reduction Act
EFTPS.gov or call 1-800-555-4477 for information if the tax applies to you. unless the form displays a valid OMB
details. Electronic Funds Withdrawal Section 6109 requires you to provide control number. Books or records
(EFW) from a checking or savings your identifying number. Routine uses of relating to a form or its instructions must
account is also available to those who this information include disclosing it to be retained as long as their contents
file electronically. the Department of Justice for civil and may become material in the
criminal litigation and to other federal administration of any Internal Revenue
Privacy Act and Paperwork Reduc- agencies, as provided by law. We may law. Generally, tax returns and return
tion Act Notice. We ask for the disclose the information to cities, states, information are confidential, as required
information on this form to carry out the the District of Columbia, and U.S. by section 6103. However, certain
Internal Revenue laws of the United Commonwealths and territories to returns and return information of tax
States. You are required to give us the administer their laws. We may also exempt organizations and trusts are
information. We need it to ensure that disclose this information to other subject to public disclosure and
you are complying with these laws and countries under a tax treaty, to federal inspection, as provided by section 6104.
to allow us to figure and collect the right and state agencies to enforce federal
amount of tax. Certain individuals who nontax criminal laws, or to federal law The time needed to complete and file
owe tax under Chapter 41 or 42 of the enforcement and intelligence agencies this form will vary depending on
Internal Revenue Code, and who don't to combat terrorism. If you don't file this individual circumstances. The estimated
sign the Form 4720 of the foundation or information, you may be subject to burden for tax exempt organizations
organization, must file a separate Form interest, penalties, and/or criminal filing this form is approved under OMB
4720 showing the tax owed and the prosecution. control number 1545-0047 and is
name of the foundation or organization included in the estimates shown in the
for which they owe tax. Sections 6001 You aren’t required to provide the instructions for their information return.
and 6011 of the Internal Revenue Code information requested on a form that is

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Index
 
                           Initial taxes on                 Schedule E; Initial Taxes     Schedule O; Excess Tax 
A                            investments that               on Taxable                    on Net Investment 
Amended return   6           jeopardize charitable          Expenditures    13            Income of Private 
                             purpose:
Attorney 21                                                 Schedule F; Initial Taxes     Colleges and 
                             section 4944   12              on Political                  Universities (Section 
                           Initial taxes on political       Expenditures    13            4968) 20
D                            expenditures:                  Schedule G; Tax on           Signature and 
Disqualified person   15     section 4955   13              Excess Lobbying               Verification 4
Donor advised funds   17,  Initial taxes on taxable         Expenditures    14           Summary of Taxes                8
  18                         expenditures:                  Schedule H; Taxes on 
                             section 4945   13              Disqualifying Lobbying       T
E                                                           Expenditures    14           Tax on excess lobbying 
Excess business holdings:  P                                Schedule I; Initial Taxes on  expenditures:
                                                            Excess Benefit                section 4911 14
  Exceptions to tax 10     Paid Preparer 21                 Transactions 15
                                                                                         Tax Payments  5
  Schedule C   9           Paid Preparer                    Schedule J; Taxes on 
Extension 4                  Authorization  21              Being a Party to             Taxes on being a party to 
                           Preparer Tax identification      Prohibited Tax Shelter        Prohibited Tax Shelter 
F                            Number (PTIN)     21           Transactions (Section         Transactions:
Filing requirements:       Publications:                    4965)     16                  listed transaction             17
  When to file 4             Pub. 947, Practice Before      Schedule K; Taxes on          section 4965 16
  Where and How to file  3   the IRS and Power of           Taxable Distributions of     Taxes on disqualifying 
                             Attorney    21                 Sponsoring                    lobbying expenditures:
  Who must file 2                                           Organizations                 section 4912 14
Foreign Organizations or   S                                Maintaining Donor            Taxes on Managers, 
  U.S. Territory 4                                          Advised Funds   17            Self-Dealers, etc.             7
                           Schedule:                        Schedule L; Taxes on         Taxes on Prohibited 
I                            Schedule A; Initial Taxes      Prohibited Benefits           Benefits Distributed 
                             on Self-Dealing   8
Initial Taxes on Excess                                     Distributed From Donor        From Donor Advised 
  Benefit Transactions:      Schedule B; Initial Tax on     Advised Funds   18            Funds:
                             Undistributed Income      9
  disqualified person 15                                    Schedule M; Tax on            section 4967 18
                             Schedule C; Initial Tax on     Failure to Meet the          Taxes on Taxable 
  donor advised funds  16    Excess Business                Community Health              Distributions of 
  excess benefit             Holdings    9                  Needs Assessment              Sponsoring 
  transaction    15          Schedule D; Initial Taxes      Requirements (Section         Organizations 
  section 4958 15            on Investments That            501(r)(3))   19               Maintaining Donor 
  sponsoring                 Jeopardize Charitable          Schedule N; Tax on            Advised Funds:
  organizations   16         Purpose     12                 Excess Executive              section 4966 17
  supporting                                                Compensation (Section 
  organizations   16                                        4960)     19

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