TAX  EX EM P T  AN D  
GO VE RNMEN T E N TI TIE S                    
DI VI SIO N  
                                              
Publication 4779 
(May 2009) 
Catalog Number 53287F 
______________________________________________________________________ 
 
                      Facts about Terminating or Merging Your Exempt Organization 
 
Most tax-exempt organizations that end their operations, either through shutting down, 
transferring their assets or merging with another tax-exempt organization, must inform 
the IRS about the details of the action.  
 
                            Organizations Other Than Private Foundations 
 
How You Should Inform the IRS 
Usually this is done by filing a final Form 990, 990-EZ or e-Postcard (990-N). Which of 
these the organization files depends largely on its gross receipts and assets.  
 
For the 2008 tax year returns (filed in 2009 or 2010) the filing guidelines are: 
             - Gross receipts normally less than or equal to $25,000, file the e-Postcard (990-
             N) 
             - Gross receipts greater than $25,000 and less than $1 million, and total assets 
             less than $2.5 million, the organization can choose to file Form 990-EZ or 990 
             - Gross receipts $1 million or more or total assets greater than or equal to $2.5 
             million, file Form 990 
 
A summary table is at IRS.gov/charities. 
 
When the Return is Due 
If you are terminating your organization or effectively going out of business by merging 
with another organization, you will need to file a final form four months and 15 days after 
the date of the organization’s termination. 
 
Information You Will Need to Disclose 
Form 990 filers should check the Termination box in the header area on page 1 of the 
return and answer yes to the question whether the organization liquidated, terminated, 
or dissolved (line 31 of Part IV) and, if applicable, to the question whether the 
organization engaged in a significant disposition of net assets (line 32 of Part IV).   
 

Form 990-EZ filers should check the Termination box in the header area on page 1 of 
the return and answer yes to the question whether the organization liquidated, 
terminated, dissolved or substantially contracted (line 36 of Part V).   
 
After you’ve indicated on the 990 or 990-EZ that you are terminating your organization 
or transferring assets, you’ll need to file a Schedule N: Liquidation, Termination, 
Dissolution, or Significant Disposition of Assets. The information required on Schedule 
N includes a description of the assets and any transaction fees, the date of distribution, 
the fair market value of the assets and information about the recipients of the assets. 
 
Relationship Between Your Organization and Transferee Organization   
Schedule N also asks specific questions about whether an officer, director, trustee, or 
key employee of your organization is, or is expected to be, involved in the successor or 
transferee organization by governing, controlling, or having a financial interest in that 
organization. If you answer ‘yes’ to any of the questions, you will need to provide the 
name of the person involved and an explanation of the circumstances. 
 
Attachments to Your Return 
You will need to provide a certified copy of your articles of dissolution or merger, 
resolutions and plans of liquidation or merger along with your Form 990 or 990-EZ. You 
may also need to provide any other relevant documentation. 
 
State Filings 
Organizations in certain states must notify the state attorney general or other 
appropriate state office of the organization’s intent to dissolve, liquidate, or terminate. A 
list of state officials can be found on the Charities and Non-profits Web site at  
www.irs.gov/charities. Enter State Nonprofit Incorporation Forms and Information into 
the search window. 
 
                             Private Foundations 
                              
Termination of Foundation Under State Law   
For the short tax year in which your foundation is fully liquidated, dissolved, or 
terminated, you must file a final Form 990-PF, Return of Private Foundation. You should 
check the Final Return box in the header area on page 1 of the return, answer yes to 
the question whether the foundation had a liquidation, termination, or dissolution; and 
provide the information set forth in General Instruction T of the Form 990-PF 
instructions.  This information includes the following: 
 
 -  A statement attached to the return explaining the termination, 
 -  A certified copy of any liquidation plan, resolution, etc., and all amendments or 
 supplements that were not previously filed, 
 -  A list of the names and addresses of all recipients of assets, and 
 -  An explanation of the nature and fair market value of assets distributed to each 
 recipient. 

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If you are terminating your foundation, you will need to file a final form four months and 
15 days after the date of the foundation’s termination. 
 
You also must consider the special rules that apply to termination of private foundation 
status. 
 
Termination of Private Foundation Status    
Once an organization is classified as a private foundation, it may only terminate that 
status under the provisions of Internal Revenue Code section 507. Under section 507, 
there are four ways to terminate private foundation status, two of which involve tax 
liability: 
 
1. Voluntary termination by notifying the IRS of intent to terminate and paying a 
termination tax 
 
To voluntarily terminate under section 507(a)(1), the organization must send a 
statement to the Manager, Exempt Organizations Determinations (Internal Revenue 
Service, Exempt Organizations Determinations, P.O. Box 2508, Cincinnati, OH 45201) 
of its intent to terminate its status under section 507(a)(1). The statement must provide, 
in detail, the computation and amount of private foundation termination tax. Unless the 
organization requests abatement, it must pay the tax at the time the statement is filed. 
 
2. Involuntary termination for either willful repeated violations or a willful and 
flagrant violation of the private foundation excise tax provisions and becoming subject to 
the termination tax 
 
3. Transfer of assets to certain public charities 
 
A private foundation may terminate its status under section 507(b)(1)(A) by distributing 
all its net assets to one or more organizations with a ruling or determination letter 
described in section 509(a)(1). However, the organization to which the distribution is 
made must have been in existence and so described for a continuous period of at least 
60 months before the distribution.  A private foundation that terminates its status in 
compliance with section 507(b)(1)(A) is not required to notify the IRS of its intent to 
terminate, and does not incur any tax under section 507(c). 
 
4. Operating as a public charity for a continuous period of 60 months after giving 
appropriate notice 
 
An organization may terminate its private foundation status under section 507(b)(1)(B) if 
it meets the requirements of section 509(a)(1), (2), or (3)) for a continuous 60-month 
period beginning with the first day of any tax year, and notifies the Service before 
beginning the 60-month period that it is terminating its private foundation status.   
 
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The notice of termination of private foundation status via operation as a public charity 
should include: 
 
 •  The name and address of the private foundation,  
 •  Its intention to terminate its private foundation status,  
 •  The Code section under which it seeks classification (section 509(a)(1), (2), 
  or (3)),  
 •  If section 509(a)(1) applies, the specific type of section 170(b)(1)(A) 
  organization for which it seeks classification,  
 •  The date its regular tax year begins, and  
 •  The date the 60-month period begins. 
 
The organization also must establish immediately after the end of the 60-month period 
that it has met the requirements of section 509(a)(1), (2), or (3).   
 
A foundation may also transfer its assets to another private foundation, commence 
voluntary termination, and pay no termination tax because it has no assets. In this case, 
the transferee acquires all of the aggregate tax benefits of the transferor associated with 
the transferred assets. 
 
References (click to link to IRS.gov page) 
Form 990, Return of Organization Exempt From Income Tax 
Form 990-EZ, Short Form Return of Organization Exempt From Income Tax  
Schedule N: Liquidation, Termination, Dissolution, or Significant Disposition of Assets 
Form 990-N, Electronic Notice (e-Postcard) for Tax-Exempt Organizations not Required 
To File Form 990 or 990-EZ 
Form 990-PF, Return of Private Foundation 
Form 990 Series, Filing Phase-In 
State Non Profit Information 
Life Cycle of a Public Charity    
Life Cycle of a Private Foundation 
 
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