What are donor advised funds for the purpose of Form 4720?

Donor advised funds are a type of supporting organization where a sponsoring organization accepts contributions from donors and then makes grants or recommendations to other charitable organizations. The initial taxes on excess benefit transactions, investments that jeopardize charitable purpose, political expenditures, and taxable expenditures for these types of organizations must be reported on Form 4720.

When to file Form 4720?

Form 4720 must be filed annually with the Internal Revenue Service (IRS) by the due date of the organization's annual information return (Form 990, Form 990-EZ or Form 990-PF), which is typically the 15th day of the 5th month after the end of the organization's fiscal year.

Where and how to file Form 4720?

Form 4720 can be filed electronically through the Electronic Federal Tax Payment System (EFTPS) or by mailing a paper copy to the following address: Internal Revenue Service, P.O. Box 82922, Kansas City, MO 64133-4822.

What taxes are reported on Form 4720?

Form 4720 reports and pays taxes on various transactions including self-dealing, excess benefit transactions, jeopardizing investments, taxable expenditures, lobbying, and prohibited tax shelter transactions.

What is a disqualified person in the context of Form 4720?

A disqualified person is an individual who has certain relationships with an organization that may result in excess benefit transactions. Examples include current and former officers, directors, trustees, key employees, substantial contributors, and their family members.

What is an excess business holding for Form 4720?

An excess business holding is any interest in a trade or business that exceeds the amount necessary to provide reasonable compensation for services rendered to the organization. If the value of the excess business holding is more than $5,000, it is subject to excise tax under section 4960.

Form 4720, Return of Certain Excise Taxes Under Chapters 41 and 42 of the Internal Revenue Code, is used by tax-exempt organizations to report and pay taxes on certain transactions.

Who must file Form 4720?

Tax-exempt organizations that have incurred excise taxes under Chapters 41 and 42 of the Internal Revenue Code must file Form 4720.

What are supporting organizations as per Form 4720?

Supporting organizations are tax-exempt organizations that support one or more specific charitable organizations with a controlling relationship. They include type II and type III supporting organizations as defined in the Internal Revenue Code.

What are the consequences of not filing Form 4720?

Failure to file Form 4720 may result in penalties, interest, and even criminal prosecution. The IRS can also revoke or deny tax-exempt status for failure to comply with reporting requirements.

Form 4720

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Return of Certain Excise Taxes Under Chapters 41 and 42 of the Internal Revenue Code

Rev. 2023

Form 4720 is an IRS informational return used to report taxes on various types of trusts and organizations, including private foundations, split-interest trusts, and hospital organizations. The instructions provide details on the required information for each schedule, including prohibited benefits distributions, excess executive compensation, community health needs assessments, and net investment income of private colleges and universities.

Instructions

Form 4720 Instructions - Instructions for Form 4720, Return of Certain Excise Taxes Under Chapters 41 and 42 of the Internal Revenue Code

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FAQ

What are donor advised funds for the purpose of Form 4720?
Donor advised funds are a type of supporting organization where a sponsoring organization accepts contributions from donors and then makes grants or recommendations to other charitable organizations. The initial taxes on excess benefit transactions, investments that jeopardize charitable purpose, political expenditures, and taxable expenditures for these types of organizations must be reported on Form 4720.
When to file Form 4720?
Form 4720 must be filed annually with the Internal Revenue Service (IRS) by the due date of the organization's annual information return (Form 990, Form 990-EZ or Form 990-PF), which is typically the 15th day of the 5th month after the end of the organization's fiscal year.
Where and how to file Form 4720?
Form 4720 can be filed electronically through the Electronic Federal Tax Payment System (EFTPS) or by mailing a paper copy to the following address: Internal Revenue Service, P.O. Box 82922, Kansas City, MO 64133-4822.
What taxes are reported on Form 4720?
Form 4720 reports and pays taxes on various transactions including self-dealing, excess benefit transactions, jeopardizing investments, taxable expenditures, lobbying, and prohibited tax shelter transactions.
What is a disqualified person in the context of Form 4720?
A disqualified person is an individual who has certain relationships with an organization that may result in excess benefit transactions. Examples include current and former officers, directors, trustees, key employees, substantial contributors, and their family members.
What is an excess business holding for Form 4720?
An excess business holding is any interest in a trade or business that exceeds the amount necessary to provide reasonable compensation for services rendered to the organization. If the value of the excess business holding is more than $5,000, it is subject to excise tax under section 4960.
What is Form 4720?
Form 4720, Return of Certain Excise Taxes Under Chapters 41 and 42 of the Internal Revenue Code, is used by tax-exempt organizations to report and pay taxes on certain transactions.
Who must file Form 4720?
Tax-exempt organizations that have incurred excise taxes under Chapters 41 and 42 of the Internal Revenue Code must file Form 4720.
What are supporting organizations as per Form 4720?
Supporting organizations are tax-exempt organizations that support one or more specific charitable organizations with a controlling relationship. They include type II and type III supporting organizations as defined in the Internal Revenue Code.
What are the consequences of not filing Form 4720?
Failure to file Form 4720 may result in penalties, interest, and even criminal prosecution. The IRS can also revoke or deny tax-exempt status for failure to comply with reporting requirements.

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Tax forms

Form 4720 is one of Tax forms that are documents used to report income, deductions, and tax liability to the relevant tax authority. These forms are an essential part of the tax filing process and are used to ensure individuals and businesses comply with tax laws and accurately calculate their tax obligations.

The specific tax forms required can vary depending on factors such as an individual's filing status, sources of income, and the country's tax laws. However, here are some common types of tax forms:

Individual Income Tax Forms: These forms, such as the 1040 series in the United States, are used by individuals to report their income, claim deductions and credits, and calculate their tax liability.

Business Tax Forms: Businesses, including sole proprietorships, partnerships, corporations, and self-employed individuals, may have to file various forms to report their income, expenses, and taxes owed. Examples include Schedule C (Profit or Loss from Business) and Form 1120 (U.S. Corporation Income Tax Return).

Employment Tax Forms: Employers are required to report employee wages and withhold and remit payroll taxes. Forms such as W-2 (Wage and Tax Statement) and 941 (Employer's Quarterly Federal Tax Return) are used for this purpose.

Investment and Retirement Account Forms: These forms are used to report investment income, capital gains, and losses, as well as contributions and distributions from retirement accounts. Examples include Form 1099-DIV (Dividends and Distributions) and Form 5498 (IRA Contribution Information).

Estate and Gift Tax Forms: When a person passes away or makes significant gifts, specific forms such as Form 706 (United States Estate (and Generation-Skipping Transfer) Tax Return) and Form 709 (United States Gift (and Generation-Skipping Transfer) Tax Return) are used to report and calculate any applicable estate or gift taxes.

It is important to note that tax laws and forms can change over time, so individuals and businesses should consult the relevant tax authority or seek professional tax advice to ensure compliance with the current requirements.

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