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.
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.
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.
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.
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.
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.
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.
Tax-exempt organizations that have incurred excise taxes under Chapters 41 and 42 of the Internal Revenue Code must file 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.
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 is one of Tax forms that are documents used to report information related to taxes to the relevant tax authority. There are various types of tax forms, including federal, state, and local tax forms, which can vary depending on the taxpayer's circumstances and location.
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