Instructions For Form 4720 - Return Of Certain Excise Taxes On Charities And Other Persons - Department Of The Treasury - 2009 Page 15

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more than incidental benefit, then such
prohibited benefit. If more than one
Justice for civil and criminal litigation
benefit is a prohibited benefit.
donor, donor advisor, or related person
and to other federal agencies, as
is listed in column (a) for one
provided by law. We may disclose the
Donor advisor. A donor advisor is
distribution, each is individually liable
information to cities, states, the District
any person appointed or designated by
for the entire tax for that distribution.
of Columbia, and U.S. Commonwealths
a donor to advise a sponsoring
However, the donors, donor advisors,
or possessions to administer their laws.
organization on the distribution or
or related persons who are liable for the
If you do not file this information, you
investment of amounts held in the
tax may prorate the payment among
may be subject to interest, penalties,
donor’s fund or account.
themselves. Enter in column (c) the tax
and/or criminal prosecution.
Related party. A related party
each manager will pay for each
We may also disclose this
includes any family member or 35%
distribution for which such manager
information to other countries under a
controlled entity. See the General
owes a tax.
tax treaty, to federal and state agencies
Instructions for Schedule I for a
Carry the total amount in column (d)
to enforce federal nontax criminal laws,
definition of those terms.
for each donor, donor advisor, or
or to federal law enforcement and
Tax on donor, donor advisor, or
related person to page 1, Part II-A,
intelligence agencies to combat
related person. A tax of 125% of the
column (k).
terrorism.
benefit resulting from the distribution is
Part III. Enter in column (a) the names
You are not required to provide the
imposed on both the party who advised
of all fund managers who agreed to
information requested on a form that is
as to the distribution (which might be a
make the distribution conferring the
subject to the Paperwork Reduction Act
donor, donor advisor or related party)
prohibited benefit. If more than one
unless the form displays a valid OMB
and the party who received such
fund manager is listed in column (a) for
control number. Books or records
benefit (which might be a donor, donor
one distribution, each is individually
relating to a form or its instructions
advisor, or related party). The advisor
liable for the entire tax for that
must be retained as long as their
and the party who received the benefit
distribution. However, the fund
contents may become material in the
are jointly and severally liable for the
managers who are liable for the tax
administration of any Internal Revenue
tax.
may prorate the payment among
law. Generally, tax returns and return
Tax on fund managers. If a tax is
themselves. Enter in column (c) the tax
information are confidential, as required
imposed on a prohibited benefit
each manager will pay for each
by section 6103.
received by a donor, donor advisor, or
distribution for which such manager
related person, a tax of 10% of the
The time needed to complete and
owes a tax.
file this form will vary depending on
amount of the prohibited benefit is
Carry the total amount in column (d)
individual circumstances. The
imposed on any fund manager who
for each fund manager to page 1, Part
estimated average time is:
agreed to the distribution knowing that
II-A, column (k).
it would confer a prohibited benefit. Any
Recordkeeping . . . . . .
39 hr., 55 min.
fund manager who took part in the
Privacy Act and Paperwork
Learning about the law
distribution and is liable for the tax must
Reduction Act Notice.
or the form . . . . . . . . .
16 hr., 30 min.
pay the tax. The maximum amount of
We ask for the information on this form
tax on all fund managers for any one
Preparing the form . . .
23 hr., 22 min.
to carry out the Internal Revenue laws
taxable distribution is $10,000. If more
of the United States. We need it to
Copying, assembling,
than one fund manager is liable for tax
ensure that you are complying with
and sending the form
on a taxable distribution, all such
these laws and to allow us to figure and
to the IRS . . . . . . . . . .
1 hr., 36 min.
managers are jointly and severally
collect the right amount of tax. Certain
liable for the tax.
If you have comments concerning
individuals who owe tax under Chapter
Exception. If a person engaged in an
the accuracy of these time estimates or
41 or 42 of the Internal Revenue Code,
excess benefit transaction and received
suggestions for making this form
and who do not sign the Form 4720 of
a prohibited benefit for the same
simpler, we would be happy to hear
the foundation or organization, must file
transaction, the person is taxed under
from you. You can write to the Internal
a separate Form 4720 showing the tax
section 4958, and no additional tax is
Revenue Service, Tax Products
owed and the name of the foundation
imposed under section 4967 for the
Coordinating Committee,
or organization for which they owe tax.
same transaction.
SE:W:CAR:MP:T:T:SP, 1111
Sections 6001 and 6011 of the Internal
Constitution Ave. NW, IR-6526,
Revenue Code require you to provide
Specific Instructions
Washington, DC 20224. Do not send
the requested information if the tax
the tax form to this address. Instead,
Part I. Complete this part for all
applies to you. Section 6109 requires
see Where To File on page 3.
prohibited benefits.
signing individuals and paid preparers
to provide their identifying number.
Part II. Enter in column (a) the names
Routine uses of this information include
of all donors, donor advisors, and
disclosing it to the Department of
related persons who received a
-15-
Form 4720 Instructions

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