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the return the tax that applies to them

Interest at the underpayment rate

and E do not apply to public charities.

as shown in Part II-A, page 1.

established under section 6621 is

However, Schedule C does apply to

Managers, self-dealers, disqualified

charged for any unpaid tax. The

some public charities including donor

persons, donors, donor advisors, and

interest on underpayments is in addition

advised funds and certain supporting

related persons, who file separate

to any penalties.

organizations that are treated as private

Forms 4720 must pay the applicable

foundations for purposes of section

Abatement

tax with their separate returns. When

4943. See the instructions for Schedule

managers do not sign the

C for a description of the public

See section 4962 for rules on

organization’s Form 4720 to report their

charities to which section 4943 applies.

abatement, refund, or relief from

own tax liability, the amount of tax they

Before completing Schedule C,

payment of first tier taxes under

owe should not be entered in Part II-B,

determine whether the organization or

sections 4942 through 4945, 4955,

line 1.

donor advised fund has excess

4958, 4966, and 4967. To request

holdings in any business enterprise. If

abatement, refund, or relief under

Payment by a private foundation of

the organization or donor advised fund

section 4962, write “Request for

any taxes owed by the foundation

has holdings subject to the tax on

Abatement Under Section 4962” in the

managers or self-dealers will result in

excess business holdings, complete

top margin of Form 4720, page 1.

additional taxes under the self-dealing

Schedule C for each enterprise.

and taxable expenditure provisions.

Initial Tax Liability

Managers and self-dealers should pay

Before completing Schedule D,

taxes imposed on them with their own

determine whether the investment was

If you pay an initial tax on self-dealing

check or money order.

program related. If not, complete

or on investments that jeopardize

Schedule D for each investment for

charitable purpose (figured on

Disqualified persons and entity

which you answered “Yes” to Form

Schedules A and D of Form 4720,

managers should pay taxes on excess

990-PF, Part VII-B, question 4a or b, or

respectively) for tax year 2009, the

benefit transactions that are imposed

Form 5227, Part VI-B, question 78a or

payment may not satisfy the entire tax

on them with their own check or money

liability for an act of self-dealing or a

order. Any reimbursement of a

jeopardy investment. (For the definition

disqualified person’s tax liability from

of self-dealing, see the instructions for

excess benefit transactions by the

Specific Instructions for

Schedule A of this form; for the

organization will be treated as an

definition of jeopardy investment, see

excess benefit transaction subject to

Page 1

the instructions for Schedule D of this

the tax unless the organization included

form.) Paying the tax and filing a Form

Question B. To avoid additional taxes

the reimbursement in the disqualified

4720 are required for each year or part

and penalties under sections 4941

person’s compensation and the

of a year in the taxable period that

through 4945, 4955, and 4958, and in

disqualified person’s total

applies to the act or investment.

some cases further initial taxes on the

compensation was reasonable. See the

Generally, the taxable period begins

foundation, organization, and related

instructions for Schedule I on page 12

with the date of the act or investment

persons, a foundation, organization,

for information on excess benefit

and ends with the date corrective action

disqualified person, or manager must

transactions.

is completed, a notice of deficiency is

correct the taxable event within the

mailed, or the tax is assessed,

correction period. The taxable event is

Rounding Off to Whole

whichever comes first.

the act, failure to act, or transaction that

Dollars

resulted in the liability for initial taxes

Similar rules apply for the initial tax

under these provisions.

liability resulting from failing to distribute

You may round off cents to whole

income (Schedule B) and from

Generally, the correction period

dollars on your return and schedules. If

acquiring excess business holdings

begins on the date the event occurs

you do round to whole dollars, you

(Schedule C). Thus, the initial tax

and ends 90 days after the mailing date

must round all amounts. To round, drop

liability for those taxes continues to

of a notice of deficiency, under section

amounts under 50 cents and increase

accrue until the date a notice of

6212, in connection with the second tier

amounts from 50 to 99 cents to the next

deficiency is mailed, the violation is

tax imposed on that taxable event. That

dollar. For example, $1.39 becomes $1

corrected, or the tax is assessed,

time is extended by:

and $2.50 becomes $3.

•

whichever comes first.

Any period in which a deficiency

If you have to add two or more

cannot be assessed under section

amounts to figure the amount to enter

Completing the

6213(a) because a petition to the Tax

on a line, include cents when adding

Court for redetermination of the

Schedules

the amounts and round off only the

deficiency is pending, not extended by

total.

Before completing any of the schedules

any supplemental proceeding by the

in this return, read the applicable

Tax Court under section 4961(b),

Penalties and Interest

instructions. If any completed schedule

regarding whether correction was

shows taxes owed, enter them on page

made, and

There are penalties for failure to file or

•

1 of this return.

Any other period the IRS determines

to pay tax. There are also penalties for

is reasonable and necessary to correct

willful failure to file, supply information

The instructions for Schedules A

the taxable event.

or pay tax, and for filing fraudulent

through L describe acts or transactions

returns and statements, that apply to

subject to tax under Chapter 42. Also,

The taxable event will be treated as

public charities, private foundations,

go to

occurring:

•

managers, donors, donor advisors,

index.html for a list of exceptions that

For the tax on failure to distribute

related persons, and self-dealers who

eliminate any tax liability that would

income, on the first day of the tax year

are required to file this return. See

otherwise be shown on Schedules A

for which there was a failure to

sections 6651, 7203, 7206, and 7207.

and E. Do not complete Schedules A

distribute income,

•

Also, see section 6684 for penalties

and E if exceptions apply to all the acts

For the tax on excess business

that relate to tax liability under Chapter

or transactions. In general, question A

holdings, on the first day on which there

42.

on page 1 and Schedules A, B, C, D,

were excess business holdings, or

-4-

Form 4720 Instructions

Instructions For Form 4720 - Return Of Certain Excise Taxes On Charities And Other Persons - Department Of The Treasury - 2009 Page 4

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