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donor, donor advisor, or related party

related persons who received a

disclosing it to the Department of

receiving (either directly or indirectly) a

prohibited benefit. If more than one

Justice for civil and criminal litigation

more than incidental benefit, then such

donor, donor advisor, or related person

and to other federal agencies, as

benefit is a prohibited benefit.

is listed in column (a) for one

provided by law. We may disclose the

distribution, each is individually liable

information to cities, states, the District

Donor advisor. A donor advisor is

for the entire tax for that distribution.

of Columbia, and U.S. Commonwealths

any person appointed or designated by

However, the donors, donor advisors,

or possessions to administer their laws.

a donor to advise a sponsoring

or related persons who are liable for the

If you do not file this information, you

organization on the distribution or

tax may prorate the payment among

may be subject to interest, penalties,

investment of amounts held in the

themselves. Enter in column (c) the tax

and/or criminal prosecution.

donor’s fund or account.

each manager will pay for each

We may also disclose this

Related party. A related party

distribution for which such manager

information to other countries under a

includes any family member or 35%

owes a tax.

tax treaty, to federal and state agencies

controlled entity. See the General

Carry the total amount in column (d)

to enforce federal nontax criminal laws,

Instructions for Schedule I for a

for each donor, donor advisor, or

or to federal law enforcement and

definition of those terms.

related person to page 1, Part II-A,

intelligence agencies to combat

Tax on donor, donor advisor, or

column (k).

terrorism.

related person. A tax of 125% of the

Part III. Enter in column (a) the names

You are not required to provide the

benefit resulting from the distribution is

of all fund managers who agreed to

information requested on a form that is

imposed on both the party who advised

make the distribution conferring the

subject to the Paperwork Reduction Act

as to the distribution (which might be a

prohibited benefit. If more than one

unless the form displays a valid OMB

donor, donor advisor or related party)

fund manager is listed in column (a) for

control number. Books or records

and the party who received such

one distribution, each is individually

relating to a form or its instructions

benefit (which might be a donor, donor

liable for the entire tax for that

must be retained as long as their

advisor, or related party). The advisor

distribution. However, the fund

contents may become material in the

and the party who received the benefit

managers who are liable for the tax

administration of any Internal Revenue

are jointly and severally liable for the

may prorate the payment among

law. Generally, tax returns and return

tax.

themselves. Enter in column (c) the tax

information are confidential, as required

Tax on fund managers. If a tax is

each manager will pay for each

by section 6103.

imposed on a prohibited benefit

distribution for which such manager

The time needed to complete and

received by a donor, donor advisor, or

owes a tax.

file this form will vary depending on

related person, a tax of 10% of the

Carry the total amount in column (d)

individual circumstances. The

amount of the prohibited benefit is

for each fund manager to page 1, Part

estimated average time is:

imposed on any fund manager who

II-A, column (k).

agreed to the distribution knowing that

Recordkeeping . . . . . .

39 hr., 55 min.

it would confer a prohibited benefit. Any

Privacy Act and Paperwork

Learning about the law

fund manager who took part in the

Reduction Act Notice.

or the form . . . . . . . . .

16 hr., 30 min.

distribution and is liable for the tax must

We ask for the information on this form

pay the tax. The maximum amount of

Preparing the form . . .

23 hr., 22 min.

to carry out the Internal Revenue laws

tax on all fund managers for any one

of the United States. We need it to

Copying, assembling,

taxable distribution is $10,000. If more

ensure that you are complying with

and sending the form

than one fund manager is liable for tax

these laws and to allow us to figure and

to the IRS . . . . . . . . . .

1 hr., 36 min.

on a taxable distribution, all such

collect the right amount of tax. Certain

managers are jointly and severally

If you have comments concerning

individuals who owe tax under Chapter

liable for the tax.

the accuracy of these time estimates or

41 or 42 of the Internal Revenue Code,

Exception. If a person engaged in an

suggestions for making this form

and who do not sign the Form 4720 of

excess benefit transaction and received

simpler, we would be happy to hear

the foundation or organization, must file

a prohibited benefit for the same

from you. You can write to the Internal

a separate Form 4720 showing the tax

transaction, the person is taxed under

Revenue Service, Tax Products

owed and the name of the foundation

section 4958, and no tax is imposed

Coordinating Committee,

or organization for which they owe tax.

under section 4967 for a prohibited

SE:W:CAR:MP:T:T:SP, 1111

Sections 6001 and 6011 of the Internal

benefit.

Constitution Ave. NW, IR-6526,

Revenue Code require you to provide

Washington, DC 20224. Do not send

the requested information if the tax

Specific Instructions

the tax form to this address. Instead,

applies to you. Section 6109 requires

see Where To File on page 3.

Part I. Complete this part for all

you to provide your social security

prohibited benefits.

number or other identifying number.

Routine uses of this information include

Part II. Enter in column (a) the names

of all donors, donor advisors, and

-15-

Form 4720 Instructions

Instructions For Form 4720 - Return Of Certain Excise Taxes On Charities And Other Persons - Department Of The Treasury - 2007 Page 15

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