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Abatement

persons, donors, donor advisors, and

C for a description of the public

related persons, who file separate

charities to which section 4943 applies.

See section 4962 for rules on

Forms 4720 must pay the applicable

abatement, refund, or relief from

Before completing Schedule C,

tax with their separate returns. When

payment of first tier taxes under

determine whether the organization or

managers do not sign the

sections 4942 through 4945, 4955,

donor advised fund has excess

organization’s Form 4720 to report their

4958, 4966, and 4967. To request

holdings in any business enterprise. If

own tax liability, the amount of tax they

abatement, refund, or relief under

the organization or donor advised fund

owe should not be entered in Part II-B,

section 4962, write “Request for

has holdings subject to the tax on

line 1.

excess business holdings, complete

Abatement Under Section 4962” in the

Payment by a private foundation of

top margin of Form 4720, page 1.

Schedule C for each enterprise.

any taxes owed by the foundation

Before completing Schedule D,

Initial Tax Liability

managers or self-dealers will result in

determine whether the investment was

additional taxes under the self-dealing

If you pay an initial tax on self-dealing

program related. If not, complete

and taxable expenditure provisions.

or on investments that jeopardize

Schedule D for each investment for

Managers and self-dealers should pay

charitable purpose (figured on

which you answered “Yes” to Form

taxes imposed on them with their own

Schedules A and D of Form 4720,

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

check or money order.

respectively) for tax year 2010, the

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

Disqualified persons and entity

payment may not satisfy the entire tax

managers should pay taxes on excess

liability for an act of self-dealing or a

benefit transactions that are imposed

Amended Return

jeopardy investment. (For the definition

on them with their own check or money

of self-dealing, see the instructions for

order. Any reimbursement of a

To correct a previously filed Form 4720,

Schedule A of this form; for the

disqualified person’s tax liability from

use the same year form as you are

definition of jeopardy investment, see

excess benefit transactions by the

correcting, then:

the instructions for Schedule D of this

•

organization will be treated as an

Write “Amended Return” at the top of

form.) Paying the tax and filing a Form

excess benefit transaction subject to

page 1.

4720 are required for each year or part

•

the tax unless the organization included

Complete the entire return (not just

of a year in the taxable period that

the reimbursement in the disqualified

the part that changed) following the

applies to the act or investment.

person’s compensation and the

form and instructions for the amended

Generally, the taxable period begins

disqualified person’s total

year.

with the date of the act or investment

•

compensation was reasonable. See the

Include a statement that identifies the

and ends with the date corrective action

instructions for Schedule I on page 12

lines and amounts being changed and

is completed, a notice of deficiency is

for information on excess benefit

the reason for each change.

mailed, or the tax is assessed,

•

transactions.

Write the entity’s name and EIN at

whichever comes first.

the top of each page of the statement.

Similar rules apply for the initial tax

Rounding Off to Whole

If the amended return is claiming a

liability resulting from failing to distribute

Dollars

refund or requesting an abatement,

income (Schedule B) and from

write “Claim for Refund” or “Request for

acquiring excess business holdings

You may round off cents to whole

Abatement,” whichever is applicable,

(Schedule C). Thus, the initial tax

dollars on your return and schedules. If

near the top of the statement discussed

liability for those taxes continues to

you do round to whole dollars, you

above.

accrue until the date a notice of

must round all amounts. To round, drop

deficiency is mailed, the violation is

Note: If you are claiming a refund or

amounts under 50 cents and increase

corrected, or the tax is assessed,

requesting an abatement, you may use

amounts from 50 to 99 cents to the next

whichever comes first.

Form 843, Claim for Refund and

dollar. For example, $1.39 becomes $1

Request for Abatement, instead of

and $2.50 becomes $3.

Completing the

Form 4720.

If you have to add two or more

Schedules

amounts to figure the amount to enter

on a line, include cents when adding

Before completing any of the schedules

Specific Instructions for

the amounts and round off only the

in this return, read the applicable

total.

Page 1

instructions. If any completed schedule

shows taxes owed, enter them on page

Penalties and Interest

Question B. To avoid additional taxes

1 of this return.

and penalties under sections 4941

There are penalties for failure to file or

The instructions for Schedules A

through 4945, 4955, and 4958, and in

to pay tax. There are also penalties for

through L describe acts or transactions

some cases further initial taxes on the

willful failure to file, supply information

subject to tax under Chapter 42. Also,

foundation, organization, and related

or pay tax, and for filing fraudulent

go to

persons, a foundation, organization,

returns and statements, that apply to

index.html for a list of exceptions that

disqualified person, or manager must

public charities, private foundations,

eliminate any tax liability that would

correct the taxable event within the

managers, donors, donor advisors,

otherwise be shown on Schedules A

correction period. The taxable event is

related persons, and self-dealers who

and E. Do not complete Schedules A

the act, failure to act, or transaction that

are required to file this return. See

and E if exceptions apply to all the acts

resulted in the liability for initial taxes

sections 6651, 7203, 7206, and 7207.

or transactions. In general, question A

under these provisions.

Also, see section 6684 for penalties

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

that relate to tax liability under Chapter

and E do not apply to public charities.

Generally, the correction period

42.

However, Schedule C does apply to

begins on the date the event occurs

Interest at the underpayment rate

some public charities including donor

and ends 90 days after the mailing date

established under section 6621 is

advised funds and certain supporting

of a notice of deficiency, under section

charged for any unpaid tax. The

organizations that are treated as private

6212, in connection with the second tier

interest on underpayments is in addition

foundations for purposes of section

tax imposed on that taxable event. That

to any penalties.

4943. See the instructions for Schedule

time is extended by:

-4-

Form 4720 Instructions

Instructions For Form 4720 - Instructions For Return Of Certain Excise Taxes - Department Of The Treasury - 2010 Page 4

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