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agreed to the distribution knowing that

preparer’s authorization or revoke it

it would confer a prohibited benefit. Any

before it ends, see Pub. 947, Practice

Paid Preparer

Before the IRS and Power of Attorney.

fund manager who took part in the

distribution and is liable for the tax must

Generally, anyone who is paid to

Check “No,” if the IRS should

pay the tax. The maximum amount of

prepare the return must sign the return

contact the organization listed on the

tax on all fund managers for any one

and fill in the other blanks in the Paid

first page of the Form 4720, rather than

taxable distribution is $10,000. If more

Preparer Use Only area. An employee

the paid preparer.

than one fund manager is liable for tax

of the filing organization is not a paid

on a taxable distribution, all such

preparer.

Privacy Act and Paperwork

managers are jointly and severally

Reduction Act Notice.

The paid preparer must:

liable for the tax.

•

We ask for the information on this form

Sign the return in the space provided

to carry out the Internal Revenue laws

for the preparer’s signature,

Exception. If a person engaged in an

•

of the United States. We need it to

Enter the preparer information,

excess benefit transaction and received

•

ensure that you are complying with

Enter the preparer tax identification

a prohibited benefit for the same

these laws and to allow us to figure and

number (PTIN), and

transaction, the person is taxed under

•

collect the right amount of tax. Certain

Give a copy of the return to the

section 4958, and no additional tax is

individuals who owe tax under Chapter

organization.

imposed under section 4967 for the

41 or 42 of the Internal Revenue Code,

same transaction.

Any paid preparer whose

and who do not sign the Form 4720 of

identifying number must be

the foundation or organization, must file

listed on Form 990-PF can

Specific Instructions

a separate Form 4720 showing the tax

CAUTION

apply for and obtain a PTIN. You can

owed and the name of the foundation

apply for a PTIN online or by filing Form

Part I. Complete this part for all

or organization for which they owe tax.

W-12, IRS Paid Preparer Tax

prohibited benefits.

Sections 6001 and 6011 of the Internal

Identification Number (PTIN)

Revenue Code require you to provide

Application and Renewal. For more

Part II. Enter in column (a) the names

the requested information if the tax

information about applying for a PTIN

of all donors, donor advisors, and

applies to you. Section 6109 requires

online, visit the IRS website at

related persons who received a

you to provide your identifying number.

gov/taxpros.

prohibited benefit. If more than one

Routine uses of this information include

donor, donor advisor, or related person

disclosing it to the Department of

Paid Preparer Authorization

is listed in column (a) for one

Justice for civil and criminal litigation

On the “Sign Here” line, check “Yes,” if

distribution, each is individually liable

and to other federal agencies, as

the IRS can contact the paid preparer

for the entire tax for that distribution.

provided by law. We may disclose the

who signed the return to discuss the

However, the donors, donor advisors,

information to cities, states, the District

return. This authorization applies only

or related persons who are liable for the

of Columbia, and U.S. Commonwealths

to the individual whose signature

tax may prorate the payment among

or possessions to administer their laws.

appears in the Paid Preparer Use Only

themselves. Enter in column (c) the tax

We may also disclose this information

section of Form 4720. It does not apply

each manager will pay for each

to other countries under a tax treaty, to

to the firm, if any, shown in that section.

distribution for which such manager

federal and state agencies to enforce

federal nontax criminal laws, or to

owes a tax.

By checking “Yes,” to this box, the

federal law enforcement and

organization is authorizing the IRS to

contact the paid preparer to answer any

intelligence agencies to combat

Carry the total amount in column (d)

questions that arise during the

terrorism. If you do not file this

for each donor, donor advisor, or

processing of the return. The

information, you may be subject to

related person to Part II-A, column (k).

organization is also authorizing the paid

interest, penalties, and/or criminal

preparer to:

prosecution.

Part III. Enter in column (a) the names

•

Give the IRS any information missing

of all fund managers who agreed to

You are not required to provide the

from the return,

make the distribution conferring the

information requested on a form that is

•

Call the IRS for information about

prohibited benefit. If more than one

subject to the Paperwork Reduction Act

processing the return, and

fund manager is listed in column (a) for

unless the form displays a valid OMB

•

Respond to certain IRS notices about

one distribution, each is individually

control number. Books or records

math errors, offsets, and return

liable for the entire tax for that

relating to a form or its instructions

preparation.

distribution. However, the fund

must be retained as long as their

The organization is not authorizing

managers who are liable for the tax

contents may become material in the

the paid preparer to bind the

may prorate the payment among

administration of any Internal Revenue

organization to anything or otherwise

themselves. Enter in column (c) the tax

law. Generally, tax returns and return

represent the organization before the

each manager will pay for each

information are confidential, as required

IRS.

distribution for which such manager

by section 6103.

owes a tax.

The authorization will automatically

The time needed to complete and

end no later than the due date

file this form will vary depending on

Carry the total amount in column (d)

(excluding extensions) for filing of the

individual circumstances. The

for each fund manager to Part II-A,

organization’s 2011 Form 4720. If the

estimated average time is:

column (k).

organization wants to expand the paid

-17-

Form 4720 Instructions

Instructions For Form 4720 - Return Of Certain Excise Taxes - Department Of The Treasury - 2011 Page 17

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