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Column (j). Enter for each person

description of acts that are not

Schedule A—Initial

listed in column (a) the tax on taxable

considered self-dealing.

distributions from sponsoring

Initial taxes on self-dealer. An initial

Taxes on Self-Dealing

organizations maintaining donor

tax of 10% of the amount involved is

advised funds from Schedule K, Part II,

(Section 4941)

charged for each act of self-dealing

column (d) that the individual took part

between a disqualified person and a

in as a manager.

private foundation for each year or part

General Instructions

of a year in the taxable period. Any

Column (k). For each person listed in

Requirement. All organizations that

disqualified person (other than a

column (a), enter the:

answered “Yes,” to question 1b or 1c in

foundation manager acting only as

1. Tax imposed on a donor, donor

Part VII-B of Form 990-PF, or “Yes,” to

such) who takes part in the act of

advisor, or related person, from

question 75b or 75c in Part VI-B of

self-dealing must pay the tax.

Schedule L, Part II, column (d), and

Form 5227, must complete Schedule A.

Initial taxes on foundation managers.

2. Tax on each fund manager who

Complete Parts I, II, and III of Schedule

When a tax is imposed on a foundation

agreed to the making of a distribution of

A only in connection with acts that are

manager for an act of self-dealing, the

a prohibited benefit from Schedule L,

subject to the tax on self-dealing.

tax will be 5% of the amount involved in

Part III, column (d) that the individual

the act of self-dealing for each year or

took part in as a manager.

Paying the tax and filing a Form

part of a year in the taxable period.

4720 is required for each year or part of

Liability for tax. A person’s liability

However, the total tax imposed for all

a year in the taxable period that applies

for tax as a manager, self-dealer,

years in the taxable period is limited to

to the act of self-dealing. Generally, the

disqualified person, donor, donor

$20,000 for each act of self-dealing.

taxable period begins with the date on

advisor, or related person, under

The tax is imposed on any foundation

which the self-dealing occurs and ends

sections 4912, 4941, 4944, 4945, 4955,

manager who took part in the act

on the earliest of:

4958, 4966, and 4967 is joint and

knowing that it was self-dealing except

•

The date a notice of deficiency is

several. Therefore, if more than one

those foundation managers whose

mailed under section 6212, in

person owes tax on an act as a

participation was not willful and was

connection with the initial tax imposed

manager, self-dealer, disqualified

due to reasonable cause. Any

on the self-dealer,

person, donor, donor advisor, or related

foundation manager who took part in

•

The date the initial tax on the

person, they may apportion the tax

the act of self-dealing must pay the tax.

self-dealer is assessed, or

among themselves. However, when all

•

The date correction of the act of

Specific Instructions

managers, self-dealers, donors, donor

self-dealing is completed.

advisors, related persons, or

Part I. List each act of self-dealing in

Self-dealing. Self-dealing includes

disqualified persons who are liable for

Part I. Enter in column (d) the number

any direct or indirect:

tax on a particular transaction under

designation from Form 990-PF, Part

•

Sale, exchange, or leasing of

sections 4912, 4941, 4944, 4945, 4955,

VII-B, question 1a, or Form 5227, Part

property between a private foundation

4958, 4966, or 4967 pay less than the

VI-B, question 75a, that applies to the

and a disqualified person (see

total tax due on that transaction, then

act. For example, “1a(1)” or “1a(4).”

definitions in Form 990-PF instructions),

the IRS may charge the amount owed

Part II. Enter in column (a) the names

•

Lending of money or other extension

to one or more of them regardless of

of all disqualified persons who took part

of credit between a private foundation

the tax apportionment shown on this

in the acts of self-dealing listed in Part

and a disqualified person,

return.

I. If more than one disqualified person

•

Furnishing of goods, services, or

took part in an act of self-dealing, each

Part II-B

facilities between a private foundation

is individually liable for the entire tax in

and a disqualified person,

Line 2. If there is more than one

connection with the act. But the

•

Payment of compensation (or

signer for this return, see Tax

disqualified persons who are liable for

payment or reimbursement of

Payments, earlier.

the tax may prorate the payment

expenses) by a private foundation to a

among themselves. Enter in column (c)

Line 3. List total payments here,

disqualified person,

the tax to be paid by each disqualified

•

including amounts paid on extension(s)

Transfer to, or use by or for the

person.

with Form 8868. See the discussion on

benefit of, a disqualified person of the

Extensions, earlier, for details on

income or assets of a private

Carry the total amount in column (d)

amounts paid with extensions.

for each self-dealer to Part II-A,

foundation, and

•

Agreement by a private foundation to

column (c).

Line 4. Enter the tax due on this line.

make any payment of money or other

(Make check(s) or money order(s)

Part III. Enter in column (a) the names

property to a government official other

payable to the United States Treasury.)

of all foundation managers who took

than an agreement to employ or make

part in the acts of self-dealing listed in

Line 5. This is your refund. If various

a grant to that individual for any period

Part I, and who knew that they were

persons (individuals or organizations)

after the end of government service if

acts of self-dealing (except for

have overpaid their taxes, please have

that individual will be ending

foundation managers whose

each person request only his, her, or its

government service within a 90-day

participation was not willful and was

legal share of the refund. This can be

period.

due to reasonable cause).

shown on an attachment to the Form

4720. Only persons with a legal right to

Exceptions to self-dealing. Go to

If more than one foundation

a refund should file a refund request

manager took part in the act of

here.

irm_07-027-015.html#d0e272

for a

self-dealing, knowing that it was such

-7-

Form 4720 Instructions

Instructions For Form 4720 - Return Of Certain Excise Taxes - Department Of The Treasury - 2011 Page 7

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