4720 Instructions for Form 4720

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2023

Department of the Treasury
Internal Revenue Service

Instructions for Form 4720

Return of Certain Excise Taxes Under Chapters 41 and 42 of the
Internal Revenue Code
(Sections 170(f)(10), 664(c)(2), 4911, 4912, 4941, 4942,
4943, 4944, 4945, 4955, 4958, 4959, 4960, 4965, 4966, 4967, and 4968)

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Section references are to the Internal Revenue
Code unless otherwise noted.

Contents

Page

General Instructions . . . . . . . . . .
Purpose of Form . . . . . . . . . . . .
Who Must File . . . . . . . . . . . . .
Where and How To File . . . . . . . .
When To File . . . . . . . . . . . . . .
Extension . . . . . . . . . . . . . . . .
Name, Address, etc. . . . . . . . . .
Signature and Verification . . . . . .
Attachments . . . . . . . . . . . . . . .
Organizations Organized or
Created in a Foreign Country .
Tax Payments . . . . . . . . . . . . . .
Rounding Off to Whole Dollars . . .
Penalties and Interest . . . . . . . . .
Abatement . . . . . . . . . . . . . . . .
Initial Tax Liability and Correction .
Completing the Schedules . . . . .
Amended Return . . . . . . . . . . . .
Specific Instructions for Page 1 . . .
Schedule A—Initial Taxes on
Self-Dealing (Section 4941) . .
Schedule B—Initial Tax on
Undistributed Income (Section
4942) . . . . . . . . . . . . . . . .
Schedule C—Initial Tax on Excess
Business Holdings (Section
4943) . . . . . . . . . . . . . . . .
Schedule D—Initial Taxes on
Investments That Jeopardize
Charitable Purpose (Section
4944) . . . . . . . . . . . . . . . .
Schedule E—Initial Taxes on
Taxable Expenditures
(Section 4945) . . . . . . . . . .
Schedule F—Initial Taxes on
Political Expenditures
(Section 4955) . . . . . . . . . .
Schedule G—Tax on Excess
Lobbying Expenditures
(Section 4911) . . . . . . . . . .
Schedule H—Taxes on
Disqualifying Lobbying
Expenditures (Section 4912) .
Schedule I—Initial Taxes on
Excess Benefit Transactions
(Section 4958) . . . . . . . . . .
Schedule J—Taxes on Being a
Party to Prohibited Tax Shelter
Transactions (Section 4965) .
Schedule K—Taxes on Taxable
Distributions of Sponsoring
Organizations Maintaining
Donor Advised Funds
(Section 4966) . . . . . . . . . .

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Contents

Page

Schedule L—Taxes on Prohibited
Benefits Distributed From
Donor Advised Funds
(Section 4967) . . . . . . . . . .
Schedule M—Tax on Hospital
Organization for Failure to
Meet the Community Health
Needs Assessment
Requirements (Sections 4959
and 501(r)(3)) . . . . . . . . . . .
Schedule N—Tax on Excess
Executive Compensation
(Section 4960) . . . . . . . . . .
Schedule O—Excise Tax on Net
Investment Income of Private
Colleges and Universities
(Section 4968) . . . . . . . . . .
Paid Preparer . . . . . . . . . . . . . .
Phone Help . . . . . . . . . . . . . . .
Photographs of Missing Children .
How To Get Forms and
Publications . . . . . . . . . . . .
IRS e-Services Makes Taxes
Easier . . . . . . . . . . . . . . . .
Index . . . . . . . . . . . . . . . . . . .

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Future Developments

For the latest information about
developments related to Form 4720 and
its instructions, such as legislation
enacted after they were published, go to
IRS.gov/Form4720.

What’s New
Electronic filing for filers that are not
private foundations. Under final
regulations (T.D. 9972) issued in
February 2023, filers of Form 4720 that
are not private foundations are required
to file Form 4720 electronically if they
file 10 or more returns in the aggregate
in a calendar year. The regulations are
effective for returns required to be filed
for tax years ending on or after
December 31, 2023. See Where and
How To File, for more information.

Reminders

Forms 4720 filed by private foundations
are publicly disclosable. Don’t enter
Social Security Numbers on these
publicly disclosable returns.

Separate returns. A manager,
self-dealer, disqualified person, donor,
Cat. No. 13023Z

donor advisor, or related person who
owes tax under Chapter 41 or 42,
(including an entity manager under
section 4965), may no longer report the
tax on the Form 4720 filed by the
organization. Each taxpayer must file a
separate Form 4720.
Electronic filing for private foundations. Under Regulations section
1.6033-2(a)(2)(ii)(J), private foundations
are required to report such information
as is required by Form 4720 as part of
their information reporting requirement
under section 6033. Therefore, private
foundations reporting information
required as to liability for tax imposed
under Chapter 42 on the Form 4720
(Schedules A-F, J, or N) must file this
form electronically. Other filers of Form
4720 may be required to file
electronically as described in Where
and How To File, later. See Regulations
section 301.6011-12. Additionally, any
other filer of Form 4720 who is not
required to file electronically may also
voluntarily use the electronic form.
Entity or person subject to tax filing
Form 4720 with respect to more than
one organization. Item B in the header
area of Form 4720 is revised for use by
any entity (other than the organization)
or person who is required to file Form
4720 to report and pay an excise tax
under Chapters 41 or 42 of the Internal
Revenue Code with respect to more
than one organization. The information
entered in Item B will allow IRS systems
to accept and process multiple Form
4720 filings under the same taxpayer
number (Employer Identification
Number or Social Security Number).
Explanations of corrective action
taken. Instead of using Item B to collect
information about corrections made (or
not made) on taxable events, Form 4720
is revised to request information about
such corrections in each of Schedules
A, B, C, D, E, F, or I. Now, for each
transaction to which an initial tax applies
under sections 4941, 4942, 4943, 4944,
4945, 4955, or 4958, the organization or
any other entity or person required to file
Form 4720 to report one or more such

transactions, must indicate whether a
correction has been made (or not) on
the Schedule where each transaction is
reported.

General Instructions
Purpose of Form

that result in prohibited benefits from a
donor advised fund.
• The section 4968 taxes on net
investment income of certain private
colleges and universities.
• The section 170(f)(10) tax on any
premiums paid on a personal benefit
contract in connection with a transfer to
an organization or charitable remainder
trust for which a charitable deduction
isn't allowed to the transferor.
• The section 664(c)(2) tax on the
unrelated business taxable income of a
charitable remainder trust.

(Form 990), Part II-A, must file Form
4720 to report the liability and pay the
tax (Schedule G). Certain organizations
whose section 501(c)(3) status is
revoked because of excess lobbying
activities (and possibly their managers)
are subject to a 5% excise tax on their
lobbying expenditures (Schedule H).

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Use Form 4720 to figure and pay the
following.
• The initial taxes on private
foundations, disqualified persons, or
foundation managers under sections
4941 through 4945 for self-dealing,
failure to distribute income, excess
business holdings, investments that
jeopardize charitable purpose, and
taxable expenditures (see instructions
for Schedules A through E for
definitions).
• The initial tax on certain supporting
organizations and donor advised funds
for excess business holdings under
section 4943.
• The section 4911 tax on excess
lobbying expenditures by public
charities that have elected to be subject
to section 501(h) regarding
expenditures to influence legislation.
(Private foundations and section
4947(a) trusts aren't eligible to make this
election).
• The section 4912 tax on disqualifying
lobbying expenditures that result in loss
of section 501(c)(3) tax-exempt status.
• The section 4955 tax imposed on any
amount paid or incurred by a section
501(c)(3) organization that participates
or intervenes in any political campaign
on behalf of, or in opposition to, any
candidate for public office.
• The section 4958 initial taxes on
disqualified persons and organization
managers of section 501(c)(3) (except
private foundations), section 501(c)(4),
and section 501(c)(29) organizations
that engage in excess benefit
transactions.
• The section 4959 tax on the failure by
a hospital organization to meet the
community health needs assessment
requirements under section 501(r)(3).
• The section 4960 taxes on excess
tax-exempt organization executive
compensation.
• The section 4965 taxes on prohibited
tax shelter transactions.
• The section 4966 taxes on taxable
distributions by sponsoring
organizations maintaining donor
advised funds.
• The section 4967 taxes on a donor,
donor advisor, or related party, and a
manager of a sponsor of a donor
advised fund, relating to distributions

Who Must File

Organizations and Any Related
Organization Subject to Tax
Under Chapter 41 or 42

Organizations liable for excise tax under
Chapter 41 or 42 should complete the
schedule(s) described below, as
applicable. Taxes owed by the
organization are reported in Part I only.

The organization should not
enter any amount(s) in Part II.
CAUTION Part II is used by persons and
entities other than the organization to
report and pay excise tax liability relating
transactions or activities described in
the applicable schedule.

!

Private foundations and section
4947(a) trusts. Generally, Form 4720
must be filed by all organizations,
including foreign organizations, that
answered “Yes,” to question 1b, 1d, 2b,
3b, 4a, 4b, 5b, 6b, 7b, or 8 in Part VI-B of
Form 990-PF; or “Yes,” to question 1b,
1c, 3b, 4a, 4b, 5b, 6b, or 7 in Part VIII of
Form 5227. (Schedules A through E).

Other organizations owing initial taxes on excess business holdings.
Supporting organizations described in
section 4943(f)(3) and donor advised
funds described in section 4966(d)(2)
that owe the tax reported on Schedule C
(section 4943(a)). (Schedule C).
Organizations making political expenditures. All section 501(c)(3)
organizations that make a political
expenditure must file Form 4720 to
report the liability and pay the tax
(Schedule F). Organization managers
may report any first-tier tax they owe on
Schedule F of Form 4720. (See
Schedule F instructions, later, for the
definition of political expenditures.)
Public charities making excess lobbying expenditures. Public charities
that made the election under section
501(h) and owe tax on excess lobbying
expenditures as figured on Schedule C
-2-

Charitable organizations that engage in excess benefit transactions.
Form 4720 must be filed by any
organization that answered “Yes” to
question 25a in Part V of Form 990 or
that otherwise engaged in an excess
benefit transaction described in section
4958. (Schedule I).
Charitable organizations that make
certain premium payments on personal benefit contracts. Form 4720
must be filed by any organization
described in section 170(c) or section
664(d) that answered “Yes,” to question
7f in Part V of Form 990, question 6b in
Part VI-B of Form 990-PF, question 6b in
Part VIII of Form 5227, or that otherwise
paid premiums on a personal benefit
contract in connection with a transfer to
an organization for which a charitable
deduction was not allowed to the
transferor (Part I, line 8).
Certain tax-exempt entities that are a
party to a prohibited tax shelter
transaction (PTST). Certain
tax-exempt entities must file Form 4720
to report the liability and pay the tax due
under section 4965(a)(1) (Schedule J).
This requirement applies to entities
described in sections 501(c), 501(d), or
170(c) (other than the United States) or
an Indian tribal government (within the
meaning of section 7701(a)(40)).
Any entity described in section

TIP 4965(c) that is a party to a PTST
must file Form 8886-T.

Sponsoring organizations maintaining donor advised funds. All section
170(c) organizations (excluding private
foundations and government
organizations referred to in sections
170(c)(1) and 170(c)(2)(A)) that
maintain one or more donor advised
funds must file Form 4720 to report the
liability and pay the tax owed on any
taxable distributions under section 4966
(Schedule K). In addition, sponsoring
organizations that have made a
distribution resulting in a prohibited
benefit to a donor, donor advisor, or
related person must file Form 4720 to
report the distribution (Schedule L).
Charitable remainder trusts. All
charitable remainder trusts described in
section 664 that have unrelated
Instructions for Form 4720 (2023)

business taxable income for the tax year
must file Form 4720 to report the liability
and pay the tax due (Part I, line 11).
Unrelated business taxable income is
figured under section 512 and is
determined as if Part III of subchapter F
applies to such trusts. Use Form 990-T
to compute unrelated business taxable
income. The charitable remainder trust
should not submit Form 990-T for
processing as a return. Instead, attach a
copy of the completed Form 990-T and
file it with Form 4720.

educational institution, as defined in
section 25A(f)(2);
• Had at least 500 students during the
preceding tax year, with more than 50%
of those students located in the United
States; and
• Had an aggregate fair market value,
at the end of the preceding tax year, of
assets not used directly in the carrying
out of the organization’s exempt
purpose, held by the organization and
related organizations, of at least
$500,000 per student.

Hospital organizations failing to
meet the community health needs
assessment requirements (Sections
501(r)(3), 4959). An excise tax is
imposed on the failure by a hospital
organization to meet the community
health needs assessment (“CHNA”)
requirements of section 501(r)(3)
(Schedule M).

Other Filers

Authorized IRS e-File Providers for
Business Returns.
Mandatory electronic filing for private foundations. All private
foundations reporting information
required as to liability for tax imposed
under Chapter 42 on the Form 4720
(Schedules A-F, J, or N) must file this
form electronically, regardless of the
number of other returns the private
foundation must file during the calendar
year. Form 4720 returns filed on paper
by organizations required to file
electronically will not be accepted or
processed.

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Certain taxpayers that pay excess
executive compensation. An
applicable tax-exempt organization
(ATEO) that pays to any covered
employee more than $1 million in
remuneration or pays an excess
parachute payment during the year must
file Form 4720 to report the liability and
pay the excise tax imposed by section
4960. (Schedule N). An ATEO includes
section 501(a) exempt organizations,
section 527 political organizations,
section 521 farmers’ cooperatives, and
government entities that have income
excluded under section 115(1). If
remuneration from a related
organization is included to determine
the tax imposed by section 4960, the
related organization must file a separate
Form 4720 to report its share of liability
for the tax on Schedule N. See the
instructions for Schedule N, later, for the
definition of related organization for
purposes of the excise tax under section
4960.
A governmental entity that is not

TIP exempt from tax under section

501(a) and does not exclude
income under section 115(1) is not an
ATEO for purposes of section 4960.

Certain private colleges and universities subject to the excise tax on
net investment income (section
4968). An applicable educational
institution must file Form 4720 to report
the liability and pay the excise tax
imposed by section 4968. (Schedule O)
An applicable educational institution is a
private college or university that:
• Answered “Yes” to line 16 in Part V of
Form 990 or that otherwise is a private
college or university that is an eligible
Instructions for Form 4720 (2023)

Managers, self-dealers, disqualified
persons, donors, donor advisors,
and related persons. A manager,
self-dealer, disqualified person, donor,
donor advisor, or related person who
owes tax under Chapter 41 or 42,
including an entity manager under
section 4965, must file a separate Form
4720 showing the tax owed. The Form
4720 filed by a manager, self-dealer,
disqualified person, donor, donor
advisor, or related person should
include the name of the organization in
Part II. If applicable, a separate Form
4720 should be filed for each
organization for which the manager,
self-dealer, disqualified person, donor,
donor advisor, or related person owes
tax. A person filing Form 4720 should
enter their tax year at the top of Form
4720. Enter the name, address, and
taxpayer identification number of the
manager, self-dealer, disqualified
person, donor, donor advisor, or related
person in the address area at the top of
Form 4720. Enter the name of the
organization in the name and address
area in Part II. Each manager,
self-dealer, disqualified person, donor,
donor advisor, or related person should
complete all the information the form
requires, including the schedule(s)
applicable to each tax shown on Part II,
to the extent possible, and as
applicable.

Managers of tax favored
TIP retirement plans, individual
retirement arrangements, and
savings arrangements described in
sections 401(a), 403(a), 403(b), 529,
457(b), 408(a), 220(d), 408(b), 530, or
223(d) must report and pay tax due
under section 4965(a)(2) on Form 5330.

Where and How To File
Electronic filing. All persons required
to file can file Form 4720 electronically.
For general information about electronic
filing, visit IRS.gov/Efile, and see Pub.
4163, Modernized e-file Information for
-3-

Mandatory electronic filing for other
than private foundations. Filers that
are not private foundations required to
file at least 10 returns of any type during
the calendar year ending with or within
the tax year must file their returns
electronically. “Returns” for purposes of
these instructions include information
returns (for example, Forms W-2 and
Forms 1099), income tax returns,
employment tax returns (including
quarterly Forms 941, Employer’s
Quarterly Federal Tax Return), and
excise returns. The failure to file a return
electronically when required is deemed
a failure to file the return even if the filer
submits a paper return.
On a year-by-year and form-by-form
basis, the IRS may waive, in cases of
undue hardship, the requirement that
filers other than private foundations that
file 10 or more returns file electronically.
In certain circumstances, a filer may be
administratively exempt from the
requirement to file electronically. The
filer should keep documentation
supporting their undue hardship or other
applicable reason for not filing
electronically in the filer’s records. For
more information about mandatory
electronic filing based on the 10–return
threshold, waivers, and exemptions, see
Regulations section 301.6011–12.
Paper filing. For filers submitting paper
returns:

IF you are
located in ...

THEN use the
following
address ...

the United States

Department of the
Treasury
Internal Revenue
Service Center
Ogden, UT
84201-0027

Part II taxes on managers, self-dealers, disqualified persons, donors,
donor advisors, or related persons.
Each manager, self-dealer, disqualified
person, donor, donor advisor, or related
person, must file Form 4720 by the 15th
day of the 5th month after the end of
their tax year.
If the regular due date falls on a
Saturday, Sunday, or legal holiday, file
by the next business day.

treasurer, assistant treasurer, chief
accounting officer, or other corporate
officer (such as tax officer).
For a partnership, the form may be
signed by a partner or partners
authorized to sign the partnership
return.

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a foreign country or Internal Revenue
a U.S. territory
Service Center
P.O. Box 409101
Ogden, UT 84409

Private delivery services. You can
use certain private delivery services
(PDS) designated by the IRS to meet
the “timely mailing as timely filing/
paying” rule for tax returns and
payments. Go to IRS.gov/PDS for the
current list of designated services.
The private delivery service can tell
you how to get written proof of the
mailing date.
Private delivery services can't deliver
items to P.O. boxes. You must use the
U.S. Postal Service to mail any item to
an IRS P.O. box address. Private
delivery services deliver to:
Internal Revenue Service
1973 Rulon White Blvd.
Ogden, UT 84201

When To File
Part I taxes on the organization. File
Form 4720 by the due date (not
including extensions) for filing the
organization's Form 990-PF, Form 990,
Form 990-EZ, or Form 5227. If you
aren't required to file any of these forms,
file Form 4720 by the 15th day of the 5th
month after the organization's
accounting period ends.
If the regular due date falls on a
Saturday, Sunday, or legal holiday, file
by the next business day.
Affiliated group member. See
section 4911(f) and the instructions for
Schedule G, later, for definition of
“affiliated group.” For the members of an
affiliated group of organizations that
have different tax years, and who are
filing Form 4720 to report tax under
section 4911, the tax year of the
affiliated group is the calendar year,
unless all members of the group elect
under Regulations section 56.4911-7(e)
(5) to make a member's year the group's
tax year.

Extension

Use Form 8868, Application for
Automatic Extension of Time To File an
Exempt Organization Return or Excise
Taxes Related to Employee Benefit
Plans, to request an automatic
extension of time to file. The automatic
extension will be granted if Form 8868 is
properly completed, filed, and any
balance due shown on Form 4720 is
paid by the due date for Form 4720.

Name, Address, etc.

For an organization filing its own Form
4720, the name, address, and employer
identification number of the organization
should be the same as shown on Form
990-PF, Form 5227, Form 990, or Form
990-EZ, and entered in the address field
at the top of the form. A self-dealer,
donor, donor advisor, related person,
disqualified person, or manager filing a
separate Form 4720 enters their name,
address, and taxpayer identification
number in the address field at the top of
the form. The name and address of the
organization to which taxes reported in
Part II relate is entered in the address
field at the top of Part II.
Include the suite, room, or other unit
number after the street address.
If the Post Office doesn't deliver mail
to the street address, show the P.O. box
number instead of the street address.

For a trust, the form must be signed
by the trustee(s).
A receiver, trustee, or assignee
required to file any return on behalf of an
individual, a trust, estate, partnership,
association, company, or corporation
must sign the Form 4720 filed for these
taxpayers.
Also, a person with a valid power of
attorney may sign for the organization,
foundation, manager, self-dealer, donor,
donor advisor, or related person.
Include a copy of the power of attorney
with the return.

Attachments

If you need more space, and are
permitted to file a paper form, attach
separate sheets showing the same
information in the same order as on the
printed form. Show the totals on the
printed form.
Enter the organization's name and
EIN on each sheet. Use sheets that are
the same size as the form and indicate
clearly the line of the paper form to
which the information relates.

Organizations Organized
or Created in a Foreign
Country

Report all amounts in U.S. currency
(state conversion rate used) and give
information in English. Report items in
total, including amounts and
transactions from both inside and
outside the United States.

Each taxpayer required to file Form
4720 (see Who Must File, earlier) must
file their own return. Each return must
be signed by a person authorized to
sign the return as of the date the return
is filed.

Chapter 42 taxes (including sections
4941 through 4945, 4955, 4958 through
4960, and 4965 through 4968) don't
apply to foreign organizations that
receive substantially all of their support
(other than gross investment income)
from sources outside the United States.
See section 4948(b). These
organizations must complete this form
and file it in the same manner as
domestic organizations. However, these
organizations, as well as their
foundation managers and self-dealers,
don't have to pay any tax that would
otherwise be due on this return.

For a corporation (or an association),
the form may be signed by one of the
following: president, vice president,

For these purposes, a foreign
organization is an organization not
created or organized in or under the law

If you want a third party (such as an
accountant or an attorney) to receive
mail for the foundation or charity, enter
on the street address line “C/O” followed
by the third party's name and street
address or P.O. box.

Signature and Verification

-4-

Instructions for Form 4720 (2023)

of the United States, a U.S. state or
territory, or the District of Columbia.
Gifts, grants, contributions, or
membership fees directly or indirectly
from a United States person (as defined
in section 7701(a)(30)) are from sources
within the U.S. See Regulations section
53.4948-1.

disqualified person or manager liable for
the excise tax under section 4958(a)(1)
or (2). Disqualified persons and entity
managers should each file their own
return and should pay taxes on excess
benefit transactions that are imposed on
them under section 4958 from their own
funds. Any reimbursement of a
disqualified person's tax liability from
excess benefit transactions by the
organization will be treated as an excess
benefit transaction subject to the tax
unless the organization included the
reimbursement in the disqualified
person's compensation and the
disqualified person's total compensation
was reasonable. See the instructions for
Schedule I, later, for information on
excess benefit transactions.

Rounding Off to Whole
Dollars

You may round off cents to whole dollars
on your return and schedules. If you do
round to whole dollars, you must round
all amounts. To round, drop amounts
under 50 cents and increase amounts
from 50 to 99 cents to the next dollar.
For example, $1.39 becomes $1 and
$2.50 becomes $3.

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Although a foreign organization
described in section 4948(b) isn't
subject to Chapter 42 taxes, it shall not
be exempt from tax under section
501(a) if it engages in a prohibited
transaction. See section 4948(c). A
prohibited transaction is a transaction
that would subject the organization or its
disqualified person to a penalty under
section 6684 if the foreign organization
were a domestic organization. Unless
the transaction constitutes a willful and
flagrant violation of a Chapter 42
provision, a transaction violating a
Chapter 42 provision won't constitute a
prohibited transaction except under the
following circumstances:
1. There was a prior Chapter 42
violation that resulted in a warning from
the IRS that a second violation would
result in a prohibited transaction.
2. The IRS provides notice that the
second transaction will constitute a
prohibited transaction unless it is
corrected within 90 days of the notice.
3. The second transaction isn't
timely corrected.

Reporting Self-Dealing,
Excess Benefit
Transactions, and
Prohibited Benefits
A private foundation that engages in a
self-dealing transaction must report the
transaction on Schedule A but must not
pay the tax liability of any disqualified
person or manager liable for the excise
tax under section 4941(a)(1) or (2).
Payment by a private foundation of any
taxes owed by the foundation managers
or self-dealers will result in additional
taxes under the self-dealing and taxable
expenditure provisions (sections 4941
and 4945, respectively). In addition,
these payments could impact the
foundation's calculation of undistributed
income on Form 990-PF which could
subject the foundation to additional
taxes under section 4942. Managers
and self-dealers should pay taxes
imposed on them from their own funds.
An organization that engages in an
excess benefit transaction must report
the transaction on Schedule I but must
not pay the tax liability of any
Instructions for Form 4720 (2023)

Similarly, an organization that pays a
prohibited benefit from a donor advised
fund must report the transaction(s) on
Schedule L but must not pay the tax
liability of any donor advisor or manager
liable for the excise taxes under section
4967. Such persons should each file
their own return and pay the applicable
excise tax under section 4967 from their
own funds. Any reimbursement of a
donor advisor's tax liability under
section 4967 by the organization will be
treated an additional prohibited benefit.

Tax Payments

The organization or a related
organization liable for the section 4960
excise tax on excess executive
compensation, reports and computes
the taxes owed on Part I. The
organization or related organization
pays the applicable taxes on Part III of
the organization’s Form 4720. Each
must file their own return and cannot file
jointly.
Managers, self-dealers, disqualified
persons, donors, donor advisors, and
related persons, report and compute the
applicable taxes on Part II. Such
persons pay the applicable tax on Part
III, each filing a separate Form 4720.
Tax payments can be made by check
or through the Electronic Federal Tax
Payment System (EFTPS). For more
information about EFTPS or to enroll in
EFTPS, visit the EFTPS website at
EFTPS.gov, or call 800-555-4477. You
can also get Pub. 966, Electronic
Federal Tax Payment System: A Guide
to Getting Started. See below for an
exception to this rule for small
foundations.

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If you have to add two or more
amounts to figure the amount to enter
on a line, include cents when adding the
amounts and round off only the total.

Penalties and Interest

There are penalties for failure to file or to
pay tax. There are also penalties for
willful failure to file, supply information or
pay tax, and for filing fraudulent returns
and statements, that apply to public
charities, private foundations,
managers, donors, donor advisors,
related persons, and self-dealers who
are required to file this return. See
sections 6651, 7203, 7206, and 7207.
Also, see section 6684 for penalties that
relate to tax liability under Chapter 42.
Interest on any unpaid tax is charged
at the underpayment rate established
under section 6621. The interest on
underpayments is in addition to any
penalties.

Abatement

Use Form 843, Claim for Refund and
Request for Abatement, to request
abatement, refund, or relief under
section 4962. See section 4962 for rules
on abatement, refund, or relief from
payment of first tier taxes under sections
4942 through 4945, 4955, 4958, 4966,
and 4967.
Note. If you file Form 4720 on paper,
you can submit the Form 843 with your
Form 4720 or mail it separately, as
described in the instructions for that
form. If you file Form 4720 electronically,
mail Form 843, as described in the
instructions for that form, after receiving
confirmation your electronically filed
Form 4720 has been accepted.

Initial Tax Liability and
Correction

If you pay an initial tax under sections
4941 through 4945, 4955, and 4958, for
tax year 2023, the payment may not
satisfy the entire tax liability for a taxable
event. The taxable event is the act,
failure to act, or transaction that resulted
in the liability for initial taxes under these
provisions.

Paying the tax and filing a Form 4720
are required for each year or part of a
year in the taxable period that applies to
the taxable event. Generally, the taxable
period begins with the date of the act or
investment and ends with the date
corrective action is completed, a notice
of deficiency is mailed, or the tax is
assessed, whichever comes first. Thus,
the initial tax liability for those taxes
continues to accrue until the date a
notice of deficiency is mailed, the
violation is corrected, or the tax is
assessed, whichever comes first.

you are a manager, self-dealer,
disqualified person, donor, donor
advisor, or related person.

year form as the form you are correcting.
Check the “Amended Return” box in the
heading area.

The organization will complete all
parts of each applicable schedule,
including computation of the initial tax
on other persons (for example,
self-dealers and managers), even
though the organization is not liable for
those tax amounts. Entities other than
the organization and individuals filing
Form 4720 should complete the parts of
a schedule that apply to the
transaction(s) that give rise to their
liability. Where liability is being allocated
among more than one person (for
example, two or more managers
allocating the initial tax on managers),
the person filing the return should show
the full amount of tax and show how the
liability allocated.

Complete the entire return (not just
the part that changed) following the form
and instructions for the amended year.
Include a statement that identifies the
lines and amounts being changed and
the reason for each change.

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To avoid additional taxes and
penalties, and in some cases, further
initial taxes, a foundation, organization,
disqualified person, or manager must
correct the taxable event within the
correction period.

Generally, the correction period
begins on the date the event occurs and
ends 90 days after the mailing date of a
notice of deficiency, under section 6212,
in connection with the second-tier tax
imposed on that taxable event. That
time is extended by:
• Any period in which a deficiency can't
be assessed under section 6213(a)
because a petition to the Tax Court for
redetermination of the deficiency is
pending, not extended by any
supplemental proceeding by the Tax
Court under section 4961(b), regarding
whether any correction was made, and
• Any other period the IRS determines
is reasonable and necessary to correct
the taxable event.
The taxable event will be treated as
occurring:
• For the tax on failure to distribute
income (section 4942), on the first day
of the tax year for which there was a
failure to distribute income,
• For the tax on excess business
holdings (section 4943), on the first day
on which there were excess business
holdings, or
• In any other case (sections 4941,
4945, 4955, and 4958), on the date the
event occurred.
Refer to the instructions for the
applicable schedule for information
relating to corrections made (or not
made) for the applicable excise tax.

Completing the Schedules

Before completing any of the schedules
in this return, read the applicable
instructions. If any completed schedule
shows taxes you owe, enter them on
Part I if you are the organization (or
related organization subject to tax under
section 4960) or Part II of this return if

Note. See Liability for Tax (later in Part
II) regarding allocation of liability among
twoor more persons liable for an excise
tax under Chapter 42.

The instructions for Schedules A
through O describe acts or transactions
subject to tax under Chapter 42. Don't
complete Schedules A and E if
exceptions apply to all the acts or
transactions. In general, question A on
page 1 and Schedules A, B, C, D, and E
don't apply to public charities. However,
Schedule C does apply to some public
charities including certain sponsoring
organizations of donor advised funds
and certain supporting organizations
that are treated as private foundations
for purposes of section 4943. See the
instructions for Schedule C for a
description of the public charities to
which section 4943 applies.

Before completing Schedule C,
determine whether the organization or
donor advised fund has excess holdings
in any business enterprise. If the
organization or donor advised fund has
holdings subject to the tax on excess
business holdings, complete a separate
Schedule C for each enterprise.
Before completing Schedule D,
determine whether the investment was
program related. If not, complete
Schedule D for each investment for
which you answered “Yes,” to Form
990-PF, Part VI-B, question 4a or b, or
Form 5227, Part VIII, question 4a or b.

Amended Return

To correct a previously filed Form 4720
(including the reporting of additional
excise taxes discovered after the
original Form 4720 filing), use the same
-6-

If the amended return shows tax due
and you wish to request abatement of
the tax reported on Form 4720, see
Abatement, earlier. If the amended
return results in an overpayment of tax
previously paid, show the amount of the
overpayment in Part III, line 4. Do not file
Form 843, Claim for Refund and
Request for Abatement, to request a
refund of an overpayment computed on
Part III, line 4.

Specific Instructions for
Page 1

An organization filing Form 4720 should
check the appropriate box for the type of
annual return it files. If filing as an
individual or taxable entity and the
annual return you file isn't shown,
subject to a Chapter 42 tax, check
“Other.”

Question A. If filing as a person
subject to a Chapter 42 tax, answer with
respect to the related organization.
Question B. Answer “Yes” to question
B if you are a self-dealer, donor, donor
advisor, related person, disqualified
person, or manager and you will be filing
Form 4720 to report and pay excise
taxes with respect to more than one
organization. For example, if you are a
manager of two private foundations,
both of which made taxable
expenditures for which the initial tax on
managers is imposed under section
4945(a)(2), answer “Yes” to question B.
Attach a list showing the name and EIN
of each organization.
You should also answer "Yes" to
question B if you are a related
organization that is reporting your
ratable share of the section 4960 excise
tax on excess executive compensation
(reported on Part I) in the same year that
you are a disqualified person or
organization manager who must report
and pay an excise tax on Part II with
respect to the same organization. You
cannot combine amounts from Part I
and Part II in Part III. Therefore, you will
need to file separate returns - one to
report your ratable share of excess
executive compensation on Part I, and a
Instructions for Form 4720 (2023)

second return to report any excise taxes
reported on Part II.
Note. A complete list of organizations
with respect to which you will file Form
4720 is necessary to ensure that all
Form 4720 returns you must file can be
accepted for processing.

Part I

Section 664(c)(2) imposes an excise tax
on the unrelated business taxable
income of a charitable remainder trust.
The excise tax is equal to the trust's
unrelated business taxable income.
Enter the charitable remainder trust's
unrelated business taxable income on
line 11.

2. Tax for acts of self-dealing in
which you participated as a manager,
from Schedule A, Part III, column (d).
Line 2. Enter the tax on investments
that jeopardize charitable purpose from
Schedule D, Part II, column (d), that you
took part in as a foundation manager.

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Part I is completed by the organization
or a related organization liable for tax
under section 4960.
An organization filing Form 4720
solely to report activity or transactions
on Schedule A, Schedule I, or
Schedule L, should leave lines 1
through 14 of Part I blank and enter a
zero on line 15.

An organization filing form 4720 to
report activity or transactions on
Schedule A, Schedule I, or Schedule L
and that also owes excise tax for any
transactions reported on other
schedules should complete all
applicable schedules, but report in Part I
only the tax imposed on the
organization.
Note. The organization should not
make any entries in Part II.

Line 8

Line 11

If the organization has an entry

TIP on this line, it must also file
Form 8870.

Enter the total of all premiums paid
by the organization on any personal
benefit contract if the payment of
premiums is in connection with a
transfer for which a deduction isn't
allowed under section 170(f)(10)(A).
Also, if there is an understanding or
expectation that any person will directly
or indirectly pay any premium on a
personal benefit contract for the
transferor, include those premium
payments in the amount entered on this
line.
A personal benefit contract is (to the
transferor) any life insurance, annuity, or
endowment contract that benefits
directly or indirectly the transferor, a
member of the transferor's family, or any
other person designated by the
transferor (other than an organization
described in section 170(c)).
For more information, see Notice
2000-24, 2000-17 I.R.B. 952, at
IRS.gov/pub/irs-irbs/irb00-17.pdf.
Instructions for Form 4720 (2023)

Computation of unrelated business
taxable income. Charitable remainder
trusts should use Form 990-T to
compute their unrelated business
taxable income. Complete Form 990-T
as follows.
1. Enter the trust's name under
“Name of organization” and complete
item D (EIN) at the top of page 1.
2. Complete as many Schedules A
(Form 990-T) as needed to calculate the
trust’s unrelated business taxable
income. Leave any line that does not
apply blank. Complete the applicable
parts of each Schedule A, including the
business activity code for each
Schedule A. Attach forms or other
attachments required for a complete
Schedule A. However, if Schedule D
(Form 1041) is required, don't complete
Part V of Schedule D (Form 1041).
3. After all Schedules A have been
prepared, complete Form 990-T, Part I
only. Don't complete Parts II through V
or the signature area of Form 990-T.
4. Enter the amount from Part I,
line 11 of Form 990-T on Part I, line 11
of Form 4720.

Part II

Part II is completed by a manager, selfdealer, disqualified person, donor, donor
advisor, or related person subject to tax
under sections 4912(b), 4941(a),
4944(a)(2), 4945(a)(2), 4955(a)(2),
4958(a), 4965(a)(2), 4966(a)(2), and
4967(a). Enter the name, address, and
employer identification number of the
foundation or organization with respect
to which tax is owed as a manager,
self-dealer, disqualified person, donor,
donor advisor, or related person, as
computed in Schedules A, D, E, F, H, I,
J, K, and L.
Note. A related organization that owes
section 4960 excise tax on excess
executive compensation should report
the tax in Part I and should not make
entries in Part II.

Line 1. Enter the sum of:
1. Taxes you owe as a self-dealer,
from Schedule A, Part II, column (d),
and
-7-

Line 3. Enter the tax on taxable
expenditures from Schedule E, Part II,
column (d), that you took part in as a
foundation manager.
Line 4. Enter the tax on political
expenditures from Schedule F, Part II,
column (d), that you took part in as an
organization or foundation manager.
Line 5. Enter the tax on disqualifying
lobbying expenditures from Schedule H,
Part II, column (d), that you took part in
as an organization manager.
Line 6. Enter the sum of:
1. Taxes you owe as a disqualified
person, from Schedule I, Part II, column
(d), and
2. Tax on excess benefit
transactions in which you as
organization manager participated
knowing that the transaction was an
excess benefit transaction, from
Schedule I, Part III, column (d).
Line 7. Enter the tax on you as the
entity manager who approved or
otherwise caused the entity to be a
party to a prohibited tax shelter
transaction from Schedule J, Part II,
column (d).
Line 8. Enter the tax on taxable
distributions from sponsoring
organizations maintaining donor
advised funds from Schedule K, Part II,
column (d), that you took part in as a
manager.

Line 9. Enter the sum of:
1. Tax imposed on you as a donor,
donor advisor, or related person, from
Schedule L, Part II, column (d), and
2. Tax imposed on you as a fund
manager who agreed to making of a
prohibited benefit distribution from
Schedule L, Part III, column (d).
Liability for tax. A person's liability
for tax as a manager, self-dealer,
disqualified person, donor, donor
advisor, or related person, under
sections 4912, 4941, 4944, 4945, 4955,
4958, 4966, and 4967 is joint and
several. Therefore, if more than one
person owes tax on an act as a
manager, self-dealer, disqualified
person, donor, donor advisor, or related
person, they may apportion the tax

among themselves. However, when all
managers, self-dealers, donors, donor
advisors, related persons, or
disqualified persons who are liable for
tax on a particular transaction under
sections 4912, 4941, 4944, 4945, 4955,
4958, 4966, or 4967 pay less than the
total tax due on that transaction, then
the IRS may charge the amount owed to
one or more of them regardless of the
tax apportionment shown on this return.

Part III

Self-dealing. Self-dealing includes any
direct or indirect:
• Sale, exchange, or leasing of property
between a private foundation and a
disqualified person (see definitions in
the Form 990-PF instructions),
• Lending of money or other extension
of credit between a private foundation
and a disqualified person,
• Furnishing of goods, services, or
facilities between a private foundation
and a disqualified person,
• Payment of compensation (or
payment or reimbursement of
expenses) by a private foundation to a
disqualified person,
• Transfer to, or use by or for the benefit
of, a disqualified person of the income
or assets of a private foundation, and
• Agreement by a private foundation to
make any payment of money or other
property to a government official other
than an agreement to employ or make a
grant to that individual for any period
after the end of government service if
that individual will be ending
government service within a 90-day
period.

participation was not willful and was due
to reasonable cause.

Specific Instructions
Part I. List each act of self-dealing in
Part I. In column (c), for each act of
self-dealing in Part I, indicate whether
the act has been corrected. For the
purposes of a self-dealing transaction
described in section 4941, the term
“correction” generally means undoing
the transaction to the extent possible,
but in any case, placing the private
foundation in a financial position not
worse than that in which it would be if
the disqualified person were dealing
under the highest fiduciary standards.
Answer “Yes,” in column (c) if
correction has been made in whole or in
part. Answer “No,” only if the transaction
has not been corrected in any way.
• If correction has been made, provide
a detailed description of any correction
made, and the date of each correction. If
correction is partial, explain why
complete correction has not been made.
If correction is made in more than one
transaction, describe each transaction
separately.
• If correction has not been made,
provide a detailed explanation of why
correction hasn't been made and what
steps are being taken to make the
correction.
Enter in column (e) the number
designation from Form 990-PF, Part
VI-B, question 1a, or Form 5227, Part
VIII, question 1a that applies to the act.
For example, “1a(1)” or “1a(4).”

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Line 1. Organizations and related
organizations owing tax under section
4960 enter the total tax amount from
Part I, line 15. Managers, self-dealers,
disqualified persons, donors, donor
advisors, or related persons enter the
total tax amount from Part II, line 10.

Line 2. List total payments here,
including amounts paid on extension
with Form 8868. See the discussion on
Extensions, earlier, for details on
amounts paid with extensions.
Line 3. Enter the tax due on this line.
Make check(s) or money order(s)
payable to the United States Treasury.
Line 4. This is your refund. Only
persons with a legal right to a refund
should file a refund request here.

!

connection with the initial tax imposed
on the self-dealer;
• The date the initial tax on the
self-dealer is assessed; or
• The date any correction of the act of
self-dealing is completed.

Amounts from Parts I and Part II
cannot be combined in Part III.

CAUTION

Schedule A—Initial Taxes
on Self-Dealing (Section
4941)
General Instructions
Requirement. All organizations that
answered “Yes,” to question 1b or 1d in
Part VI-B of Form 990-PF, or “Yes,” to
question 1b or 1c in Part VIII of Form
5227, must complete Schedule A. In
addition, a self-dealer or a manager that
participated in an act of self-dealing
knowing that it was such an act must
also complete Schedule A. Complete
Parts I, II, and III of Schedule A only in
connection with acts that are subject to
the tax on self-dealing.
Paying the tax and filing a Form 4720
is required for each year or part of a year
in the taxable period that applies to the
act of self-dealing. Generally, the
taxable period begins with the date on
which the self-dealing occurs and ends
on the earliest of:
• The date a notice of deficiency is
mailed under section 6212, in

Exceptions to self-dealing. Go to
IRS.gov Technical Guide 58 Excise
Taxes on Self-Dealing under IRC 4941
for a description of acts that aren't
considered self-dealing.
Initial taxes on self-dealer. An initial
tax of 10% of the amount involved is
charged for each act of self-dealing
between a disqualified person and a
private foundation for each year or part
of a year in the taxable period. Any
disqualified person (other than a
foundation manager acting only as
such) who takes part in the act of
self-dealing must pay the tax.
Initial taxes on foundation managers. When a tax is imposed on a
foundation manager for an act of
self-dealing, the tax will be 5% of the
amount involved in the act of
self-dealing for each year or part of a
year in the taxable period. However, the
total tax imposed for all years in the
taxable period is limited to $20,000 for
each act of self-dealing. The tax is
imposed on any foundation manager
who took part in the act knowing that it
was self-dealing except those
foundation managers whose

-8-

Part II. Enter in column (a) the names
of all disqualified persons who took part
in the acts of self-dealing listed in Part I.
If more than one disqualified person
took part in an act of self-dealing, each
is individually liable for the entire tax in
connection with the act. But the
disqualified persons who are liable for
the tax may prorate the payment among
themselves. Enter in column (c) the tax
to be paid by each disqualified person.
A self-dealer filing Form 4720 should
carry the appropriate amount in column
(d) to Part II, line 1.

!

CAUTION

The organization should not
carry any amount from column
(d) to Part II, line 1.

Part III. Enter in column (a) the names
of all foundation managers who took
part in the acts of self-dealing listed in
Part I, and who knew that the acts were
self-dealing (except for foundation
managers whose participation was not
willful and was due to reasonable
cause).
Instructions for Form 4720 (2023)

If more than one foundation manager
took part in the act of self-dealing,
knowing that it was such an act, and
participation was willful and not due to
reasonable cause, each is individually
liable for the entire tax in connection
with the act. But the foundation
managers liable for the tax may prorate
the payment among themselves. Enter
in column (c) the tax to be paid by each
foundation manager.
Carry the total amount in column (d)
for each foundation manager to Part II,
line 1.

!

CAUTION

applicable, indicate whether the election
under 4942(h) has been made. See the
Instructions for Form 990-PF, Part XII,
lines 4b and 4c.

Schedule C—Initial Tax on
Excess Business Holdings
(Section 4943)

conducted to produce income from
selling goods or performing services,
that is an unrelated trade or business
described in section 513.
The term “business enterprise”
doesn't include a functionally related
business, as defined in section 4942(j)
(4). In addition, business holdings don't
include program-related investments
(such as investments in small
businesses in economically depressed
areas or in corporations to assist in
neighborhood renovations) as defined in
section 4944(c) and related regulations.
Also, business enterprise doesn't
include a trade or business at least 95%
of the gross income of which comes
from passive sources. For more
information, go to IRS.gov TG 61 Taxes
on Investments which Jeopardize
Charitable Purposes IRC 4944.

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The organization should not
carry any amount from column
(d) to Part II, line 1.

Schedule B—Initial Tax on
Undistributed Income
(Section 4942)

Complete Schedule B if you answered
“Yes,” to Form 990-PF, Part VI-B,
question 2b.
An initial excise tax of 30% is
imposed on a private foundation's
undistributed income on the first day of
the second or any succeeding tax year
after the tax year in connection with
which income remains undistributed.
Use the 2023 Form 4720 to report
the initial tax on undistributed income for
tax years beginning in 2022 or earlier
that remains undistributed at the end of
the foundation's current tax year
beginning in 2023. The initial tax won't
apply to a private foundation's
undistributed income:
• For any tax year it is an operating
foundation (as defined in section 4942(j)
(3) and related regulations or in section
4942(j)(5)); or
• To the extent it didn't distribute an
amount solely because of an incorrect
valuation of assets, provided the
foundation satisfies the requirements of
section 4942(a)(2); or
• For any year for which the initial tax
was previously assessed or a notice of
deficiency was issued.

Line 3. Undistributed income is
corrected by making sufficient qualifying
distributions to compensate for deficient
qualifying distributions for a prior tax
year. You must attach a statement that
describes any qualifying distributions
made to correct the undistributed
income and the date(s) those
distributions were made. If no qualifying
distributions have been made to correct
the undistributed income, explain why
and describe steps you will take to make
the necessary qualifying distributions. If
Instructions for Form 4720 (2023)

General Instructions

Private foundations may be subject to
an excise tax on the amount of any
excess holdings, as described later. For
purposes of section 4943, donor
advised funds and certain supporting
organizations are considered private
foundations. For more information on
the applicability of Schedule C to such
organizations, see General rules on the
permitted holdings of donor advised
funds and certain supporting
organizations in a business enterprise,
later.

Requirement. If you answered “Yes,” to
Form 990-PF, Part VI-B, question 3b;
Form 990, Part V, question 8; or Form
5227, Part VIII, question 3b, or
otherwise had excess business
holdings, complete a Schedule C for
each business enterprise in which the
foundation had excess business
holdings for its tax year beginning in
2023.

Taxes. A private foundation that has
excess holdings in a business
enterprise may become liable for an
excise tax based on the amount of
holdings. The initial tax is 10% of the
value of the excess holdings and is
imposed on the last day of each tax year
that ends during the taxable period. The
excess holdings are determined on the
day during the tax year when they were
the largest.
If the foundation keeps the excess
business holdings after the initial tax
has been imposed, the foundation
becomes liable for an additional tax of
200% of the remaining excess business
holdings unless it disposes of them
within the taxable period. However, if the
foundation disposes of its excess
business holdings during the correction
period, the additional tax won't be
assessed or, if assessed, will be abated
and if collected, will be credited or
refunded. For information on the
correction period, go to IRS.gov TG 60
Taxes on Excess Business Holdings
IRC 4943.
Business enterprise. In general, this
means the active conduct of a trade or
business, including any activity regularly
-9-

Excess business holdings. Excess
business holdings is the amount of
stock or other interest in a business
enterprise that the foundation would
have to dispose of to a person other
than a disqualified person in order for
the foundation's remaining holdings in
the enterprise to be permitted holdings
(section 4943(c)(1)). Go to IRS.gov TG
60 Taxes on Excess Business Holdings
IRC 4943 for more information.
Sole proprietorships. In general, a
private foundation can't have any
permitted holdings in a business
enterprise that is a sole proprietorship.
For exceptions, go to IRS.gov TG 60
Taxes on Excess Business Holdings
IRC 4943. For a definition of sole
proprietorship, see Regulations section
53.4943-10(e).
Corporate voting stock. This stock
entitles a person to vote for the election
of directors. Treasury stock and stock
that is authorized but unissued isn't
voting stock for these purposes. See
Regulations sections 53.4943-3(b)(1)(ii)
and 53.4943-3(b)(2)(ii).
For a partnership (including a limited
partnership) or joint venture, the term
“profits interest” should be substituted
for “voting stock.” For any
unincorporated business enterprise that
isn't a partnership, joint venture, or sole
proprietorship, the term “beneficial
interest” should be substituted for
“voting stock.” See Regulations section
53.4943-3(c).
Nonvoting stock. Corporate equity
interests that don't have voting power
should be classified as nonvoting stock.
Evidences of indebtedness (including
convertible indebtedness), warrants,
and other options or rights to acquire

stock shouldn't be considered equity
interests. See Regulations section
53.4943-3(b)(2).
For a partnership (including a limited
partnership) or joint venture, the term
“capital interest” should be substituted
for “nonvoting stock.” For any
unincorporated business that isn't a
partnership, joint venture, or sole
proprietorship, references to nonvoting
stock don't apply for computation of
permitted holdings. See Regulations
section 53.4943-3(c)(4).

Disposition of excess business holdings within 90 days. Generally, when
a private foundation acquires excess
business holdings other than as a result
of purchase by the foundation (such as
an acquisition by a disqualified person),
the foundation won't be taxed on those
excess holdings if it disposes of enough
of them so that it no longer has an
excess. To avoid the tax, the disposition
must take place within 90 days from the
date the foundation knew, or had reason
to know, of the event that caused it to
have excess business holdings. That
90-day period will be extended to
include the period during which federal
or state securities laws prevent the
foundation from disposing of those
excess business holdings. See
Regulations section 53.4943-2(a).

other than donor advised funds and
supporting organizations considered to
be private foundations for purposes of
section 4943, that had business
holdings on May 26, 1969 (or holdings
acquired by trust or will as described
below), that were more than the current
limits permit, there are transitional rules
that permit the foundation to dispose of
the excess over time without being
subject to the tax on excess business
holdings.
During the first phase, no excess
business holdings tax was imposed on a
private foundation for interests held
since May 26, 1969, if the foundation
had excess holdings on that date. The
first phase is:
• A 20-year period beginning on May
26, 1969, if on that date the foundation
and all disqualified persons held more
than a 95% voting interest in the
enterprise (the 20-year first phase
expired on May 25, 1989);
• A 15-year period beginning on May
26, 1969, if on that date the foundation
and all disqualified persons together
had more than a 75% voting stock
interest (or more than a 75% profits or
beneficial interest of any unincorporated
enterprise), or more than a 75% interest
in the value of all outstanding shares of
all classes of stock (or more than a 75%
capital interest of a partnership or joint
venture) in the enterprise (the 15-year
first phase expired on May 25, 1984);
and
• A 10-year period beginning on May
26, 1969, in all other cases in which the
foundation had excess business
holdings on May 26, 1969. The 10-year
first phase expired on May 25, 1979.
During the second phase (the
15-year period after the first phase), if
the foundation's disqualified persons
hold more than 2% of the enterprise's
voting stock, the foundation will be liable
for tax if the foundation holds more than
25% of the voting stock or if the
foundation and its disqualified persons
together hold more than 50% of the
voting stock.
However, during the second phase, if
a foundation's disqualified persons
purchase voting stock in a business
enterprise after July 18, 1984, causing
the combined holdings of the
disqualified persons to exceed 2% of
the enterprise's voting stock, the
foundation has 5 years to reduce its
holdings in the enterprise to below its
second phase limit before the increase
will be treated as held by the foundation.
See sections 4943(c)(4)(D) and 4943(c)
(6).

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Attribution of business holdings. In
determining the holdings in a business
enterprise of either a private foundation
or a disqualified person, any stock or
other interest owned directly or indirectly
by or for a corporation, partnership,
estate, or trust is considered owned
proportionately by or for its
shareholders, partners, or beneficiaries.
In general, this rule doesn't apply to
certain income interests or remainder
interests of a private foundation in a
split-interest trust described in section
4947(a)(2). See Regulations section
53.4943-8.
Taxable period. The taxable period
begins on the first day the foundation
has excess business holdings and ends
on the earliest of:
• The mailing date of a notice of
deficiency, under section 6212, in
connection with the initial tax on excess
business holdings related to those
holdings;
• The date the excess is eliminated; or
• The date the initial tax on excess
business holdings related to those
holdings is assessed.
When a notice of deficiency isn't
mailed because the restrictions on
assessment and collection are waived
or because the deficiency is paid, the
date of filing the waiver or the date of
paying the tax, respectively, will be
treated as the end of the taxable period.
See Regulations section 53.4943-9.

Exceptions to Tax on Excess
Business Holdings
2% de minimis rule. A private
foundation won't be treated as having
excess business holdings in any
enterprise in which it, together with
related foundations, as described in the
instructions for Form 990-PF (under the
definition for “disqualified person” in the
General Instructions), owns not more
than 2% of the voting stock and not
more than 2% in value of all outstanding
shares of all classes of stock.

General rules on the permitted holdings of a private foundation in a
business enterprise. No excess
business holdings tax is imposed (a) if a
private foundation and all disqualified
persons together hold no more than
20% of the voting stock of a business
enterprise, or (b) on nonvoting stock, if
all disqualified persons together don't
own more than 20% of the voting stock
of the business enterprise.
If the private foundation and all
disqualified persons together don't own
more than 35% of the enterprise's voting
stock, and effective control is in one or
more persons who aren't disqualified
persons in connection with the
foundation, then 35% may be
substituted for 20% wherever it appears
in the preceding paragraph. See
sections 4943(c)(2) and 4943(c)(3).
If a private foundation and all
disqualified persons together had
holdings in a business enterprise of
more than 20% of the voting stock on
May 26, 1969, substitute that
percentage for 20% and for 35% (if the
holding is greater than 35%), using the
principles of section 4943(c)(4) that
apply. However, the percentage
substituted can't be more than 50%.
The percentage substituted under
the preceding paragraph is (1) subject
to reductions and limitations (see
sections 4943(c)(4)(A)(ii) and 4943(c)
(4)(D)), and (2) applicable, both in
connection with the voting stock and,
separately, in connection with the value
of all outstanding shares of all classes of
stock (see section 4943(c)(4)(A)(iii)).
Interests held by a private foundation (other than donor advised funds
and supporting organizations) on
May 26, 1969. For private foundations,
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Instructions for Form 4720 (2023)

The first-phase periods must be
suspended pending the outcome of any
judicial proceeding the private
foundation brings and which is
necessary to reform, or to excuse it from
compliance with its governing
instrument or similar instrument in effect
on May 26, 1969. See section 4943(c)
(4)(C) and Regulations section
53.4943-4.

holdings. However, the date of August
17, 2006, will be substituted for May 26,
1969.
Donor advised fund. In general, a
donor advised fund is a fund or account
separately identified by reference to
contributions of a donor or donors that is
owned and controlled by a sponsoring
organization and for which the donor
has or expects to have advisory
privileges concerning the distribution or
investment of the funds. See
Schedule K for further details.

holdings to disqualified persons, as long
as the sales price equals or is more than
fair market value.
The excess business holdings
involved are interests that are subject to
the section 4941 transitional rules for
May 26, 1969, holdings. These interests
would also be subject to the excess
business holdings tax if they were not
reduced by the required amount.

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Holdings acquired by trust or will.
Holdings acquired under the terms of a
trust that was irrevocable on May 26,
1969, or under the terms of a will
executed by that date, are treated as
held by the foundation on May 26, 1969,
except that the 15- and 10-year periods
of the first phase for the holdings start
on the date of distribution under the trust
or will instead of on May 26, 1969. See
section 4943(c)(5) and Regulations
section 53.4943-5. See section 4943(d)
(1) and Regulations section 53.4943-8
for rules relating to constructive holdings
held in a corporation, partnership,
estate, or trust for the benefit of the
foundation.
Gifts or bequests of business holdings. Except as provided in the
exception regarding Holdings acquired
by trust or will (discussed above), there
is a special rule for private foundations
that have excess business holdings as a
result of a change in holdings after May
26,1969. This rule applies if the change
is other than by purchase by the
foundation or by disqualified persons
(such as through gift or bequest) and
the additional holdings result in the
foundation having excess business
holdings. In that case, the foundation
has 5 years to reduce these holdings or
those of its disqualified persons to
permissible levels to avoid the tax. See
section 4943(c)(6) and Regulations
section 53.4943-6.
A private foundation that received an
unusually large gift or bequest of
business holdings after 1969, and that
has made a diligent effort to dispose of
excess business holdings, may apply for
an additional 5-year period to reduce its
holdings to permissible levels if certain
conditions are met. See section 4943(c)
(7).

General rules on the permitted holdings of donor advised funds and certain supporting organizations in a
business enterprise. Rules similar to
those described above for interests held
by private foundations on May 26, 1969,
will be applied to determine if donor
advised funds or certain supporting
organizations with interests as of August
17, 2006, have any excess business
Instructions for Form 4720 (2023)

Sponsoring organization. A
sponsoring organization is any section
170(c) organization other than
governmental entities (described in
section 170(c)(1) and (2)(A)) that isn't a
private foundation, as defined in section
509(a)(3), that maintains one or more
donor advised funds. See section
4966(d)(1).

Supporting organizations. Only
certain supporting organizations are
subject to the excess business holdings
tax under section 4943. These include
(1) Type III supporting organizations that
aren't functionally integrated, and (2)
Type II supporting organizations that
accept any gift or contribution from a
person who by himself or in connection
with a related party controls the
supported organization that the Type II
supporting organization supports. (See
the 2023 Instructions for Schedule A
(Form 990), Part I, question 11, for help
in determining the type of your
supporting organization.)

Readjustments, distributions, or
changes in relative value of different
classes of stock. See Regulations
section 53.4943-4(d)(10) for special
rules whereby increases in the
percentage of value of holdings in a
corporation that result solely from
changes in the relative values of
different classes of stock won't result in
excess business holdings.
See Regulations section
53.4943-6(d) for rules on treatment of
increases in holdings due to
readjustments, distributions, or
redemptions.
See Regulations section 53.4943-7
for special rules for readjustments
involving grandfathered holdings.
Exceptions from self-dealing taxes
on certain dispositions of excess
business holdings. Section 101(I)(2)
(B) of the Tax Reform Act of 1969
provides for a limited exception from
self-dealing taxes for private foundations
that dispose of certain excess business
-11-

Specific Instructions

Complete columns (a) and (b) of
Schedule C if sections 4943(c)(4),
4943(c)(3) (using the principles of
4943(c)(4)), or 4943(c)(5) apply.
Complete column (a) and column (c)
(if applicable) if sections 4943(c)(2) or
4943(c)(3) (using the principles of
4943(c)(2)) apply.
Complete Schedule C for that day
during the tax year when the
foundation's excess holdings in the
enterprise were largest.
Line 1. Enter in column (a) the
percentage of voting stock the
foundation holds in the business
enterprise.
If the foundation is using the rules or
principles for determining present
holdings under section 4943(c)(4)(A) or
(D) (or rules similar to that for donor
advised funds and certain supporting
organizations), enter in column (b) the
percentage of value the foundation
holds in all outstanding shares of all
classes of stock.
Don't include in either column (a) or
(b) stock treated as held by disqualified
persons:
• Under section 4943(c)(6) or
Regulations sections 53.4943-6 and
53.4943-10(d), or
• During the first phase if the first phase
is still in effect (see Regulations sections
53.4943-4(a), (b), and (c)).
Line 2. If the foundation is using the
rules or principles for determining
present holdings under section 4943(c)
(4) (or rules similar to that for donor
advised funds and certain supporting
organizations), refer to that section and
Regulations section 53.4943-4(d) to
determine which entries to record in
columns (a) and (b). Enter in column (a)
the excess of the substituted combined
voting level over the disqualified person
voting level. Enter in column (b) the
excess of the substituted combined
value level over the disqualified person
value level.
If the foundation is using the rules or
principles for determining permitted
holdings under section 4943(c)(2), refer

to that section to determine which
entries to record in column (a). Enter in
column (a) the percentage, using the
general rule (section 4943(c)(2)(A)) or
the 35% rule (see section 4943(c)(2)
(B)), if applicable, of permitted holdings
the foundation may have in the
enterprise's voting stock. If the
foundation determines the permitted
holdings under section 4943(c)(2)(B),
attach a statement showing effective
control by a third party.

transaction, describe each transaction
separately.
• If correction has not been made,
provide a detailed explanation of why
correction hasn't been made and what
steps are being taken to make the
correction.

See section 4944(c) and Regulations
section 53.4944-3.
Initial taxes on foundation. The initial
tax is 10% of the amount invested for
each year or part of a year in the taxable
period.
Initial taxes on foundation managers. When a tax is imposed on an
investment that jeopardizes the
charitable purpose of the foundation,
the tax will be 10% of the investment for
each year or part of a year in the taxable
period, up to $10,000 for any one
investment. It is imposed on all
foundation managers who took part in
the act, knowing that it was such an act,
except for foundation managers whose
participation was not willful and was due
to reasonable cause. Any foundation
manager who took part in making the
investment must pay the tax.

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Line 3. Enter the value of any stock,
interest, etc., in the business enterprise
that the foundation is required to
dispose of so the foundation's holdings
in the enterprise are permitted. See
section 4943 and related regulations.
A private foundation using the
section 4943(c)(4) rules, or a donor
advised fund or supporting organization
using rules similar to that, has excess
holdings if line 1 is more than line 2 in
either column (a) or column (b). Don't
include in column (b) the value of any
voting stock included in column (a).
A private foundation using the
section 4943(c)(2) rules has excess
holdings if line 1 is more than line 2 in
column (a) or if the private foundation
holds nonvoting stock and all
disqualified persons together own more
than 20% (or 35%, if applicable) of the
enterprise's voting stock, interest, etc. In
the latter case, enter in column (c) the
value of all nonvoting stock the
foundation holds.
Line 4. Enter the value of excess
holdings disposed of under the 90-day
rule in Regulations section 53.4943-2(a)
(1)(ii). If other conditions preclude
imposition of tax on excess business
holdings, include the value of the
nontaxable amount on this line and
check the appropriate boxes on the
statement page attached to the
electronic version of Form 4720.
Organizations not required to file
electronically may attach an
explanation.

Line 5. Compute the excess holdings in
a business enterprise subject to tax.
Line 8. Excess business holdings are
corrected by taking action as needed
such that the foundation no longer has
excess business holdings in a business
enterprise. Answer “Yes,” if the excess
business holdings have been corrected
in whole or in part.
• If correction has been made, provide
a detailed description of any correction
made, and the date of each correction. If
correction is made in more than one

Schedule D—Initial Taxes
on Investments That
Jeopardize Charitable
Purpose (Section 4944)

General Instructions

Requirement. Complete Schedule D if
you answered “Yes,” to Form 990-PF,
Part VI-B, question 4a or b; or Form
5227, Part VIII, question 4a or b. Each
manager of the organization or trust that
answered "Yes," to Form 990-PF, Part
VI-B, question 4a or b; or Form 5227,
Part VIII, question 4a or b and who took
part in making the investment should
also complete Schedule D. Report each
investment separately. Paying tax and
filing a Form 4720 are required for each
year or part of a year in the taxable
period that applies to the investments
that jeopardize the foundation's
charitable purpose. Generally, the
taxable period begins with the date of
the investment and ends with the date
corrective action is completed, a notice
of deficiency is mailed, or the initial tax
is assessed, whichever comes first.
Therefore, in addition to investments
made in 2023, include all investments
subject to tax that were made before
2023 if those investments were not
removed from jeopardy before 2023 and
the initial tax was not assessed before
2023.
Taxable investments. An investment
to be taxed on this schedule is an
investment by a private foundation that
jeopardizes the carrying out of its
exempt purposes (for example, if it is
determined that the foundation
managers, in making the investment,
didn't exercise ordinary business care
and prudence, under prevailing facts
and circumstances, in providing for the
long- and short-term financial needs of
the foundation to carry out its exempt
purposes). See Regulations section
53.4944-1(a)(2). An investment isn't
taxed on this schedule if it is a
program-related investment; that is, one
whose primary purpose is one or more
of those described in section 170(c)(2)
(B) (religious, charitable, educational,
etc.). A significant purpose of such an
investment can't be the production of
income or the appreciation of property.
-12-

Specific Instructions

Part I. Complete this part for all taxable
investments. Investments that
jeopardize the carrying out of the
foundation’s exempt purpose are
corrected by selling or otherwise
disposing of the investment, and holding
the proceeds of such sale or other
disposition in investments that do not
jeopardize the carrying out of the
foundation's exempt purpose. In column
(c), for each act of investment listed in
Part I, indicate whether the investment
has been corrected. Answer “Yes,” if
correction has been made in whole or in
part. Answer “No,” only if the investment
has not been corrected in any way.
• If correction has been made, provide
a detailed description of any correction
made, and the date of each correction. If
correction is partial, explain why
complete correction has not been made.
If correction is made in more than one
transaction, describe each transaction
separately.
• If correction has not been made,
provide a detailed explanation of why
correction hasn't been made and what
steps are being taken to make the
correction.
Part II. Enter in column (a) the names
of all foundation managers who took
part in making the investments listed in
Part I. See Initial taxes on foundation
managers, earlier.
If more than one foundation manager
is listed in column (a), each is
individually liable for the entire amount
of tax in connection with the investment.
However, the foundation managers who
are liable for the tax may prorate
payment among themselves. Enter in
Instructions for Form 4720 (2023)

column (c) the tax each foundation
manager will pay.
A foundation manager filing this Form
4720 should carry the appropriate
amount in column (d) to Part II, line 2.

Schedule E—Initial Taxes
on Taxable Expenditures
(Section 4945)

Exceptions. Section 4945(d)(4)(B)
provides an exception to taxable
expenditures that applies to certain
grants to organizations when the
granting foundation exercises
expenditure responsibility described in
section 4945(h). Additional information
on special rules and exceptions to the
definition of taxable expenditures given
above can be found at IRS.gov TG 62
Excise Taxes on Taxable Expenditures
under IRC 4945.

If correction is made in more than one
transaction, describe each transaction
separately.
• If correction has not been made,
provide a detailed explanation of why
correction hasn't been made and what
steps are being taken to make the
correction.

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General Instructions

Requirement. Complete Schedule E if
you answered “Yes,” to Form 990-PF,
Part VI-B, question 5b, or Form 5227,
Part VIII, question 5b. Complete Parts I
and II of Schedule E only for
expenditures that are subject to tax.
Note. Also, see Schedule F, Initial
Taxes on Political Expenditures.

Taxable expenditures. With certain
exceptions, this means any amount a
private foundation pays or incurs:
1. To carry on propaganda or
otherwise influence any legislation
through:
a. An attempt to influence general
public opinion or any segment of it, and
b. Communication with any member
or employee of a legislative body, or with
any other government official or
employee who may take part in
formulating legislation;
2. To influence the outcome of any
specific public election, or to conduct,
directly or indirectly, any voter
registration drive;
3. As a grant to an individual for
travel, study, or other purposes;
4. As a grant to an organization not
described in section 509(a)(1), (2), or
(3) or that isn't an exempt operating
foundation (as defined in section
4940(d)(2)). This includes grants to:
a. Type I, Type II, and Type III
functionally integrated supporting
organizations (as described in section
4942(g)(4)(B) and (C)) if a disqualified
person of the foundation controls such
supporting organization or the
supported organizations of such
supporting organizations, and
b. Type III supporting organizations
(as described in section 4943(f)(5)(A))
that aren't functionally integrated with
their supported organizations; or
5. For any purpose other than
religious, charitable, scientific, literary,
educational, or public purposes, or the
prevention of cruelty to children or
animals.
Instructions for Form 4720 (2023)

Initial tax on foundation. An initial tax
of 20% is imposed on each taxable
expenditure of the foundation.

Initial tax on foundation managers.
When a tax is imposed on a taxable
expenditure of the foundation, a tax of
5% of the expenditure will be imposed
on any foundation manager who agreed
to the expenditure and who knew that it
was a taxable expenditure. Foundation
managers whose participation was not
willful and was due to reasonable cause
aren't liable for the tax. Any foundation
manager who took part in the
expenditure and is liable for the tax must
pay the tax. The maximum total amount
of tax on all foundation managers for
any one taxable expenditure is $10,000.
If more than one foundation manager is
liable for tax on a taxable expenditure,
all those foundation managers are jointly
and severally liable for the tax.

Specific Instructions
Part I. Complete this part for all taxable
expenditures. Enter in column (f) the
number designation from Form 990-PF,
Part VI-B, question 5a, or Form 5227,
Part VIII, line 5 that applies to the act; for
example, “5a(1).”
A taxable expenditure is corrected by
(a) recovering part or all of the
expenditure to the extent recovery is
possible, and where full recovery isn't
possible, such additional corrective
action as is prescribed by regulations; or
(b) if the taxable expenditure is due to
failure to comply with requirements
described in section 4945(h)(2) or (3)
(expenditure responsibility), obtaining or
making the report in question. In column
(d), for each act of taxable expenditure
listed in Part I, indicate whether the
investment has been corrected. Answer
“Yes,” if correction has been made in
whole or in part. Answer only “No,” if the
taxable expenditure has not been
corrected in any way.
• If correction has been made, provide
a detailed description of any correction
made, and the date of each correction. If
correction is partial, explain why
complete correction has not been made.
-13-

Part II. Enter in column (a) the names
of all foundation managers who agreed
to make the taxable expenditure. See
Initial tax on foundation managers,
earlier. If more than one foundation
manager is listed in column (a), each is
individually liable for the entire tax in
connection with the expenditure.
However, the foundation managers who
are liable for the tax may prorate the
payment among themselves. Enter in
column (c) the tax each foundation
manager will pay.
A foundation manager filing this Form
4720 should carry the appropriate
amount in column (d) to Part II, line 3.

Schedule F—Initial Taxes
on Political Expenditures
(Section 4955)
General Instructions

Requirement. Complete Schedule F if
you answered “Yes,” to question 5a(2)
and 5b of Form 990-PF, Part VI-B.
Complete Schedule F if you entered an
amount on line 2 of Schedule C (Form
990), Part I-A. Complete Schedule F if
you are otherwise a section 501(c)(3)
organization that made a political
expenditure.
Political expenditures. These include
any amount paid or incurred by a
section 501(c)(3) organization that
participates or intervenes in (including
the publication or distribution of
statements) any political campaign on
behalf of, or in opposition to, any
candidate for public office. The tax is
imposed even if the political expenditure
gives rise to a revocation of the
organization's section 501(c)(3) status.
These taxes apply in the case of both
public charities and private foundations.
When tax is imposed under this
provision in the case of a private
foundation, however, the expenditure in
question won't be treated as a taxable
expenditure under section 4945.
For an organization formed primarily
to promote the candidacy or prospective
candidacy of an individual for public
office (or that is effectively controlled by
a candidate or prospective candidate
and is used primarily for such

purposes), amounts paid or incurred for
any of the following purposes are
deemed political expenditures:
• Remuneration to the candidate or
prospective candidate for speeches or
other services;
• Travel expenses of the individual;
• Expenses of conducting polls,
surveys, or other studies, or preparing
papers or other material for use by the
individual;
• Expenses of advertising, publicity,
and fundraising for such individual; and
• Any other expense which has the
primary effect of promoting public
recognition or otherwise primarily
accruing to the benefit of the individual.

Part II. Enter in column (a) the names
of all managers who took part in making
the political expenditures listed in Part I.
See Initial tax on organization managers
or foundation managers, earlier.
If more than one manager is listed in
column (a), each is individually liable for
the entire amount of tax on the
expenditure. However, the managers
who are liable for the tax may prorate
payment among themselves. Enter in
column (c) the tax each manager will
pay.
An organization manager filing this
Form 4720 should carry the appropriate
amount in column (d) to Part II, line 4.

An electing member of an affiliated
group that is included in a group return,
should enter on line 1 its share of the
excess grass root lobbying expenditures
of the affiliated group, and on line 2 its
share of the excess lobbying
expenditures of the affiliated group. Take
these amounts from the schedule of
excess lobbying expenditures that must
be attached to Schedule C (Form 990).
See the Instructions for Schedule C
(Form 990), Part II-A, for a discussion of
the lobbying provisions, including how to
figure the taxable amount.

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Initial tax on organization or foundation. The initial tax on the organization
or foundation is 10% of the amount
involved.

Initial tax on organization managers
or foundation managers. An initial tax
of 2.5% of the amount involved (up to
$5,000 of tax on any one expenditure) is
imposed on any manager who agrees to
an expenditure, knowing that it is a
political expenditure, unless the
agreement isn't willful and is due to
reasonable cause.
Any manager who agreed to the
expenditure must pay the tax.

Specific Instructions

Part I. Complete this part for all political
expenditures. A political expenditure
described in section 4955 is corrected
by recovering part or all of the
expenditure to the extent recovery is
possible, establishment of safeguards to
prevent future political expenditures,
and where full recovery isn't possible,
such additional corrective action as is
prescribed by the regulations. In column
(d), for each act of political expenditure
listed in Part I, indicate whether the
investment has been corrected. Answer
“Yes,” if correction has been made in
whole or in part. Answer “No,” only if the
political expenditure has not been
corrected in any way.
• If correction has been made, provide
a detailed description of any correction
made, and the date of each correction. If
correction is partial, explain why
complete correction has not been made.
If correction is made in more than one
transaction, describe each transaction
separately.
• If correction has not been made,
provide a detailed explanation of why
correction hasn't been made and what
steps are being taken to make the
correction.

Schedule G—Tax on
Excess Lobbying
Expenditures (Section
4911)

Requirement. Schedule G must be
completed by eligible section 501(c)(3)
organizations that elected to be subject
to the limitations on lobbying
expenditures, under section 501(h) and
that made excess lobbying expenditures
as defined in section 4911(b).
Except as noted below, follow the line
instructions on Schedule G.

Affiliated groups. Two or more
organizations are members of an
affiliated group of organizations for the
purposes of section 4911 only if:
• The governing instrument of one
organization requires it to be bound by
decisions of the other organization on
legislative issues; or
• The governing board of one
organization includes persons who are
specifically designated representatives
of another such organization or are
members of the governing board,
officers or paid executive staff members
of such other organization, and who, by
aggregating their votes, hold sufficient
voting power to cause or prevent action
on legislative activities by the first
organization. See section 4911(f) and
Regulations section 56.4911-7.
A nonelecting member of an affiliated
group doesn’t file Form 4720.
Electing members of an affiliated
group may file a group return or may file
separately. An electing member of an
affiliated group that files a separate
return, should enter on line 1 the amount
from Schedule C (Form 990), Part II-A,
column (a), line 1h. Enter on line 2 the
amount from Schedule C (Form 990),
Part II-A, column (a), line 1i.
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Schedule H—Taxes on
Disqualifying Lobbying
Expenditures (Section
4912)
General Instructions

Requirement. Schedule H must be
completed by certain organizations
whose section 501(c)(3) status is
revoked because of excess lobbying
activities.
Exceptions. These taxes aren't
imposed on a private foundation (whose
lobbying expenditures may be subject to
the tax on taxable expenditures). These
taxes also aren't imposed on any
organization for which a section 501(h)
election was in effect at the time of the
lobbying expenditures or that was not
eligible to make a section 501(h)
election.

Tax on organization. A tax of 5% of
the lobbying expenditures is imposed on
the organization whose section 501(c)
(3) status is revoked because of excess
lobbying activities.
Tax on organization managers. A tax
of 5% of the lobbying expenditures is
also imposed on any manager who
willfully and without reasonable cause
consented to the lobbying expenditures,
knowing that they would likely result in
the organization no longer qualifying
under section 501(c)(3).
There is no limit on the amount of this
tax that may be imposed against either
the organization or its managers. Any
organization manager who agreed to the
expenditure must pay the tax.

Specific Instructions
Part I. Complete this part for all
disqualifying lobbying expenditures.
Part II. Enter in column (a) the names
of all organization managers who took
part in making disqualifying lobbying

Instructions for Form 4720 (2023)

expenditures listed in Part I. See Tax on
organization managers, earlier.
If more than one organization
manager is listed in column (a), each is
individually liable for the entire amount
of tax in connection with the
expenditure. However, the managers
who are liable for the tax may prorate
payment among themselves. Enter in
column (c) the tax each manager will
pay.
A manager filing this Form 4720
should carry the appropriate amount in
column (d) to Part II, line 5.

Tax on disqualified persons. The
tax is 25% of the excess benefit and is
paid by any disqualified person who
improperly benefited from the excess
benefit transaction.
Tax on organization managers.
When tax is imposed on a disqualified
person for any excess benefit
transaction, then tax is also imposed on
any manager who knowingly
participated in the excess benefit
transaction. The tax is 10% of the
excess benefit, not to exceed $20,000
for each transaction.

loan, compensation, or other similar
payment. Also, any loan provided to a
disqualified person that isn't an
organization described in section 509(a)
(1), (2), or (4) or a supported
organization of the supporting
organization exempt under section
501(c)(4), (5), (6) and described in the
last sentence of section 509(a) is
considered an excess benefit
transaction.

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Schedule I—Initial Taxes
on Excess Benefit
Transactions (Section
4958)
General Instructions

Requirement. Schedule I must be
completed by any Applicable
organization or Disqualified person
that engaged in an Excess benefit
transaction, and by any fund manager
who knowingly participated in the
excess benefit transaction. These terms
are discussed below. Each person must
file separately.
Applicable organization. In
general, an applicable organization is
any section 501(c)(3) (except a private
foundation), 501(c)(4), or 501(c)(29)
organization.
Also, an applicable organization
includes any organization that was a
section 501(c)(3) (except a private
foundation), 501(c)(4), or 501(c)(29)
organization at any time during a 5-year
period ending on the date of an excess
benefit transaction (the lookback
period).

Initial taxes. Excise taxes are imposed
under section 4958 on each excess
benefit transaction. If a manager
receives an excess benefit from an
excess benefit transaction, the manager
may be liable for the tax on disqualified
persons and the tax on the organization
manager. The applicable organization
must complete Schedule I. However, the
excise tax under section 4958 is
imposed on the disqualified person. The
organization completing Schedule I
should not report the initial tax amount
on Part II and should not pay the tax
liability of any disqualified person or
organization manager. See Abatement,
earlier, for information on abatement,
refund, or relief from this tax.

Instructions for Form 4720 (2023)

Taxable period. Taxable period
means the period beginning with the
date on which the excess benefit
transaction occurs and ending on the
earlier of:
1. The date a notice of deficiency
was mailed to the disqualified person for
the initial tax on the excess benefit
transaction, or
2. The date on which the initial tax
on the excess benefit transaction for the
disqualified person is assessed.

Excess benefit transaction. An
excess benefit transaction is any
transaction in which:
1. An economic benefit is provided
by the organization directly or indirectly
to or for the use of, any disqualified
person, if the value of the economic
benefit provided exceeds the value of
the consideration (including the
performance of services) received for
providing such benefit, or
2. The amount of any economic
benefit provided to, or for the use of, a
disqualified person is determined in
whole or in part by the revenues of the
organization and violates the private
inurement prohibition rules (to the extent
provided in regulations).

Until final regulations are issued
regarding the special rules for
CAUTION revenue sharing transactions
described in 2 above, these transactions
will only be subject to section 4958
liability under the general rule described
in 1 above.

!

Supporting organization
transactions occurring after July 25,
2006. For any supporting organization,
as defined in section 509(a)(3), any
grant, loan, compensation, or other
similar payment provided to a
substantial contributor (defined later),
family member, or 35% controlled entity
will be considered an excess benefit
transaction. The amount of the excess
benefit is the amount of such grant,
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Donor advised fund transactions
occurring after August 17, 2006. Any
grant, loan, compensation, or other
similar payment from any donor advised
fund to a donor, donor advisor, family
member, or 35% controlled entity is an
excess benefit transaction. The amount
of the excess benefit is the amount of
such grant, loan, compensation, or other
similar payment.
Excess benefit. Excess benefit
means the excess of the economic
benefit received from the applicable
organization over the consideration
given (including services) by a
disqualified person, except in the
immediately preceding special rules
where the entire amount of the grant,
loan, compensation, or other similar
payment is considered the excess
benefit.
However, an economic benefit won't
be treated as compensation for services
unless the applicable organization
clearly indicates its intent to treat the
economic benefit (when paid) as
compensation for a disqualified person's
services. See Regulations section
53.4958-4(c) for more information.
Exception. Generally, section 4958
doesn't apply to any fixed payment
made to a person under an initial
contract. See Regulations section
53.4958-4(a)(3) for details.

Special rule. The initial and additional
taxes of this section don't apply if the
transaction described in 1 under Excess
benefit transaction was pursuant to a
written contract in effect on September
13, 1995, and at all times after that date
until the time that the transaction occurs.
However, if a written contract is
materially modified, it is treated as a
new contract entered into as of the date
of the material modification. A material
modification includes amending the
contract to extend its term or to increase
the compensation payable to a
disqualified person.
Disqualified person. For purposes of
this Schedule I, a disqualified person
means:

1. Any person (at any time during
the 5-year period ending on the date of
the transaction) in a position to exercise
substantial influence over the affairs of
the organization,
2. A family member of an individual
described in 1 above, and
3. A 35% controlled entity of a
person described in 1 or 2 above.

Investment advisor. Investment
advisor means for any sponsoring
organization, any person compensated
by such organization (but not an
employee of such organization) for
managing the investment of, or
providing investment advice for assets
maintained in donor advised funds
maintained by such sponsoring
organization.

correction is partial, explain why
complete correction has not been made.
If correction is made in more than one
transaction, describe each transaction
separately.
• If correction has not been made,
provide a detailed explanation of why
correction hasn't been made and what
steps are being taken to make the
correction.
For organization managers, the tax is
the lesser of 10% of the excess benefit
or $20,000. This tax is computed on
each transaction.

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Family members. Family members
of a disqualified person described in 1
above include a disqualified person's
spouse, ancestors, children,
grandchildren, great grandchildren, and
brothers and sisters (whether by wholeor half-blood). It also includes the
spouse of the children, grandchildren,
great grandchildren, brothers, or sisters
(whether by whole- or half-blood).

35% controlled entity. The term
35% controlled entity means:
• A corporation in which a disqualified
person described in 1 or 2 above owns
more than 35% of the total combined
voting power,
• A partnership in which such persons
own more than 35% of the profits
interest, or
• A trust or estate in which such
persons own more than 35% of the
beneficial interest.
In determining the holdings of a
business enterprise, any stock or other
interest owned directly or indirectly shall
apply.

For donor advised funds, sponsoring organizations, and certain supporting organization transactions
occurring after August 17, 2006. The
following persons will be considered
disqualified persons along with certain
family members and 35% controlled
entities associated with them:

• Donors of donor advised funds,
• Donor advisors of donor advised

funds,
• Investment advisors of sponsoring
organizations, and
• Disqualified persons of a section
509(a)(3) supporting organization for the
organizations that organization
supports.
For certain supporting
organization transactions occurring
after July 25, 2006. Substantial
contributors to supporting organizations
will also be considered disqualified
persons along with their family members
and 35% controlled entities.
Donor advised fund. See the
Schedule K instructions for a definition
of donor advised fund.

Sponsoring organization. See the
Schedule K instructions for a definition
of sponsoring organization.

Substantial contributor. In
general, a substantial contributor means
any person who contributed or
bequeathed an aggregate of more than
$5,000 to the organization, if that
amount is more than 2% of the total
contributions and bequests received by
the organization before the end of the
tax year of the organization in which the
contribution or bequest is received by
the organization from such person. A
substantial contributor includes the
grantor of a trust.

Specific Instructions

Part I. List each excess benefit
transaction in Part I, column (d). Enter
the date of the transaction in column (b)
and the amount of the excess benefit in
column (e). Compute the tax on the
excess benefit for disqualified persons
and enter it in column (f). Compute any
tax on the excess benefit for
organization managers and enter the
amount in column (g). The organization
reporting one or more excess benefit
transactions should not carry totals from
column (f) or column (g) to Part II, line 6.
An excess benefit transaction is
corrected by undoing the excess benefit
to the extent possible and taking any
additional measures necessary to place
the organization in a financial position
not worse than that in which it would be
if the disqualified person had been
dealing under the highest fiduciary
standards, except that in the case of any
correction of an excess benefit
transaction involving a donor advised
fund no amount repaid in a manner
prescribed by the Secretary may be
held in any donor advised fund. In
column (c), for each act of excess
benefit transaction in Part I, indicate
whether the act has been corrected.
Answer “Yes,” if correction has been
made in whole or in part. Answer “No,”
only if the transaction has not been
corrected in any way.
• If correction has been made, provide
a detailed description of any correction
made, and the date of each correction. If
-16-

Part II. Enter in column (a) the names
of all disqualified persons who took part
in the excess benefit transactions. If
more than one disqualified person took
part in an excess benefit transaction,
each is individually liable for the entire
tax on the transaction. But the
disqualified persons who are liable for
the tax may prorate the payment among
themselves. Enter in column (c) the tax
to be paid by each disqualified person.
Carry the total amount in column (d)
for each disqualified person to Part II,
line 6.
Part III. Enter in column (a) the names
of all managers who knowingly took part
in the excess benefit transactions listed
in Part I. If more than one manager
knowingly took part in an excess benefit
transaction, each is individually liable for
the entire tax in connection with the
transaction. But the managers liable for
the tax may prorate the payment among
themselves. Enter in column (c) the tax
to be paid by each organization
manager.
A manager filing this Form 4720
should carry the appropriate amount in
column (d) to Part II, line 6.

Schedule J—Taxes on
Being a Party to Prohibited
Tax Shelter Transactions
(Section 4965)
General Instructions
Requirement.
1. Complete Schedule J if you are
an entity described in section 501(c),
501(d), or 170(c) (other than the United
States) or an Indian tribal government
(within the meaning of section 7701(a)
(40)) and you received proceeds from or
have net income attributable to a
prohibited tax shelter transaction
(PTST).
2. Complete Schedule J if you are
an entity manager of such an entity who
Instructions for Form 4720 (2023)

approved the entity listed in section
4965(c) as (or otherwise caused the
entity to be) a party to a PTST at any
time during the tax year and who knew
(or had reason to know) that the
transaction is a PTST.
See the following guidance and any
future guidance for details.
• Notice 2006-65, 2006-31 I.R.B. 102;
• Notice 2007-18, 2007-9 I.R.B. 608;
• T.D. 9334, 2007-34 I.R.B. 382; and
• T.D. 9492, 2010-33 I.R.B. 242.

Allocation of net income and proceeds to a tax year. The net income
and proceeds attributable to a
prohibited tax shelter transaction must
be allocated to a particular tax year in a
manner consistent with the entity's
established method of accounting for
federal income tax purposes. If an entity
hasn't established a method of
accounting for federal income tax
purposes, the entity must use the cash
receipts and disbursements method to
determine the amount and timing of net
income and proceeds attributable to a
prohibited tax shelter transaction.
If an entity has an established
method of accounting other than the
cash method, the entity may use the
cash method to determine the amount
of the net income and proceeds
attributable to a prohibited tax shelter
transaction.

Part V of Form 990, or if you are a fund
manager of a sponsoring organization
who agreed to the making of a taxable
distribution knowing that it was a taxable
distribution. Report each taxable
distribution separately. These terms are
discussed below.
Taxable distribution. A taxable
distribution is any distribution from a
donor advised fund to any natural
person or to any other person if:
1. The distribution is for any purpose
other than one specified in section
170(c)(2)(B), or
2. The sponsoring organization
maintaining the donor advised fund
doesn't exercise expenditure
responsibility with respect to such
distribution in accordance with section
4945(h).

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Managers of tax favored
TIP retirement plans, individual
retirement arrangements, and
savings arrangements described in
sections 401(a), 403(a), 403(b), 529,
457(b), 408(a), 220(d), 408(b), 530, or
223(d) must report and pay tax due
under section 4965(a)(2) on Form 5330.

Prohibited tax shelter transaction. In
general, a prohibited tax shelter
transaction means any listed transaction
(including a subsequently listed
transaction) and any prohibited
reportable transaction.

Listed transaction. A listed
transaction includes any transaction that
is the same as or substantially similar to
one of the types of transactions that the
IRS has determined to be a tax
avoidance transaction. These
transactions are identified by notice,
regulation, or other form of published
guidance as a listed transaction. For
existing guidance, see Notice 2009-59,
2009-31 I.R.B. 170.
For updates to this list, go to the IRS
website at IRS.gov/businesses/
corporations/abusive-tax-shelters-andtransactions. The listed transactions in
the above notices and rulings will also
be periodically updated in future issues
of the Internal Revenue Bulletin.
Subsequently listed transaction.
A subsequently listed transaction is a
transaction that is identified in published
guidance as a listed transaction after
the entity has entered into the
transaction and that was not a
confidential transaction or transaction
with contractual protection at the time
the entity entered into the transaction.

Prohibited reportable transaction. A
prohibited reportable transaction is any
confidential transaction or any
transaction with contractual protection
that is a reportable transaction. See
Regulations sections 1.6011-4(b)(3)
and (4), and the Instructions for Form
8886-T, Disclosure by Tax-Exempt Entity
Regarding Prohibited Tax Shelter
Transaction, for more information.
Instructions for Form 4720 (2023)

Specific Instructions

Part I. Complete this part for each
transaction if during the tax year the
entity received proceeds from or has net
income attributable to a PTST.
Figure the tax for each transaction as
follows.
• If column (e) was answered “Yes,”
then enter the larger of the column (f) or
column (g) amount in column (h).
• If column (e) was answered “No,” then
multiply the larger of the amount in
column (f) or column (g) by 21% (0.21)
and enter the result in column (h).
After the tax has been figured for all
PTSTs entered on Schedule J, then total
column (h) and enter the amount on the
Total line and on line 9 of Part I.
Part II. Enter in column (a) the names
of all entity managers who approved the
entity as (or otherwise caused the entity
to be) a party to a PTST at any time
during the tax year and who knew or
had reason to know that the transaction
is a PTST.
A manager filing this Form 4720
should carry the appropriate amount in
column (d) to Part II, line 7.

Schedule K—Taxes on
Taxable Distributions of
Sponsoring Organizations
Maintaining Donor
Advised Funds (Section
4966)
General Instructions
Requirement. Complete Schedule K if
you answered “Yes,” to question 9a in
-17-

However, a taxable distribution
doesn't include a distribution from a
donor advised fund to:
1. Any organization described in
section 170(b)(1)(A) (other than a
disqualified supporting organization),
2. The sponsoring organization of
such donor advised fund, or
3. Any other donor advised fund.

Sponsoring organization. A
sponsoring organization is a section
170(c) organization that isn't a
government organization (as referred to
in section 170(c)(1) and (2)(A)) or a
private foundation and maintains one or
more donor advised funds.
Donor advised fund. A donor advised
fund is a fund or account:
1. Which is separately identified by
reference to contributions of a donor or
donors,
2. Which is owned and controlled by
a sponsoring organization, and
3. For which the donor (or any
person appointed or designated by the
donor) has or expects to have advisory
privileges concerning the distribution or
investment of the funds held in the
donor advised funds or accounts
because of the donor's status as a
donor.
Exception. A donor advised fund
doesn't include:
1. A fund or account that makes
distributions only to a single identified
organization or governmental entity, or
2. Any fund or account with respect
to which a donor or donor advisor (as
defined in the Schedule L instructions)
gives advice about which individuals

receive grants for travel, study, or similar
purposes, if:
a. Such person's advisory privileges
are performed exclusively by such
person in their capacity as a committee
member of which all the committee
members are appointed by the
sponsoring organization,
b. No combination of donors, donor
advisors, or persons related (as defined
in the Schedule L instructions) to donors
or donor advisors, directly or indirectly
control the committee, and
c. All grants from the fund or
account are awarded on an objective
and nondiscriminatory basis according
to a procedure approved in advance by
the board of directors of the sponsoring
organization. The procedure must be
designed to ensure that all grants meet
the requirements of section 4945(g)(1),
(2), or (3).

Schedule L—Taxes on
Prohibited Benefits
Distributed From Donor
Advised Funds (Section
4967)
General Instructions

party who received the benefit are jointly
and severally liable for the tax.
Tax on fund managers. If a tax is
imposed on a prohibited benefit
received by a donor, donor advisor, or
related person, a tax of 10% of the
amount of the prohibited benefit is
imposed on any fund manager who
agreed to the distribution knowing that it
would confer a prohibited benefit. Any
fund manager who took part in the
distribution and is liable for the tax must
pay the tax. The maximum amount of
tax on all fund managers for any one
taxable distribution is $10,000. If more
than one fund manager is liable for tax
on a taxable distribution, all such
managers are jointly and severally liable
for the tax.

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Tax on sponsoring organization. A
tax of 20% of the amount of each
taxable distribution is imposed on the
sponsoring organization.

Tax on fund manager. If a tax is
imposed on a taxable distribution of the
sponsoring organization, a tax of 5% of
the distribution will be imposed on any
fund manager who agreed to the
distribution knowing that it was a taxable
distribution. Any fund manager who took
part in the distribution and is liable for
the tax must pay the tax. The maximum
amount of tax on all fund managers for
any one taxable distribution is $10,000.
If more than one fund manager is liable
for tax on a taxable distribution, all such
managers are jointly and severally liable
for the tax.

Specific Instructions
Part I. Complete this part for all taxable
distributions.
Part II. Enter in column (a) the names
of all fund managers who agreed to
make the taxable distribution. If more
than one fund manager is listed in
column (a) for one distribution, each is
individually liable for the entire tax in
connection with that distribution.
However, the fund managers who are
liable for the tax may prorate the
payment among themselves. Enter in
column (c) the tax each manager will
pay for each distribution for which such
manager owes a tax.
A fund manager filing this Form 4720
should carry the apportioned amount in
column (d) to Part II, line 8.

Requirement. A sponsoring
organization of donor advised funds that
answered “Yes,” to Form 990, Part V,
line 9b, or that otherwise distributed
prohibited benefits under section 4967,
must complete Schedule L. In addition,
a donor, donor advisor, or related party
that (1) advised a distribution that
provided a prohibited benefit under
section 4967, or (2) that received such a
benefit, and any fund manager who
agreed to the distribution knowing that it
would confer a prohibited benefit, must
complete Schedule L. Report each
distribution separately. Complete Parts I,
II, and III of Schedule L only in
connection with distributions made by a
sponsoring organization from a donor
advised fund which results in a
prohibited benefit. (See the instructions
for Schedule K for definitions of the
terms sponsoring organization and
donor advised fund). An organization
reporting a prohibited benefit on
Schedule L is not liable for the tax and
should not report any tax amount on
Part II, line 9.

Prohibited benefit. If any donor, donor
advisor, or related party advises the
sponsoring organization about making a
distribution which results in a donor,
donor advisor, or related party receiving
(either directly or indirectly) a more than
incidental benefit, then such benefit is a
prohibited benefit.
Donor advisor. A donor advisor is any
person appointed or designated by a
donor to advise a sponsoring
organization on the distribution or
investment of amounts held in the
donor's fund or account.
Related party. A related party includes
any family member or 35% controlled
entity. See the General Instructions for
Schedule I for a definition of those
terms.
Tax on donor, donor advisor, or related person. A tax of 125% of the
benefit resulting from the distribution is
imposed on both the party who advised
as to the distribution (which might be a
donor, donor advisor, or related party)
and the party who received such benefit
(which might be a donor, donor advisor,
or related party). The advisor and the
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Exception. If a tax is imposed under
section 4958 for the same transaction,
then no additional tax is imposed under
section 4967 on that transaction.

Specific Instructions

Part I. Complete this part for all
prohibited benefits.
Part II. Enter in column (a) the names
of all donors, donor advisors, and
related persons who received a
prohibited benefit or advised as to the
distribution of such benefit. If more than
one donor, donor advisor, or related
person is listed in column (a) for one
distribution, each is individually liable for
the entire tax for that distribution.
However, the donors, donor advisors, or
related persons who are liable for the
tax may prorate the payment among
themselves. Enter in column (c) the tax
each donor, donor advisor, or related
person will pay for each distribution for
which such donor, donor advisor, or
related person owes a tax.
A donor, donor advisor, or related
person filing this Form 4720 should
carry the apportioned amount in
Schedule L, Part II, column (d) to Part II,
line 9.
Part III. Enter in column (a) the names
of all fund managers who agreed to
make the distribution conferring the
prohibited benefit. If more than one fund
manager is listed in column (a) for one
distribution, each is individually liable for
the entire tax for that distribution.
However, the fund managers who are
liable for the tax may prorate the
payment among themselves. Enter in
column (c) the tax each donor advisor,
or related person will pay for each
distribution for which such donor, donor
advisor, or related person owes a tax.

Instructions for Form 4720 (2023)

A fund manager filing this Form 4720
should carry the total amount in
Schedule L, Part III, column (d) to Part II,
line 9.

Schedule M—Tax on
Hospital Organization for
Failure to Meet the
Community Health Needs
Assessment Requirements
(Sections 4959 and 501(r)
(3))

line 1 on line 2 and on Part I, line 12.
This is the CHNA excise tax under
section 4959.

Schedule N—Tax on
Excess Executive
Compensation (Section
4960)

Remuneration exceptions. For
purposes of this provision, remuneration
does not include:
• Designated Roth contributions (as
defined in section 402A(c)),
• The portion of any remuneration paid
to a licensed medical professional
(including a veterinarian) which is for the
performance of medical or veterinary
services by such professional, or
• Remuneration the deduction for
which is not allowed by reason of
section 162(m).

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General Instructions

Requirements. Section 4959 imposes
an excise tax on hospital organizations
that fail to meet the section 501(r)(3)
requirements in any tax year.
Section 501(r)(3) requirements
pertain to a hospital organization
conducting a community health needs
assessment (CHNA). The requirements,
which apply separately to each hospital
facility the hospital organization
operates, are as follows.
1. To conduct a CHNA this tax year,
or in either of the 2 prior tax years. The
CHNA must take into account input from
persons who represent the broad
interests of the community served by
the hospital facility, including people
with special knowledge of or expertise in
public health. The CHNA must be made
widely available to the public.
2. To adopt an implementation
strategy to meet the community health
needs identified through the CHNA.
See Notice 2011-52, 2011-30 I.R.B.
60; Final Regulations, T.D. 9708, 79
Fed. Reg. 78954 (Dec. 31, 2014),
2012-32 I.R.B. 126; Notice 2014-2,
2014-3 I.R.B. 407; Notice 2014-3,
2014-3 I.R.B. 408; as well as any future
related guidance for details. For
additional information on the CHNA
requirements, see Schedule H (Form
990), Hospitals, Part V, Section B.

Specific Instructions
Part I. For each hospital facility, list the
following information in the relevant
column: (b) name of facility, (c)
description of the failure to meet section
501(r)(3), (d) tax year hospital facility
last conducted a CHNA, and (e) tax
year hospital facility last adopted an
implementation strategy.
Part II. On line 1 enter the number of
hospital facilities operated by the
hospital organization that failed to meet
the CHNA requirements of section
501(r)(3). Enter $50,000 multiplied by
Instructions for Form 4720 (2023)

General Instructions

Requirement. Complete Schedule N if
you answered “Yes” to question 15 in
Part V of Form 990, question 8 of Part
VI-B of Form 990-PF, or if you are an
ATEO (as defined earlier) or a related
organization but only if you are liable for
the tax under section 4960(a). Section
4960(a) imposes an excise tax of 21%
on the amount of remuneration paid by
an ATEO with respect to employment of
any covered employee in excess of $1
million and on any excess parachute
payment paid by such organization to
any covered employee.

Note. You may be required to file 2
Form 4720 returns if you are a related
organization liable for the tax under
section 4960(a), which is reported on
Part I, line 13, and you are a disqualified
person or organization manager of the
organization with respect to which you
are a related organization and you are
liable for a Chapter 41 or 42 excise tax
as a disqualified person or organization
manager, which is reported on Part II.
See the instructions for Page 1,
Question B, earlier.

Form 4720, Schedule N, is used

TIP to report and pay any section

4960 tax owed. Because there
is no requirement to make estimated tax
payments for the section 4960 tax, Form
990-W does not apply to the section
4960 tax.
Covered employee. A covered
employee means any employee of an
ATEO (including any former employee)
that is one of the ATEO’s five highest
compensated employees for the tax
year or was the ATEO’s (or a
predecessor’s) covered employee for
any preceding tax year beginning after
2016.
Remuneration. Remuneration means
wages (as defined in section 3401(a)).
Remuneration also includes amounts
required to be included in gross income
under section 457(f). Remuneration
shall be treated as paid when there is no
substantial risk of forfeiture (within the
meaning of section 457(f)(3)(B)) of the
rights to such remuneration.
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Remuneration from related
organizations. Remuneration of a
covered employee by an ATEO includes
any remuneration paid with respect to
employment of such employee by any
related person or governmental entity,
whether taxable or tax-exempt.
For this purpose, a person or
governmental entity is related to an
ATEO if it:
• Controls, or is controlled by, the
ATEO;
• Is controlled by one or more persons
who control the ATEO;
• Is a supported organization (as
defined in section 509(f)(3)) or
supporting organization (as defined in
section 509(a)(3)) with respect to the
ATEO during the taxable year; or
• In the case of an ATEO that is a
section 501(c)(9) voluntary employees’
beneficiary association (VEBA),
establishes, maintains, or makes
contributions to the ATEO.
Liability for tax in case of
remuneration from more than one
employer. In any case in which
remuneration from more than one
employer is taken into account under
the rule above, each related employer is
liable for the tax in an amount which
bears the same ratio to the total tax as
the ratio of (1) the amount of
remuneration that employer paid with
respect to such employee, to (2) the
amount of remuneration paid by all
related employers to the employee.
Each related employer must file their
own Form 4720, complete Schedule N
and report their ratable share of tax on
Part I, line 13.
Excess parachute payment. For
purposes of this provision, an excess
parachute payment equals the excess of
any parachute payment over the portion
of the base amount allocated to such
payment.
Parachute payment. A parachute
payment is any payment in the nature of
compensation to (or for the benefit of) a
covered employee if the payment:

• Is contingent on such employee’s
separation from the employment with
the employer, and
• Has an aggregate present value of
the payments in the nature of
compensation to (or for the benefit of)
such individual which are contingent on
such separation that equals or exceeds
three times the base amount.

amount of any excess parachute
payment you paid.
For each covered employee reported
in column (b), enter in column (e) the
sum of columns (c) and (d).

Schedule O—Excise Tax
on Net Investment Income
of Private Colleges and
Universities (Section 4968)

4968 defines “related organization” to
include only the following organizations.
• Organizations that control or are
controlled by the educational institution.
• Organizations that are controlled by
one or more of the same persons who
control the educational institution.
• A supported organization (as defined
in section 509(f)(3)) during the tax year
with respect to the educational
institution.
• Supporting organizations described
in section 509(a)(3) during the tax year
with respect to the educational
institution.
When calculating the net investment
income of a related organization,
exclude (1) net investment income of
any related organization to the extent
that such net investment income is
taken into account with respect to
another educational institution; and (2)
net investment income from assets that
are not intended, or are not available for
the use or benefit of the educational
institution, unless the related
organization is controlled by the
educational institution, or unless the
related organization is a supporting
organization with respect to the
educational institution.

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Base amount. Rules similar to the
rules of section 280G(b)(3) shall apply
for purposes of determining the base
amount.

Property transfers. Rules similar to
the rules of section 280G(d)(3) and (4)
shall apply to property transfers.
Exception from excess parachute
payments. An excess parachute
payment does not include any
payments:
• Described in section 280G(b)(6)
(relating to exemption for payments
under qualified plans),
• Made under or to an annuity contract
described in section 403(b) or a plan
described in section 457(b),
• To a licensed medical professional
(including a veterinarian) to the extent
that such payment is for the
performance of medical or veterinary
services by such professional, or
• To an individual who is not a highly
compensated employee as defined in
section 414(q).

Specific Instructions

Enter in column (b) the name of each
covered employee who was paid more
than $1 million in renumeration or was
paid an excess parachute payment
during the year. If more than five
covered employees, attach a statement
with the information required by the
schedule and show the total amounts
for column (e) on line 6.
For each covered employee reported
in column (b), enter in column (c) the
amount of remuneration you paid that
exceeded $1 million. Do not include any
excess parachute payment reported in
column (d). If remuneration from related
employer(s) was taken into account in
determining that remuneration
exceeded $1 million, enter your
proportional share of the amount of
remuneration that exceeded $1 million,
based on your proportional share of
total remuneration paid to the covered
employee. Also, attach a statement to
Form 4720 with the name and EIN of the
related employer(s).
For each covered employee reported
in column (b), enter in column (d) the

General Instructions

Requirement. An applicable
educational institution that answered
“Yes” to Form 990, Part V, line 16, or that
is otherwise subject to the section 4968
tax on net investment income, must
complete Schedule O.
Organizations subject to the section
4968 excise tax. A private college or
university is subject to a 1.4% excise tax
on net investment income under section
4968 if all four of the following threshold
tests are met.
• The organization must be an eligible
educational institution (as defined in
section 25A(f)(2)). Section 25A(f)(2)
defines “eligible educational institution”
as an institution that is described in
section 481 of the Higher Education Act
of 1965 (20 U.S.C. section 1088), as in
effect on August 5, 1997; and is eligible
to participate in a program under Title IV
of such Act (20 U.S.C. sections 1070 et
seq.).
• The organization must have had at
least 500 tuition-paying students, based
upon a daily average student count,
during the preceding tax year.
• More than 50% of those students
must have been located in the United
States.
• The aggregate fair market value, at
the end of the preceding tax year, of the
assets not used directly in carrying out
the organization’s exempt purpose, held
by the organization and related
organizations, must be at least
$500,000 per student.

Form 4720, Schedule O, is used

TIP by applicable educational

institutions to report and pay
any section 4968 tax owed. Because
there is no requirement to make
estimated tax payments for the section
4968 tax, Form 990-W does not apply to
the section 4968 tax.
Related organizations. The net
investment income of related
organizations is taken into account
under certain circumstances. Section

-20-

Net investment income. Net
investment income is the amount by
which the sum of the gross investment
income and the capital gain net income
exceeds the administrative expenses
allocable to gross investment income
and capital gain net income.
To determine net investment income,
including certain exceptions to gross
investment income and modifications to
allowable deductions, see Regulations
section 53.4968-2.
Basis. As described in Regulations
section 53.4968-2(d)(2), in the case of
property held by an applicable
educational institution on December 31,
2017, and continuously thereafter to the
date of its disposition, the basis for
determining gain shall be deemed not to
be less than the fair market value of
such property on December 31, 2017,
plus or minus all adjustments after
December 31, 2017, and before the
date of disposition consistent with the
regulations under section 4940(c).
However, for purposes of determining
loss, basis rules that are consistent with
the regulations under section 4940(c)
will apply.
Modified capital gain net income.
Column (d) can reflect capital losses
from sales or other dispositions of
property in one organization only to the
Instructions for Form 4720 (2023)

extent of capital gains from such sales
or other dispositions in all the other
organizations (modified capital gain net
income). See Regulations section
53.4968–2. Amounts listed in column
(d), for the filing organization and any
related organization, may indicate a net
loss. However, the amount carried to
line 6, column (d) must be the greater of
the modified capital gain net income or
zero. Do not take into account capital
loss carrybacks. Capital loss carryovers
are allowed.

• Sign the return in the space provided
for the preparer's signature,
• Enter the preparer information,
• Enter the preparer tax identification
number (PTIN), and
• Give a copy of the return to the
organization, in addition to the copy to
be filed with the IRS.

service is available Monday through
Friday.

Photographs of Missing
Children

The Internal Revenue Service is a proud
partner with the National Center for
Missing & Exploited Children®
(NCMEC). Photographs of missing
children selected by the Center may
appear in instructions on pages that
would otherwise be blank. You can help
bring these children home by looking at
the photographs and calling
1-800-THE-LOST (1-800-843-5678) if
you recognize a child.

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Specific Instructions

Line 1. Use Line 1 to report the gross
investment income , capital gain net
income (or loss), and associated
allocable administrative expenses of the
filing organization.

Lines 2–5. Use Lines 2–5 to report the
gross investment income, capital gain
net income (or loss), and associated
allocable administrative expenses from
related organizations during the related
organizations’ tax years that end with or
within the tax year of the organization. If
a related organization is a partner in a
partnership or a shareholder of an S
corporation, include the pertinent items
of income, gain, loss, or deduction from
the entity's Schedule K-1 (Form 1065 or
1120-S) for the tax year of the entity
ending with or within the tax year of the
filing organization.
Report income from related
organizations in descending order from
most income to least income. If there
are more than three related
organizations, attach a schedule to your
Form 4720 showing the information for
columns (a) through (e) for each related
organization and enter the total amounts
from the schedule in line 5, columns (c)
through (e).
Line 6. Total the amounts in columns
(c), (d), and (e). See Notice 2018-55,
2018-26 I.R.B. 773.
Add 6(c) and 6(d), subtract 6(e), and
enter the total in 6(f).
Line 7. Multiply line 6(f) by 0.014
(1.4%) and enter the amount in box 7f
and on Part I, line 14.

Paid Preparer

Generally, anyone who is paid to
prepare the return must sign the return
and fill in the other blanks in the Paid
Preparer Use Only area. An employee
of the filing organization isn't a paid
preparer.
The paid preparer must:
Form 4720 Instructions

Any paid preparer whose
identifying number must be
CAUTION listed on Form 990-PF can
apply for and obtain a PTIN. You can
apply for a PTIN online or by filing Form
W-12, IRS Paid Preparer Tax
Identification Number (PTIN)
Application and Renewal. For more
information about applying for a PTIN
online, visit the IRS website at IRS.gov/
PTIN.

!

Paid Preparer Authorization

On the “Sign Here” line, check “Yes,” if
the IRS can contact the paid preparer
who signed the return to discuss the
return. This authorization applies only to
the individual whose signature appears
in the Paid Preparer Use Only section of
Form 4720. It doesn't apply to the firm, if
any, shown in that section.
By checking the “Yes” box, the
organization is authorizing the IRS to
contact the paid preparer to answer any
questions that arise during the
processing of the return. The
organization is also authorizing the paid
preparer to:
• Give the IRS any information missing
from the return;
• Call the IRS for information about
processing the return; and
• Respond to certain IRS notices about
math errors, offsets, and return
preparation.

The organization isn't authorizing the
paid preparer to bind the organization to
anything or otherwise represent the
organization before the IRS.
The authorization will automatically
end no later than the due date
(excluding extensions) for filing of the
organization's 2024 Form 4720. If the
organization wants to expand the paid
preparer's authorization or revoke it
before it ends, see Pub. 947, Practice
Before the IRS and Power of Attorney.
Check “No,” if the IRS should contact
the organization listed on the first page
of the Form 4720, rather than the paid
preparer.

Phone Help

If you have questions and/or need help
completing this form, please call
877-829-5500. This toll-free telephone
-21-

How To Get Forms and
Publications
Internet. You can access the IRS
website 24 hours a day, 7 days a week,
at IRS.gov to:
• Download forms, including talking tax
forms, instructions, and publications.
• Order IRS products online.
• Research your tax questions online.
• Search publications online by topic or
keyword.
• Sign up to receive local and national
tax news by email.
• You can order forms and publications
by downloading from the IRS website at
IRS.gov/OrderForms.

IRS e-Services Makes
Taxes Easier

Now more than ever before, businesses
can enjoy the benefits of filing and
paying their federal taxes electronically.
Whether you rely on a tax professional
or handle your own taxes, the IRS offers
you convenient programs to make taxes
easier. Use these electronic options to
make filing and paying easier.
• You can efile your Form 990 or Form
990-PF; Form 940 and 941 employment
tax returns; Forms 1099; and other
information returns. Visit IRS.gov/E-File
for details. For tax years beginning on or
after July 2, 2019, section 3101 of P.L.
116-25 requires that returns by exempt
organizations be filed electronically.
Organizations filing Form 990 or Form
990-PF for a tax year beginning on or
after July 2, 2019 must file the return
electronically. For tax years ending on or
after July 31, 2021, Form 990-EZ must
also be filed electronically. Limited
exceptions apply. See When, Where,
and How To File, in the Instructions for
Form 990, Form 990-PF or 990–EZ for
more information.
• You can pay taxes online or by phone
using the free Electronic Federal Tax

Payment System (EFTPS). Visit
EFTPS.gov or call 1-800-555-4477 for
details. Electronic Funds Withdrawal
(EFW) from a checking or savings
account is also available to those who
file electronically.
Privacy Act and Paperwork Reduction Act Notice. We ask for the
information on this form to carry out the
Internal Revenue laws of the United
States. You are required to give us the
information. We need it to ensure that
you are complying with these laws and
to allow us to figure and collect the right
amount of tax. Certain individuals who
owe tax under Chapter 41 or 42 of the
Internal Revenue Code, and who don't
sign the Form 4720 of the foundation or
organization, must file a separate Form
4720 showing the tax owed and the
name of the foundation or organization
for which they owe tax. Sections 6001
and 6011 of the Internal Revenue Code

require you to provide the requested
information if the tax applies to you.
Section 6109 requires you to provide
your identifying number. Routine uses of
this information include disclosing it to
the Department of Justice for civil and
criminal litigation and to other federal
agencies, as provided by law. We may
disclose the information to cities, states,
the District of Columbia, and U.S.
Commonwealths and territories to
administer their laws. We may also
disclose this information to other
countries under a tax treaty, to federal
and state agencies to enforce federal
nontax criminal laws, or to federal law
enforcement and intelligence agencies
to combat terrorism. If you don't file this
information, you may be subject to
interest, penalties, and/or criminal
prosecution.

subject to the Paperwork Reduction Act
unless the form displays a valid OMB
control number. Books or records
relating to a form or its instructions must
be retained as long as their contents
may become material in the
administration of any Internal Revenue
law. Generally, tax returns and return
information are confidential, as required
by section 6103. However, certain
returns and return information of tax
exempt organizations and trusts are
subject to public disclosure and
inspection, as provided by section 6104.

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You aren’t required to provide the
information requested on a form that is

-22-

The time needed to complete and file
this form will vary depending on
individual circumstances. The estimated
burden for tax exempt organizations
filing this form is approved under OMB
control number 1545-0047 and is
included in the estimates shown in the
instructions for their information return.

Instructions for Form 4720 (2023)

Index

A

Amended return 6
Attorney 21

D

Excess business holdings:
Exceptions to tax 10
Schedule C 9
Extension 4

F

Filing requirements:
When to file 4
Where and How to file 3
Who must file 2
Foreign Organizations or
U.S. Territory 4

I

Schedule E; Initial Taxes
on Taxable
Expenditures 13
Schedule F; Initial Taxes
on Political
Expenditures 13
Schedule G; Tax on
Excess Lobbying
Expenditures 14
Schedule H; Taxes on
Disqualifying Lobbying
Expenditures 14
Schedule I; Initial Taxes on
Excess Benefit
Transactions 15
Schedule J; Taxes on
Being a Party to
Prohibited Tax Shelter
Transactions (Section
4965) 16
Schedule K; Taxes on
Taxable Distributions of
Sponsoring
Organizations
Maintaining Donor
Advised Funds 17
Schedule L; Taxes on
Prohibited Benefits
Distributed From Donor
Advised Funds 18
Schedule M; Tax on
Failure to Meet the
Community Health
Needs Assessment
Requirements (Section
501(r)(3)) 19
Schedule N; Tax on
Excess Executive
Compensation (Section
4960) 19

Schedule O; Excess Tax
on Net Investment
Income of Private
Colleges and
Universities (Section
4968) 20
Signature and
Verification 4
Summary of Taxes 8

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Disqualified person 15
Donor advised funds 17,
18

E

Initial taxes on
investments that
jeopardize charitable
purpose:
section 4944 12
Initial taxes on political
expenditures:
section 4955 13
Initial taxes on taxable
expenditures:
section 4945 13

Initial Taxes on Excess
Benefit Transactions:
disqualified person 15
donor advised funds 16
excess benefit
transaction 15
section 4958 15
sponsoring
organizations 16
supporting
organizations 16

P

Paid Preparer 21
Paid Preparer
Authorization 21
Preparer Tax identification
Number (PTIN) 21
Publications:
Pub. 947, Practice Before
the IRS and Power of
Attorney 21

S

Schedule:
Schedule A; Initial Taxes
on Self-Dealing 8
Schedule B; Initial Tax on
Undistributed Income 9
Schedule C; Initial Tax on
Excess Business
Holdings 9
Schedule D; Initial Taxes
on Investments That
Jeopardize Charitable
Purpose 12

-23-

T

Tax on excess lobbying
expenditures:
section 4911 14
Tax Payments 5
Taxes on being a party to
Prohibited Tax Shelter
Transactions:
listed transaction 17
section 4965 16
Taxes on disqualifying
lobbying expenditures:
section 4912 14
Taxes on Managers,
Self-Dealers, etc. 7
Taxes on Prohibited
Benefits Distributed
From Donor Advised
Funds:
section 4967 18
Taxes on Taxable
Distributions of
Sponsoring
Organizations
Maintaining Donor
Advised Funds:
section 4966 17