Forms, Schedules, and Instructions for U.S. Tax-Exempt Returns

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TREASURY/IRS AND OMB USE ONLY DRAFT

2025

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

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) . . . . . . . . . . . .

Sep 22, 2025

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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 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Future Developments

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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 payments. If you have access to U.S. banking
services or electronic payment systems, you should use
direct deposit for any refunds. The IRS recommends paying
electronically whenever possible. For more information about
electronic payments, see Tax Payments, later.
Direct deposit for overpayments. For direct deposit for an
overpayment, attach Form 8050, Direct Deposit of Tax
Exempt or Government Entity Tax Refund to Form 4720. See
Part III, Line 4 under Specific Instructions for Page 1, later.

Reminders
Separate returns. 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), may no longer report the tax on the Form 4720
filed by the organization. Each taxpayer must file a separate
Form 4720.
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

Instructions for Form 4720 (2025) Catalog Number 13023Z
Department of the Treasury Internal Revenue Service www.irs.gov

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Contents

Contents

TREASURY/IRS AND OMB USE ONLY DRAFT
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
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 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.
2

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. Part II is used by persons and entities other
CAUTION 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 (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).
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)).
Instructions for Form 4720 (2025)

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Purpose of Form

Who Must File

TREASURY/IRS AND OMB USE ONLY DRAFT
Any entity described in section 4965(c) that is a party

TIP 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).

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).
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 exempt from tax

TIP 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
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
Instructions for Form 4720 (2025)

Other Filers
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 retirement plans, individual

TIP 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 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.
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
3

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Charitable remainder trusts. All charitable remainder
trusts described in section 664 that have unrelated 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.

• 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.

TREASURY/IRS AND OMB USE ONLY DRAFT
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.
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

a foreign country or
a U.S. territory

Internal Revenue 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.
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.
4

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.
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

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.
For a corporation (or an association), the form may be
signed by one of the following: president, vice president,
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.
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.
Instructions for Form 4720 (2025)

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Paper filing. For filers submitting paper returns:

Extension

Use Form 8868, Application for 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.

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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.
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.

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
Instructions for Form 4720 (2025)

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 as 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.

Making a Payment

All payments made to the federal government are to be
processed electronically. If you qualify for an exception, an
alternative payment option may be permitted. See
Non-electronic payment option exceptions, later, for more
information.

Electronic Federal Tax Payment System (EFTPS). Tax
payments can be made by check or through EFTPS. For
more information about EFTPS or to enroll in EFTPS, go to
EFTPS.gov or call 800-555-4477. You can also get Pub. 966,
Electronic Federal Tax Payment System: A Guide to Getting
Started.
Non-electronic payment option exceptions. If you qualify
for one of the exceptions below, a check may still be
permitted as a payment option.
1. Individuals who do not have access to banking
services or electronic payment systems.
2. Certain emergency payments where electronic
disbursement would cause undue hardship, as contemplated
in 31 C.F.R. Part 208.
3. National security or law enforcement-related activities
where non-EFT transactions are necessary or desirable.
4. Other circumstances as determined by the Secretary
of the Treasury, as reflected in regulations or other guidance.

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
5

DRAFT

DRAFT

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

the tax liability of any 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.

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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.
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.

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 2025, 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.
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.
6

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 you are a manager, self-dealer,
disqualified person, donor, donor advisor, or related person.
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.
Note. See Liability for Tax (later in Part II) regarding
allocation of liability among two or 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 year form as the form
you are correcting. Check the “Amended Return” box in the
heading area.
Instructions for Form 4720 (2025)

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DRAFT

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.

The taxable event will be treated as occurring:

• For the tax on failure to distribute income (section 4942),

TREASURY/IRS AND OMB USE ONLY DRAFT
Complete the entire return (not just the part that changed)
following the form and instructions for the amended year.

Note. The organization should not make any entries in Part
II.

Include a statement that identifies the lines and amounts
being changed and the reason for each change.

Line 8

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 on 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

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 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

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.
Instructions for Form 4720 (2025)

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.

Line 11
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.
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, self-dealer, 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.
7

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DRAFT

An organization filing Form 4720 should check the
appropriate box for the type of annual return it files. For
purposes of these instructions, "an organization" or “the
organization” refers to the organization (generally
tax-exempt) referenced in the excise tax, rather than a
disqualified person (such as a donor or related person) or
manager with respect to the organization. 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.”

If the organization has an entry on this line, it must

TIP also file Form 8870.

TREASURY/IRS AND OMB USE ONLY DRAFT
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 15. Managers, self-dealers, disqualified persons, donors,
donor advisors, or related persons enter the total tax amount
from Part II, line 10.

Line 1. Enter the sum of:
1. Taxes you owe as a self-dealer, from Schedule A, Part
II, column (d), and
2. Tax for acts of self-dealing in which you participated as
a manager, from Schedule A, Part III, column (d).

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 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.
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 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
the 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
Line 1. Organizations and related organizations owing tax
under section 4960 enter the total tax amount from Part I,
8

Line 4. This is your refund. Only persons with a legal right to
a refund should file a refund request here. Complete and
attach Form 8050, Direct Deposit of Tax Exempt or
Government Entity Tax Refund. For details, see the Form
8050 instructions.

!

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 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.
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.
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.
Instructions for Form 4720 (2025)

DRAFT

DRAFT

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 3. Enter the tax due on this line. Make check(s) or
money order(s) payable to the United States Treasury.

TREASURY/IRS AND OMB USE ONLY DRAFT
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 participation was
not willful and was due to reasonable cause.
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).”
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.

!

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

CAUTION

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).
If more than one foundation manager took part in the act
of self-dealing, knowing that it was such an act, and
Instructions for Form 4720 (2025)

!

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

CAUTION

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 2025 Form 4720 to report the initial tax on
undistributed income for tax years beginning in 2024 or
earlier that remains undistributed at the end of the
foundation's current tax year beginning in 2025. 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 applicable, indicate whether the
election under section 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)
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
9

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Specific Instructions

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.

TREASURY/IRS AND OMB USE ONLY DRAFT
enterprise in which the foundation had excess business
holdings for its tax year beginning in 2025.

Business enterprise. In general, this means the active
conduct of a trade or business, including any activity regularly
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.
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
10

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.
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).
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.
Instructions for Form 4720 (2025)

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DRAFT

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.

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).

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Interests held by a private foundation (other than donor
advised funds and supporting organizations) on May
26, 1969. For private foundations, 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

Instructions for Form 4720 (2025)

phase limit before the increase will be treated as held by the
foundation. See sections 4943(c)(4)(D) and 4943(c)(6).
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 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 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 ,
later, for further details.
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
11

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DRAFT

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)).

TREASURY/IRS AND OMB USE ONLY DRAFT
party controls the supported organization that the Type II
supporting organization supports. (See the 2025 Instructions
for Schedule A (Form 990), Part I, question 11, for help in
determining the type of your supporting organization.)

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 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.

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.
12

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 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 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
Instructions for Form 4720 (2025)

DRAFT

DRAFT

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.

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.

TREASURY/IRS AND OMB USE ONLY DRAFT

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. 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.

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.

Instructions for Form 4720 (2025)

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 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)
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 (Section 4955), later.
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.
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.
Initial tax on foundation. An initial tax of 20% is imposed
on each taxable expenditure of the foundation.

13

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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 2025, include all investments subject to
tax that were made before 2025 if those investments were not
removed from jeopardy before 2025 and the initial tax was
not assessed before 2025.

TREASURY/IRS AND OMB USE ONLY DRAFT
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.
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. 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 agreed to make the taxable expenditure. 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 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.

14

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.
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.
Instructions for Form 4720 (2025)

DRAFT

DRAFT

Specific Instructions

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.

TREASURY/IRS AND OMB USE ONLY DRAFT
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.

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

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.
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.

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
Instructions for Form 4720 (2025)

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
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.

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
15

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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.

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.

of any disqualified person or organization manager. See
Abatement, earlier, for information on abatement, refund, or
relief from this tax.
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.
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.

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.

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).

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.

Until final regulations are issued regarding the
special rules for revenue sharing transactions
CAUTION 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, 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.
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,
16

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.

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

Instructions for Form 4720 (2025)

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TREASURY/IRS AND OMB USE ONLY DRAFT
persons along with their family members and 35% controlled
entities.
Donor advised fund. See the Schedule K instructions,
later, for a definition of donor advised fund.
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.
Sponsoring organization. See the Schedule K
instructions, later, 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.
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
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.
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.
Instructions for Form 4720 (2025)

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 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.
Managers of tax favored retirement plans, individual

TIP 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
17

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Specific Instructions

Carry the total amount in column (d) for each disqualified
person to Part II, line 6.

TREASURY/IRS AND OMB USE ONLY DRAFT
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.

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 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:
18

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, controls 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).
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
Instructions for Form 4720 (2025)

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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.

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).

TREASURY/IRS AND OMB USE ONLY DRAFT
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.

General Instructions
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, earlier, 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 party
who received the benefit are jointly and severally liable for the
tax.

Instructions for Form 4720 (2025)

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.
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))
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
19

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

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.

TREASURY/IRS AND OMB USE ONLY DRAFT
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 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 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)
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 to report and pay

TIP 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.

20

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.
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),
Instructions for Form 4720 (2025)

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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.

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.
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).
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.

TREASURY/IRS AND OMB USE ONLY DRAFT

• 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).

organization and related organizations, must be at least
$500,000 per student.

Specific Instructions

Related organizations. The net investment income of
related organizations is taken into account under certain
circumstances. Section 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.

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 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)
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
Instructions for Form 4720 (2025)

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.

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 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.

21

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Enter in column (b) the name of each covered employee who
was paid more than $1 million in remuneration 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.

Form 4720, Schedule O, is used by applicable

TIP educational institutions to report and pay any section

TREASURY/IRS AND OMB USE ONLY DRAFT
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.

Line 6. Total the amounts in columns (c), (d), and (e). See
Notice 2018-55, 2018-26 I.R.B. 773.
Add the amounts in 6(c) and 6(d), subtract the amount in
6(e), and enter the total in 6(f).
Line 7. Multiply the amount in 6(f) by 0.014 (1.4%) and enter
the amount in 7(f) 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:

• 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.
Any paid preparer whose identifying number must be
listed on Form 990-PF can apply for and obtain a
CAUTION 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
22

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
2026 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 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.

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.
Form 4720 Instructions

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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).

• Respond to certain IRS notices about math errors, offsets,
and return preparation.

TREASURY/IRS AND OMB USE ONLY DRAFT
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.
You aren’t required to provide the information requested
on a form that is 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.
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.

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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

Instructions for Form 4720 (2025)

23

TREASURY/IRS AND OMB USE ONLY DRAFT
Index

A

Amended return 6
Attorney 22

D

Disqualified person 16
Donor advised funds 18, 19

E

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

Filing requirements:
When to file 4
Where and How to file 4
Who must file 2
Foreign Organizations or U.S.
Territory 5

I

Initial Taxes on Excess Benefit
Transactions:
disqualified person 16
donor advised funds 16
excess benefit transaction 16
section 4958 15
sponsoring organizations 16
supporting organizations 16
Initial taxes on investments that
jeopardize charitable purpose:
section 4944 12
Initial taxes on political
expenditures:
section 4955 14
Initial taxes on taxable
expenditures:
section 4945 13

24

Paid Preparer 22
Paid Preparer Authorization 22
Preparer Tax identification Number
(PTIN) 22
Publications:
Pub. 947, Practice Before the IRS
and Power of Attorney 22

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
Schedule E; Initial Taxes on Taxable
Expenditures 13
Schedule F; Initial Taxes on Political
Expenditures 14
Schedule G; Tax on Excess
Lobbying Expenditures 15
Schedule H; Taxes on Disqualifying
Lobbying Expenditures 15
Schedule I; Initial Taxes on Excess
Benefit Transactions 15
Schedule J; Taxes on Being a Party
to Prohibited Tax Shelter
Transactions (Section 4965) 17
Schedule K; Taxes on Taxable
Distributions of Sponsoring
Organizations Maintaining Donor
Advised Funds 18
Schedule L; Taxes on Prohibited
Benefits Distributed From Donor
Advised Funds 19

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) 20
Schedule O; Excess Tax on Net
Investment Income of Private
Colleges and Universities
(Section 4968) 21
Signature and Verification 4
Summary of Taxes 8

T

Tax on excess lobbying
expenditures:
section 4911 15
Tax Payments 5
Taxes on being a party to Prohibited
Tax Shelter Transactions:
listed transaction 17
section 4965 17
Taxes on disqualifying lobbying
expenditures:
section 4912 15
Taxes on Managers, Self-Dealers,
etc. 7
Taxes on Prohibited Benefits
Distributed From Donor Advised
Funds:
section 4967 19
Taxes on Taxable Distributions of
Sponsoring Organizations
Maintaining Donor Advised
Funds:
section 4966 18

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F

P