Instructions For Form 4720 (2015) (Page 16 of 19) in pdf

However, the fund managers who are

Tax on fund managers. If a tax is

Schedule M—Tax on

liable for the tax may prorate the

imposed on a prohibited benefit

Failure to Meet the

payment among themselves. Enter in

received by a donor, donor advisor, or

column (c) the tax each manager will

Community Health Needs

related person, a tax of 10% of the

pay for each distribution for which such

amount of the prohibited benefit is

Assessment Requirements

manager owes a tax.

imposed on any fund manager who

(Sections 4959 and 501(r)

Carry the total amount in column (d)

agreed to the distribution knowing that it

(3))

for each fund manager to Part II-A,

would confer a prohibited benefit. Any

column (j).

fund manager who took part in the

General Instructions

distribution and is liable for the tax must

pay the tax. The maximum amount of

Schedule L—Taxes on

Requirements. For tax years

tax on all fund managers for any one

beginning after March 23, 2012, section

Prohibited Benefits

taxable distribution is $10,000. If more

4959 imposes an excise tax on hospital

Distributed From Donor

than one fund manager is liable for tax

organizations that fail to meet the

on a taxable distribution, all such

Advised Funds (Section

section 501(r)(3) requirements in any

managers are jointly and severally liable

tax year.

4967)

for the tax.

Section 501(r)(3) requirements

General Instructions

Exception. If a tax is imposed under

pertain to a hospital organization

section 4958 for the same transaction,

conducting a community health needs

Requirement. A sponsoring

then no additional tax is imposed under

assessment (CHNA). The requirements,

organization of donor advised funds that

section 4967 on that transaction.

which apply separately to each hospital

answered “Yes,” to Form 990, Part V,

facility the hospital organization

Specific Instructions

line 9b, or that otherwise distributed

operates, are as follows.

prohibited benefits under section 4967,

Part I. Complete this part for all

1. To conduct a CHNA this tax year,

must complete Schedule L. Report each

prohibited benefits.

or in either of the two prior tax years.

taxable distribution separately.

The CHNA must take into account input

Part II. Enter in column (a) the names

Complete Parts I, II, and III of

from persons who represent the broad

of all donors, donor advisors, and

Schedule L only in connection with

interests of the community served by

related persons who received a

distributions made by a sponsoring

the hospital facility, including people

prohibited benefit. If more than one

organization from a donor advised fund

with special knowledge of or expertise

donor, donor advisor, or related person

which results in a prohibited benefit.

in public health. The CHNA must be

is listed in column (a) for one

(See instructions to Schedule K for

made widely available to the public.

distribution, each is individually liable for

definitions of the terms sponsoring

the entire tax for that distribution.

organization and donor advised fund).

2. To adopt an implementation

However, the donors, donor advisors, or

strategy to meet the community health

Prohibited benefit. If any donor, donor

related persons who are liable for the

needs identified through the CHNA.

advisor, or related party advises the

tax may prorate the payment among

sponsoring organization about making a

See Notice 2011-52, 2011-30 I.R.B.

themselves. Enter in column (c) the tax

distribution which results in a donor,

60; Proposed Regulations,

each manager will pay for each

donor advisor, or related party receiving

REG-130266-11, 78 F.R. 20523,

distribution for which such manager

(either directly or indirectly) a more than

2012-32 I.R.B. 126; Notice 2014-2,

owes a tax.

incidental benefit, then such benefit is a

2014-3 I.R.B. 407; Notice 2014-3,

Carry the total amount in column (d)

prohibited benefit.

2014-3 I.R.B. 408; as well as any future

for each donor, donor advisor, or related

related guidance for details. For

Donor advisor. A donor advisor is any

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

additional information on the CHNA

person appointed or designated by a

requirements, see Schedule H (Form

Part III. Enter in column (a) the names

donor to advise a sponsoring

990), Hospitals, Part V, Section B.

of all fund managers who agreed to

organization on the distribution or

make the distribution conferring the

investment of amounts held in the

Specific Instructions

prohibited benefit. If more than one fund

donor's fund or account.

manager is listed in column (a) for one

Part I. For each hospital facility, list the

Related party. A related party includes

distribution, each is individually liable for

following information in the relevant

any family member or 35% controlled

the entire tax for that distribution.

column: (b) name of facility, (c)

entity. See the General Instructions for

However, the fund managers who are

description of the failure to meet section

Schedule I for a definition of those

liable for the tax may prorate the

501(r)(3), (d) tax year hospital facility

terms.

payment among themselves. Enter in

last conducted a CHNA, and (e) tax

column (c) the tax each manager will

year hospital facility last adopted an

Tax on donor, donor advisor, or rela

pay for each distribution for which such

implementation strategy.

ted person. A tax of 125% of the

manager owes a tax.

benefit resulting from the distribution is

Part II. On line 1 enter the number of

imposed on both the party who advised

Carry the total amount in column (d)

hospital facilities operated by the

as to the distribution (which might be a

for each fund manager to Part II-A,

hospital organization that failed to meet

donor, donor advisor, or related party)

column (k).

the CHNA requirements of section

and the party who received such benefit

501(r)(3). Enter $50,000 multiplied by

(which might be a donor, donor advisor,

line 1 on line 2 and on Part 1, line 12.

or related party). The advisor and the

This is the CHNA excise tax under

party who received the benefit are jointly

section 4959.

and severally liable for the tax.

Instructions for Form 4720 (2015)

Instructions For Form 4720 (2015) Page 16

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