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.
16
Instructions for Form 4720 (2015)