Instructions For Form 4720 - 2016 (Page 4 of 19) in pdf

the same size as the form and indicate

3. The second transaction isn't

and statements, that apply to public

clearly the line of the printed form to

timely corrected.

charities, private foundations,

which the information relates.

managers, donors, donor advisors,

Tax Payments

related persons, and self-dealers who

Organizations Organized

are required to file this return. See

Managers, self-dealers, disqualified

or Created in a Foreign

sections 6651, 7203, 7206, and 7207.

persons, donors, donor advisors, and

Also, see section 6684 for penalties that

related persons, paying tax on the

Country

relate to tax liability under Chapter 42.

organization's Form 4720 must pay with

Report all amounts in U.S. currency

the return the tax that applies to them as

Interest charges for any unpaid tax is

(state conversion rate used) and give

shown in Part II-A. Managers,

charged at the underpayment rate

information in English. Report items in

self-dealers, disqualified persons,

established under section 6621. The

total, including amounts and

donors, donor advisors, and related

interest on underpayments is in addition

transactions from both inside and

persons, who file separate Forms 4720

to any penalties.

outside the United States.

must pay the applicable tax with their

separate returns. When managers don't

Abatement

Chapter 42 taxes (including sections

sign the organization's Form 4720 to

4941 through 4945, 4955, 4958, 4959,

See section 4962 for rules on

report their own tax liability, the amount

and 4965 through 4967) don't apply to

abatement, refund, or relief from

of tax they owe shouldn't be entered in

foreign organizations that receive

payment of first tier taxes under

Part II-B, line 1.

substantially all of their support (other

sections 4942 through 4945, 4955,

than gross investment income) from

4958, 4966, and 4967. To request

Payment by a private foundation of

sources outside the United States. See

abatement, refund, or relief under

any taxes owed by the foundation

section 4948(b). These organizations

section 4962, write “Request for

managers or self-dealers will result in

must complete this form and file it in the

Abatement Under Section 4962” in the

additional taxes under the self-dealing

same manner as domestic

top margin of Form 4720, page 1.

and taxable expenditure provisions.

organizations. However, these

Managers and self-dealers should pay

organizations, as well as their

Initial Tax Liability

taxes imposed on them with their own

foundation managers and self-dealers,

check or money order.

If you pay an initial tax on self-dealing or

don't have to pay any tax that would

on investments that jeopardize

otherwise be due on this return.

Disqualified persons and entity

charitable purpose (figured on

managers should pay taxes on excess

For these purposes, a foreign

Schedules A and D of Form 4720,

benefit transactions that are imposed on

organization is an organization not

respectively) for tax year 2016, the

them with their own check or money

created or organized in or under the law

payment may not satisfy the entire tax

order. Any reimbursement of a

of the United States, a U.S. state or

liability for an act of self-dealing or an

disqualified person's tax liability from

possession, or the District of Columbia.

investment that jeopardizes charitable

excess benefit transactions by the

Gifts, grants, contributions, or

purpose. (For the definition of

organization will be treated as an

membership fees directly or indirectly

self-dealing, see the instructions for

excess benefit transaction subject to the

from a United States person (as defined

Schedule A of this form; for the

tax unless the organization included the

in section 7701(a)(30)) are from sources

definition of investments that jeopardize

reimbursement in the disqualified

within the United States. See

charitable purpose, see the instructions

person's compensation and the

Regulations section 53.4948-1.

for Schedule D of this form.) Paying the

disqualified person's total compensation

tax and filing a Form 4720 are required

Although a foreign organization

was reasonable. See the instructions for

for each year or part of a year in the

described in section 4948(b) isn't

Schedule I, later, for information on

taxable period that applies to the act or

subject to Chapter 42 taxes, it shall not

excess benefit transactions.

investment. Generally, the taxable

be exempt from tax under section

period begins with the date of the act or

Rounding Off to Whole

501(a) if it engages in a prohibited

investment and ends with the date

transaction. See section 4948(c). A

Dollars

corrective action is completed, a notice

prohibited transaction is a transaction

You may round off cents to whole

of deficiency is mailed, or the tax is

that would subject the organization or its

dollars on your return and schedules. If

assessed, whichever comes first.

disqualified person to a penalty under

you do round to whole dollars, you must

section 6684 if the foreign organization

Similar rules apply for the initial tax

round all amounts. To round, drop

were a domestic organization. Unless

liability resulting from failing to distribute

amounts under 50 cents and increase

the transaction constitutes a willful and

income (Schedule B) and from acquiring

amounts from 50 to 99 cents to the next

flagrant violation of a Chapter 42

excess business holdings (Schedule C).

dollar. For example, $1.39 becomes $1

provision, a transaction violating a

Thus, the initial tax liability for those

and $2.50 becomes $3.

Chapter 42 provision won't constitute a

taxes continues to accrue until the date

prohibited transaction except under the

If you have to add two or more

a notice of deficiency is mailed, the

following circumstances:

amounts to figure the amount to enter

violation is corrected, or the tax is

1. There was a prior Chapter 42

on a line, include cents when adding the

assessed, whichever comes first.

violation that resulted in a warning from

amounts and round off only the total.

Completing the Schedules

the IRS that a second violation would

Penalties and Interest

result in a prohibited transaction.

Before completing any of the schedules

2. The IRS provides notice that the

There are penalties for failure to file or to

in this return, read the applicable

second transaction will constitute a

pay tax. There are also penalties for

instructions. If any completed schedule

prohibited transaction unless it is

willful failure to file, supply information or

shows taxes owed, enter them on

corrected within 90 days of the notice.

pay tax, and for filing fraudulent returns

page 1 of this return.

Instructions for Form 4720 (2016)

Instructions For Form 4720 - 2016 Page 4

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