IRS Form 4720 – IRS Forms, Instructions, Pubs 2026 – In the complex world of tax-exempt organizations, maintaining compliance with the Internal Revenue Code (IRC) is crucial. One key form that plays a pivotal role in this is IRS Form 4720, officially titled the “Return of Certain Excise Taxes Under Chapters 41 and 42 of the Internal Revenue Code.” This form is essential for reporting and paying specific excise taxes imposed on private foundations, certain charitable organizations, disqualified persons, and managers who engage in prohibited activities. Whether you’re a private foundation executive, a tax professional, or a nonprofit leader, understanding Form 4720 can help avoid costly penalties and ensure your organization operates within legal bounds.
This SEO-optimized article breaks down everything you need to know about Form 4720, including its purpose, who must file it, the taxes it covers, filing procedures, deadlines, and more. We’ll draw from official IRS guidance to provide accurate, up-to-date information as of 2026.
What Is IRS Form 4720 and Its Purpose?
Form 4720 serves as the primary vehicle for calculating and remitting excise taxes related to violations or specific activities under IRC Chapters 41 and 42. These chapters target behaviors that could undermine the charitable intent of tax-exempt entities, such as self-dealing or failure to distribute income properly.
At its core, the form helps the IRS enforce rules designed to prevent abuse in the nonprofit sector. For instance, it addresses initial taxes on prohibited transactions, excess benefit arrangements, and other infractions. Filing Form 4720 is required for each year (or part of a year) during which a taxable event occurs, ensuring ongoing accountability. It’s often filed alongside other returns like Form 990-PF for private foundations, but separate filings are mandatory for individuals like managers or disqualified persons.
Who Must File IRS Form 4720?
Not every nonprofit or individual needs to file Form 4720—it’s specifically for those liable for excise taxes under the relevant chapters. Here’s a breakdown of the primary filers:
- Private Foundations and Trusts: Organizations filing Form 990-PF or Form 5227 that answer “Yes” to certain questions indicating taxable events, such as self-dealing or excess business holdings.
- Public Charities and Other Tax-Exempt Entities: Section 501(c)(3) organizations involved in political expenditures, excess lobbying, or excess benefit transactions; hospital organizations failing community health needs assessments; and applicable educational institutions (like private colleges) subject to net investment income tax.
- Individuals and Managers: Disqualified persons, foundation managers, self-dealers, donors, donor advisors, and related parties who owe taxes. Each must file a separate return, even if the organization also files.
- Other Entities: Sponsoring organizations of donor-advised funds, charitable remainder trusts with unrelated business income, and tax-exempt entities in prohibited tax shelter transactions.
If your organization or you as an individual are involved in any prohibited activity, consulting a tax advisor is recommended to determine filing obligations.
Excise Taxes Covered by Form 4720
Form 4720 covers a wide array of excise taxes, divided between Chapters 41 and 42. These are “initial” taxes, with additional tiers possible if issues aren’t corrected. Below is a summary:
Chapter 41 Taxes (Primarily for Private Foundations)
These focus on foundational compliance issues:
- Self-Dealing (Section 4941): 10% tax on self-dealers and 5% on managers (up to $20,000 per act) for transactions benefiting disqualified persons.
- Failure to Distribute Income (Section 4942): 30% on undistributed income.
- Excess Business Holdings (Section 4943): 10% initial tax, potentially 200% if uncorrected.
- Jeopardy Investments (Section 4944): 10% on foundations and managers (up to $10,000 per investment).
- Taxable Expenditures (Section 4945): 20% on foundations and 5% on managers (up to $10,000 per expenditure).
Chapter 42 Taxes (For Broader Tax-Exempt Organizations)
These apply to various nonprofits:
- Excess Lobbying Expenditures (Section 4911): For public charities electing under 501(h).
- Political Expenditures (Section 4955): 10% on organizations and 2.5% on managers (up to $5,000).
- Excess Benefit Transactions (Section 4958): Taxes on disqualified persons and managers for benefits exceeding fair value.
- Excess Executive Compensation (Section 4960): 21% on remuneration over $1 million or excess parachute payments for tax-exempt organizations.
- Net Investment Income (Section 4968): 1.4% on certain private colleges’ endowments.
- Other taxes include prohibited tax shelters (Section 4965), donor-advised fund issues (Sections 4966-4967), and community health needs failures (Section 4959).
Use the form’s schedules (A through O) to report specific taxes.
How to File IRS Form 4720?
Filing can be done electronically or on paper, but electronic filing is mandatory for private foundations and entities submitting 10 or more returns annually. Use IRS-approved e-file providers or the Electronic Federal Tax Payment System (EFTPS) for payments.
For paper filings, include detailed explanations of corrective actions in the relevant schedules. Separate returns are required for organizations versus individuals.
Filing Deadlines and Extensions for Form 4720
- Organizations: Due by the filing date of Form 990-PF, 990, or similar (typically the 15th day of the 5th month after the tax year ends, e.g., May 15 for calendar-year filers).
- Individuals: 15th day of the 5th month after their tax year ends.
Extensions are available via Form 8868, but any estimated tax must be paid by the original due date. No estimated payments are required for certain taxes like Section 4968.
Penalties for Late Filing or Non-Payment
Non-compliance can lead to severe consequences:
- Interest on unpaid taxes at the underpayment rate (Section 6621).
- Penalties under Sections 6651 (failure to file/pay), 6684 (prohibited transactions), and potential criminal charges for willful violations.
- Additional tiers of taxes if issues aren’t corrected promptly.
Timely filing and correction are key to minimizing these risks.
Where to File IRS Form 4720?
- Domestic Filers: Department of the Treasury, Internal Revenue Service Center, Ogden, UT 84201-0027.
- Foreign or U.S. Territory Filers: P.O. Box 409101, Ogden, UT 84409.
Use designated private delivery services for timely postmarking.
Recent Updates to Form 4720 (As of 2026)
For tax year 2025 (filed in 2026), key changes include:
- Mandatory separate returns for managers and disqualified persons.
- Expanded electronic filing requirements.
- Revised reporting for multiple organizations and corrective actions moved to specific schedules.
Stay updated via IRS notices for ongoing changes, such as new prohibited tax shelter transactions.
How to Download IRS Form 4720?
You can download the latest version of IRS Form 4720 directly from the official IRS website. Here’s the link: Download IRS Form 4720 PDF. For instructions, visit IRS Instructions for Form 4720.
Conclusion: Staying Compliant with IRS Form 4720
Navigating IRS Form 4720 requires careful attention to detail, but understanding its requirements can protect your organization from unnecessary taxes and penalties. By focusing on prevention—through proper governance and regular audits—you can avoid the need to file altogether. If you’re unsure about your obligations, consult a qualified tax professional. For the most current information, always refer to IRS.gov. This guide is for informational purposes and not a substitute for professional advice.