IRS Instruction 990-PF – IRS Form, Instructions, Pubs 2026

IRS Instruction 990-PF – In the world of tax-exempt organizations, staying compliant with IRS regulations is crucial for private foundations and certain trusts. If you’re managing a private foundation or a Section 4947(a)(1) trust treated as a private foundation, understanding the IRS Form 990-PF instructions is essential. This comprehensive guide covers everything you need to know about the Return of Private Foundation, including who must file, key sections, recent updates for the 2025 tax year, and practical filing tips. Whether you’re a foundation manager, tax professional, or nonprofit leader, this article will help you navigate the process efficiently.

What is IRS Form 990-PF?

Form 990-PF, officially known as the Return of Private Foundation or Section 4947(a)(1) Trust Treated as Private Foundation, is an annual information return required by the IRS for private foundations. Unlike public charities that file Form 990 or 990-EZ, private foundations use this form to report their financial activities, calculate taxes on investment income, and detail charitable distributions. It serves multiple purposes:

  • Figuring Excise Taxes: Under Section 4940, it calculates the tax on net investment income (typically 1.39% for domestic foundations or 4% for certain foreign ones).
  • Reporting Activities: Details grants, contributions, expenses, and program-related investments.
  • Ensuring Compliance: Helps verify adherence to rules like minimum investment return and qualifying distributions to avoid penalties.

Private foundations are typically grant-making organizations controlled by a small group of donors, distinct from publicly supported charities. If your organization has lost public charity status, you may need to file an initial return as a private foundation.

Who Must File Form 990-PF?

Not every tax-exempt entity files Form 990-PF. Here’s a breakdown:

  • Private Foundations: All organizations exempt under Section 501(c)(3) that don’t qualify as public charities (e.g., those failing the public support test).
  • Taxable Private Foundations: Those that have lost tax-exempt status but still operate as foundations.
  • Section 4947(a)(1) Trusts: Nonexempt charitable trusts treated as private foundations for tax purposes.
  • Foreign Private Foundations: If they have U.S.-source income, with modifications like skipping certain parts (e.g., Parts IX, X, XII).
  • Organizations in Transition: Former public charities must check the “Initial return of a former public charity” box if they’ve shifted status.

Exemptions include certain foreign foundations with 85% foreign support, but they may still need to report U.S.-source gross investment income. Always check IRS Publication 557 for tax-exempt status details.

Key Updates and Changes for the 2025 Tax Year

The IRS regularly updates Form 990-PF instructions to reflect legislative changes and improve efficiency. For 2025 returns (filed in 2026), notable updates include:

  • Electronic Filing Mandate: All 2025 Form 990-PF returns must be filed electronically, except for pre-2021 years. Paper filings are no longer accepted for current years.
  • Electronic Payments Transition: Shift from paper checks to electronic methods like EFTPS to reduce fraud and delays.
  • Distributable Amount Adjustments: Changes to Part X, including clarifications on fair market value valuations and set-asides.
  • Operating Foundation Tests: Enhanced guidance on the 85% income test, assets/endowment/support tests, with aggregation over 3-4 years for compliance.
  • Burden Estimates: Average preparation time is about 53 hours, with costs around $2,200-$4,500.
  • Excess Business Holdings: Exceptions under Section 4943(g) for 100% owned businesses with independence and distribution requirements.

For 2026 developments, monitor IRS.gov/Form990PF for post-2025 legislation. Short tax years ending before December 31, 2026, can use the 2025 form.

Step-by-Step Overview of Form 990-PF Instructions

The instructions for Form 990-PF are detailed, spanning general guidance to line-by-line specifics. Here’s a high-level breakdown to optimize your preparation:

General Instructions

  • Accounting Methods: Use accrual or cash basis consistently; file for calendar or fiscal years.
  • Attachments: Include Schedule B for contributors over $5,000, and schedules for assets, grants, and expenses.
  • Public Inspection: Make returns available online or at offices; use TEOS for free access.

Key Parts of the Form

  • Part I: Analysis of Revenue and Expenses: Report contributions, investment income (e.g., dividends, rents), and deductions. Columns differentiate book value, net investment income, and charitable disbursements.
  • Part II: Balance Sheets: List assets at book and fair market value; required if assets exceed $5,000.
  • Part IV: Capital Gains and Losses: Calculate for excise tax purposes; excludes foreign foundations.
  • Part V: Excise Tax on Investment Income: Compute 1.39% tax; exempt operating foundations may skip.
  • Part IX: Minimum Investment Return: 5% of average noncharitable assets; key for avoiding undistributed income taxes.
  • Part X: Distributable Amount: Adjust minimum return for taxes and recoveries.
  • Part XI: Qualifying Distributions: Include grants, set-asides (with IRS approval via Form 8940), and program-related investments.
  • Part XII: Undistributed Income: Track carryovers; must distribute by year-end to avoid 30% excise tax.
  • Part XIII: Private Operating Foundations: Claim status if meeting 85% spending and support tests.
  • Parts XIV-XVI: Supplementary info on grants, income activities, and transfers to noncharitable orgs.

Use the sequencing chart to complete parts in order and avoid errors.

  • Form 4720: For excise taxes on self-dealing or undistributed income.
  • Form 990-T: Unrelated business income.
  • Publications: 526 (Charitable Contributions), 598 (Unrelated Business Income), and 4221-PF (Compliance Guide).

Filing Requirements and Deadlines

  • Due Date: 15th day of the 5th month after your tax year ends (e.g., May 15, 2026, for calendar-year 2025 returns).
  • Extensions: File Form 8868 for automatic 6-month extensions; pay any balance due.
  • Electronic Filing: Mandatory for 2025; use IRS-approved software or services like TaxZerone or Tax990.
  • Amended Returns: Correct errors within 3 years for refunds.

State requirements may vary—check with your attorney general.

Penalties for Non-Compliance

Failing to file on time or completely can result in:

  • Late Filing: $25/day ($130/day for large orgs with >$1.3M gross receipts), up to $13,000/$65,000.
  • Incomplete Returns: Similar penalties; responsible persons fined $10/day up to $6,500.
  • Excise Taxes: 30% on undistributed income, up to 100% if uncorrected; 200% on self-dealing.
  • Revocation: Automatic loss of exempt status after 3 consecutive non-filings.

Maintain records for substantiation to avoid additional fines.

How to Download the IRS Instruction 990-PF PDF?

For the most accurate guidance, download the official IRS Instruction 990-PF PDF directly from the IRS website. This document provides line-by-line details and examples. Access it here: https://www.irs.gov/pub/irs-pdf/i990pf.pdf. Always use the latest version for your tax year.

Tips for SEO-Optimized Compliance and Best Practices

To streamline your private foundation tax return process:

  • Start early: Gather financials, grant details, and contributor info.
  • Use software: Tools like Tax990 support 2025 filings with features for attachments.
  • Consult experts: Work with a CPA familiar with nonprofit taxes.
  • Stay updated: Subscribe to IRS newsletters for Form 990-PF changes.

By following these instructions for Form 990-PF, you’ll ensure compliance, minimize taxes, and focus on your charitable mission. For personalized advice, visit IRS.gov or consult a tax professional.