In a Notice, the IRS has announced that it has delayed the requirement for private foundations to electronically file Form 4720, Return of Certain Excise Taxes Under Chapters 41 and 42. The IRS also announced that it intends to remove Reg §53.6011-1(c), which allows private foundations and other persons file a joint Form 4720 electronically.
Background.
Code Sec. 6033(n), as amended by the Taxpayer First Act of 2019 (TFA, PL 116-25) requires private foundations to electronically file Form 4720. Although the requirement to electronically file Form 4720 applies to tax years beginning after July 2, 2019, the TFA gave the IRS the authority to delay the requirement to electronically file Form 4720 to tax years beginning on or after July 1, 2021.
The IRS is in the process of modifying Form 4720 so that private foundations can electronically file the form in accordance with Code Sec. 6033(n)‘s electronic filing requirement. The electronic version of Form 4720 is not yet available.
Under Reg § 53.6011-1(b), every person (including a governmental entity) liable for certain excise taxes and certain private foundations and trusts that engaged in an act of self-dealing must annually file Form 4720 and must include all the information required by that form and its instructions.
Under Reg §53.6011-1(c), if a private foundation files a Form 4720 with respect to a transaction for which another person is also required to that form, and the private foundation and the other person have the same tax year, then the private foundation and other person can file a joint Form 4720 and, to the extent applicable, the private foundation’s Form 4720 will be considered as the other person’s return for purposes of complying with the filing requirement in Reg §53.6011-1(b).
Delay of electronic filing mandate for Form 4720.
In the Notice, the IRS delays the electronic filing requirement for Form 4720. The Notice states that private foundations may continue to file the paper version of Form 4720 until the electronic version of the form is available.
The IRS expects to announce the availability of the electronic version of Form 4720 and the requirement to electronically file Form 4720 early in 2021. Private foundations will be required to electronically file any Forms 4720 after the date of that announcement.
Observation.
The IRS doesn’t provide a more exact date than early 2021. However, private foundations will be required to electronically file Form 4720 after the IRS announces that electronic filing is required.
The IRS also intends to remove Reg §53.6011-1(c). While Reg §53.6011-1(c) assumes the ability of multiple taxpayers to sign the same paper copy of Form 4720, that flexibility no longer exists because Code Sec. 6033(n) requires private foundations to file Forms 4720 electronically and the IRS system allows for only one taxpayer per return. Thus, the TFA has rendered Reg §53.6011-1(c), inapplicable to private foundations once they are required to electronically file Form 4720.
To continue your research on private foundation excise taxes returns required to be filed, see FTC 2d/FIN ¶ S-2511.
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