Tax-Exempt Organizations Exempt From Filing Form 4626 for Tax Year 2023

On Wednesday, the IRS excused tax-exempt organizations from the requirement to file Form 4626, Alternative Minimum Tax – Corporations, for tax year 2023. (IR 2024-277, 10/23/2024)

The corporate alternative minimum tax (CAMT) is a 15% minimum tax on the adjusted financial statement income (AFSI) of corporations that have average annual AFSI greater than $1 billion (applicable corporations). The CAMT is imposed beginning in 2023.

Note. For tax-exempt organizations, the CAMT applies to unrelated trade or business AFSI only.

In Notice 2023-7 and in proposed regulations, the IRS provided a simplified method for determining whether a corporation needs to pay the CAMT. However, this method did not take into account the specific AFSI adjustment the statute provided to tax-exempt organizations.

The IRS provided this filing relief for tax year 2023 because it has not had time to consider comments on the proposed regulations, which are due December 12, 2024.

Although exempt from filing Form 4626 for 2023, organizations should keep the form with their books and records to document whether they are liable for the alternative minimum tax (i.e., whether they have average annual AFSI greater than $1 billion). Organizations should also keep Form 4626 to show how they determined any corporate alternative minimum tax liability.

Reporting CAMT.

Any organization liable for the alternative minimum tax must pay the tax and report the amount on Part II, Line 5 of Form 990-T, Exempt Organization Business Income Tax Return.

For more on the corporate alternative minimum tax, see Checkpoint’s Federal Tax Coordinator ¶ A-8900.