Instructions for Form 4720 (2006)

Instructions for Form 4720 - Introductory Material

This is archived information that pertains only to the 2006 Tax Year. If you
are looking for information for the current tax year, go to the Tax Prep Help Area.

Table of Contents

What's New

Tax Increase Prevention and Reconciliation Act of 2005 (TIPRA). New section 4965 imposes an excise tax on tax-exempt organizations and certain governmental entities that are parties to prohibited tax shelter transactions (PTSTs). Section 4965 also imposes an excise tax on any entity manager who approves or otherwise causes the entity to be a party to a PTST. For more information see Schedule J—Taxes on Being a Party to Prohibited Tax Shelter Transactions.

The Pension Protection Act of 2006 (PPA). The following items reflect changes made by the PPA.

For tax years beginning after August 17, 2006, the excise tax rates and the maximum tax amounts on managers described in sections 4941 through 4945 have been increased. For more information see:
1. Schedule A—Initial Taxes on Self-Dealing,
2. Schedule B—Initial Tax on Undistributed Income,
3. Schedule C—Initial Tax on Excess Business Holdings,
4. Schedule D—Initial Taxes on Investments That Jeopardize Charitable Purpose, and
5. Schedule E—Initial Taxes on Taxable Expenditures.
The PPA also includes a change that increases the maximum amount of tax imposed on managers in Schedule I, Initial Taxes on Excess Benefit Transactions.
For tax years beginning after August 17, 2006, section 4966 imposes an excise tax on sponsoring organizations that make taxable distributions and taxes fund managers who knowingly agree to the making of such taxable distributions. For more information, see Schedule K—Tax on Taxable Distributions of Sponsoring Organizations Maintaining Donor Advised Funds.
For tax years beginning after August 17, 2006, new section 4967 imposes an excise tax on donors, donor advisors and related persons when such persons receive a prohibited benefit distributed by a sponsoring organization for a donor advised fund on the advice of a donor, donor advisor or related person. Section 4967 also taxes fund managers of such sponsoring organization who knowingly agreed to the making of the distribution. For more information, see Schedule L—Tax on Prohibited Benefits Distributed From Donor Advised Funds.
For tax years beginning after August 17, 2006, section 4943 applies to certain public charities. Donor advised funds and certain supporting organizations are treated as private foundations for section 4943 purposes. For more information, see Schedule C—Initial Tax on Excess Business Holdings.
For tax years beginning after August 17, 2006, section 4958 expands the definition of a disqualified person and treats certain transactions as excess benefit transactions. For more information, see Schedule I—Initial Taxes on Excess Benefit Transactions.
For expenditures after August 17, 2006, grants made by private foundations to certain supporting organizations are treated as taxable expenditures. For more information, see Schedule E—Initial Taxes on Taxable Expenditures.

Phone Help

If you have questions and/or need help completing this form, please call 1-877-829-5500. This toll-free telephone service is available Monday through Friday.

Photographs of Missing Children

The Internal Revenue Service is a proud partner with the National Center for Missing and Exploited Children. Photographs of missing children selected by the Center may appear in instructions on pages that would otherwise be blank. You can help bring these children home by looking at the photographs and calling 1-800-THE-LOST (1-800-843-5678) if you recognize a child.

How To Get Forms and Publications

Internet

You can access the IRS website 24 hours a day, 7 days a week, at www.irs.gov to:

Download forms, instructions, and publications.
Order IRS products online.
Research your tax questions online.
Search publications online by topic or keyword.
View Internal Revenue Bulletins (IRBs) published in the last few years.
Sign up to receive local and national tax news by email.

CD-ROM

You can order Publication 1796, IRS Tax Products CD, and obtain:

Current-year forms, instructions, and publications.
Prior-year forms, instructions, and publications.
Bonus: Historical Tax Products DVD — Ships with the final release.
Tax Map: an electronic research tool and finding aid.
Tax Law frequently asked questions (FAQs).
Tax Topics from the IRS telephone response system.
Fill-in, print, and save features for most tax forms.
Internal Revenue Bulletins.
Toll-free and email technical support.

The CD is released twice during the year. The first release will ship the beginning of January 2007 and the final release will ship the beginning of March 2007.

Buy the CD at www.irs.gov/cdorders from National Technical Information Service for $35 (no handling fee) or call 1-877-CDFORMS (1-877-233-6767) toll-free to buy the CD for $35 (plus a $5 handling fee). Price is subject to change.

By Phone and In Person

You can order forms and publications by calling 1-800-TAX-FORMS (1-800-829-3676). You can also get most forms and publications at your local IRS office.

Use these electronic options to make filing and paying easier.

IRS E-Services Make Taxes Easier

Now more than ever before, businesses can enjoy the benefits of filing and paying their federal taxes electronically. Whether you rely on a tax professional or handle your own taxes, the IRS offers you convenient programs to make taxes easier.

You can e-file your Form 990 or Form 990-PF; Form 940 and 941 employment tax returns; Forms 1099; and other information returns. Visit www.irs.gov/efile for details.
You can pay taxes online or by phone using the free Electronic Federal Tax Payment System (EFTPS). Visit www.eftps.gov or call 1-800-555-4477 for details. Electronic Funds Withdrawal (EFW) from a checking or savings account also is available to those who file electronically.