Form 4720 is the return used to figure and pay the excise taxes under Chapters 41 and 42 of the tax code, mostly penalties on private foundations, public charities and the people who run or deal with them. It covers taxes on self-dealing, failing to distribute income, excess business holdings, investments that jeopardize charitable purpose, taxable expenditures, political spending, excess lobbying and excess benefit transactions. A private foundation that answers 'Yes' to certain Part VI-B questions on Form 990-PF must file it.
Everything below comes from the IRS 2025 Instructions for Form 4720, as of October 2026.
What triggers a Form 4720 filing
| Who | When they file |
|---|---|
| Private foundations and section 4947(a) trusts | They answered 'Yes' to question 1b, 1d, 2b, 3b, 4a, 4b, 5b, 6b, 7b or 8 in Part VI-B of Form 990-PF (or the matching Part VIII questions on Form 5227) |
| Section 501(c)(3) organizations | They made a political expenditure (Schedule F) |
| Public charities with a 501(h) election | They owe tax on excess lobbying expenditures from Schedule C (Form 990) (Schedule G) |
| Charities with excess benefit transactions | They answered 'Yes' to question 25a in Part V of Form 990, or otherwise engaged in one (Schedule I) |
| Private colleges and universities | They owe the section 4968 tax on net investment income (Schedule O) |
It also reaches individuals. A manager, self-dealer, disqualified person, donor, donor advisor or related person who owes one of these taxes can't report it on the organization's Form 4720 any more: each taxpayer files a separate Form 4720.
The main initial tax rates
These are the first-tier rates in the 2025 instructions, as of October 2026:
| Schedule | Tax | On the organization or person | On managers |
|---|---|---|---|
| A | Self-dealing (section 4941) | 10% of the amount involved, paid by the self-dealer | 5% of the amount involved |
| B | Undistributed income (section 4942) | 30% on the foundation | None |
| C | Excess business holdings (section 4943) | 10% of the excess holdings | None |
| D | Jeopardizing investments (section 4944) | 10% of the amount invested | 10% of the investment |
| E | Taxable expenditures (section 4945) | 20% of each taxable expenditure | 5% of the expenditure |
| I | Excess benefit transactions (section 4958) | 25% of the excess benefit, paid by the disqualified person | 10% of the excess benefit, up to $20,000 per transaction |
Manager taxes generally apply only where the manager knew and agreed, and the instructions carve out participation that wasn't willful and was due to reasonable cause.
The correction period: why first-tier taxes are a warning
Here's the insight that changes how boards react: the initial taxes are designed to push a fix. Each schedule now asks whether the transaction has been corrected, and if a taxable event isn't corrected within the correction period, a far bigger second-tier tax can follow. On excess business holdings, for example, a foundation that still holds the excess after the correction period can owe an additional tax of 200% of what remains. Correcting quickly is usually the cheapest outcome by a long way.
If tax has already been paid on an event that qualifies for relief, Form 843 is the route to ask for abatement or a refund under section 4962.
When Form 4720 is due
- Organizations: by the due date, not counting extensions, of the organization's Form 990-PF, Form 990, Form 990-EZ or Form 5227. If it files none of these, by the 15th day of the 5th month after its accounting period ends.
- Managers, self-dealers, disqualified persons, donors, donor advisors and related persons: by the 15th day of the 5th month after the end of their own tax year.
- If the date falls on a weekend or legal holiday, file by the next business day.
- Extensions: Form 8868.
The Form 990 and Form 990-T guides cover the returns that sit alongside Form 4720 for most charities, and Form 8868 is the extension form for all of them.
Parts and schedules at a glance
- Page 1, Part I: taxes the organization owes. The organization enters nothing in Part II.
- Part II: taxes owed by managers, self-dealers, disqualified persons and others, each on their own return.
- Schedules A to E: the private foundation taxes in sections 4941 to 4945.
- Schedules F to I: political expenditures, excess and disqualifying lobbying, and excess benefit transactions.
- Schedules J to O: prohibited tax shelter transactions, donor advised fund distributions and prohibited benefits, hospital community health needs assessments, excess executive compensation and the college endowment tax.
Foreign organizations report every amount in US currency, stating the conversion rate used, and give information in English. A person with a valid power of attorney can sign for the organization, a manager or a self-dealer, but a copy of the power of attorney has to go with the return. If you're a trustee signing for a trust, it's the trustees who sign.
Don't confuse Schedule L here with the balance sheet of the same letter on business returns: on Form 4720, Schedule L covers taxes on prohibited benefits distributed from donor advised funds.
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The verdict
Form 4720 is rarely a form anyone wants to file, but it isn't a sign the game is over. Most of the Chapter 42 taxes start small, and they're meant to make the foundation or charity put things right. If a 990-PF Part VI-B answer comes out 'Yes', file Form 4720 on time, correct the transaction inside the correction period, and make sure every manager or disqualified person who owes tax files their own return.
Private foundations file an annual return alongside any excise tax return, and our private foundation return guide explains it.
Frequently asked questions
What is Form 4720 used for?
It's used to figure and pay excise taxes under Chapters 41 and 42, such as taxes on self-dealing, undistributed income, excess business holdings, jeopardizing investments, taxable expenditures and excess benefit transactions.
Who has to file Form 4720?
Private foundations that answer 'Yes' to certain Form 990-PF Part VI-B questions, charities with political expenditures, excess lobbying or excess benefit transactions, and individuals such as managers and self-dealers who owe these taxes.
When is Form 4720 due?
For an organization, by the due date (without extensions) of its Form 990-PF, 990, 990-EZ or 5227. For individuals, by the 15th day of the 5th month after their tax year ends.
What is the tax on self-dealing?
An initial tax of 10% of the amount involved for each act of self-dealing, paid by the self-dealer, and 5% on a foundation manager who took part knowingly.
Can a foundation manager report tax on the foundation's Form 4720?
No. Each manager, self-dealer, disqualified person or related person who owes tax must file a separate Form 4720.
