The Taxpayer’s First Act was signed into law on July 1, 2019. Under this Act, effective for tax years beginning on or after July 2, 2019, private foundations are required to electronically file Form 4720, Return of Certain Excise Taxes on Charities and Other Persons Under Chapters 41 and 42 of the Internal Revenue Code. Form 4720 is used by private foundations to report taxes on, among other things, undistributed income, excess business holdings and self-dealing. Form 4720 is filed by a private foundation as part of the Form 990-PF which is required to be electronically filed. The IRS is modifying the Form 4720 so it can be electronically filed in accordance with the Taxpayer’s First Act mandate.
The IRS released Notice 2021-01 in January 2021, which announced the delay in the application of the electronic filing mandate. Under the notice, private foundations may continue to paper file the Form 4720 until the IRS announces the availability of the electronic filing. The IRS expects the electronic version of the form to be available early 2021.
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