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Free Irs Tax Filing Online

Free irs tax filing online Index A Accounting methods, Accounting Methods Accrual method, Accrual method. Free irs tax filing online Change in accounting method Section 481(a) adjustment. Free irs tax filing online , Change in accounting method. Free irs tax filing online Mark-to-market accounting method, Mark-to-market accounting method. Free irs tax filing online Nonaccrual experience method, Nonaccrual experience method. Free irs tax filing online Percentage of completion method, Percentage of completion method. Free irs tax filing online Accounting periods, Accounting Periods Accumulated earnings tax, Accumulated Earnings Tax Alternative minimum tax (AMT), Alternative Minimum Tax (AMT) At-risk limits, At-Risk Limits B Backup withholding, Backup withholding. Free irs tax filing online Below-market loans, Below-Market Loans C Capital contributions, Capital Contributions Capital losses, Capital Losses Charitable contributions, Charitable Contributions Closely held corporation: At-risk limits, Closely held corporation. Free irs tax filing online Closely held corporations:, Closely held corporations. Free irs tax filing online Comments, Comments and suggestions. Free irs tax filing online Corporate preference items, Corporate Preference Items Corporations, businesses taxed as, Businesses Taxed as Corporations Credits, Credits Credits: Foreign tax, Credits General business credit, Credits Prior year minimum tax, Credits D Distributions: Money or property. Free irs tax filing online , Money or Property Distributions Other, Constructive Distributions Reporting, Reporting Dividends and Other Distributions Stock or stock rights, Distributions of Stock or Stock Rights To shareholders, Distributions to Shareholders Dividends-received deduction, Dividends-Received Deduction E EFTPS, Electronic Federal Tax Payment System, Electronic Federal Tax Payment System (EFTPS). Free irs tax filing online Electronic filing, Electronic filing. Free irs tax filing online Energy-efficient commercial building property deduction, Energy-Efficient Commercial Building Property Deduction Estimated tax, Estimated Tax Extraordinary dividends, Extraordinary Dividends F Figuring: NOL carryovers, Figuring the NOL Carryover Tax, Figuring Tax Foreign tax credit, Credits Form: 1096, Form 1099-DIV. Free irs tax filing online 1099–DIV, Form 1099-DIV. Free irs tax filing online 1118, Credits 1120, Which form to file. Free irs tax filing online 1120-W, How to figure each required installment. Free irs tax filing online 1120X, Refunds. Free irs tax filing online , NOL carryback. Free irs tax filing online 1138, Carryback expected. Free irs tax filing online 1139, Refunds. Free irs tax filing online , NOL carryback. Free irs tax filing online 2220, Form 2220. Free irs tax filing online 3800, Credits, Recapture Taxes 4255, Recapture Taxes 4626, Form 4626. Free irs tax filing online 5452, Form 5452. Free irs tax filing online 7004, Extension of time to file. Free irs tax filing online 8611, Recapture Taxes 8827, Credits 8832, Business formed after 1996. Free irs tax filing online 8834, Recapture Taxes 8845, Recapture Taxes 8874, Recapture Taxes 8882, Recapture Taxes 8912, Credits G Going into business, Costs of Going Into Business I Income tax returns, Income Tax Return L Loans, below-market, Below-Market Loans M Minimum tax credit, Credits N Net operating losses, Net Operating Losses Nontaxable exchange of property for stock, Property Exchanged for Stock P Paid-in capital, Paid-in capital. Free irs tax filing online Passive activity limits, Passive Activity Limits Paying estimated tax, How to pay estimated tax. Free irs tax filing online Penalties Other, Other penalties. Free irs tax filing online Trust fund recovery, Trust fund recovery penalty. Free irs tax filing online Penalties: Estimated tax, Underpayment penalty. Free irs tax filing online Late filing of return, Late filing of return. Free irs tax filing online Late payment of tax, Late payment of tax. Free irs tax filing online Personal service corporation: Figuring tax, Qualified personal service corporation. Free irs tax filing online Personal service corporations:, Personal service corporations. Free irs tax filing online Preference items, Corporate Preference Items Q Qualified refinery property, election to expense, Election to Expense Qualified Refinery Property Qualifying shipping activities, income from, Income From Qualifying Shipping Activities R Recapture taxes: Childcare facilities and services credit , Recapture Taxes Indian employment credit, Recapture Taxes Investment credit, Recapture Taxes Low-income housing credit, Recapture Taxes New markets credit, Recapture Taxes Qualified plug-in electric and electric vehicle credit, Recapture Taxes Recordkeeping, Recordkeeping Related persons, Related Persons Retained earnings, Accumulated Earnings Tax S Suggestions, Comments and suggestions. Free irs tax filing online T Tax help, How To Get Tax Help Tax rate schedule, Tax Rate Schedule Tax, figuring, Figuring Tax Taxpayer Advocate, Contacting your Taxpayer Advocate. Free irs tax filing online TTY/TDD information, How To Get Tax Help Prev  Up     Home   More Online Publications
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SOI Tax Stats - Tax Stats at a Glance

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2013 Tax Stats Card


Summary of Collections Before Refunds by Type of Return, FY 2012 [1]

 


Type of Return


Number of Returns


Gross Collections
(Millions of $)

Individual income tax

146,243,886

1,371,402

Corporation income tax

2,262,961 [2]

280,965

Employment taxes

29,589,891

784,397

Excise taxes

1,196,789

56,175

Gift tax

249,451

2,110

Estate tax

26,859

12,341


Selected Information from Returns Filed


Corporate Returns (TY 2010) [3]
 

 Number filing with assets $250M or more

 14,584

 Percent of total corporate net income for firms with assets $250M or more

73.2%

 


S Corporation Returns (TY 2010) [3]
 

 Number of returns

 4,127,554

 


Partnership Returns  (TY 2011) [3]
 

 Number of returns

3,285,177

 


Individual Returns

Top 1-percent Adjusted Gross Income (AGI) break (TY 2011) [3]

 $388,799

Top 10-percent AGI break (TY 2011) [3]

  $120,077

Median AGI (TY 2011) [3] 

$34,794

 

Percent that claim standard deductions (TY 2011) [3]

  66.5%

Percent that claim itemized deductions (TY 2011) [3]

  31.8%

Percent e-filed (TY 2012) thru 4/25/2013 [4]  

90.1%

Percent using paid preparers (TY 2011) [3]

  56.0%

 

Number of returns with AGI $1M or more (TY 2011) [4] 

304,118

State with the highest number-California (TY 2011)

45,109

State with the least number- Vermont (TY 2011)  

340

 

Number of individual refunds (TY 2011) (millions) [3] 

  113.5

Individual refund amount (TY 2011) (billions of $) [3]

  $325.8

Average individual refund amount (TY 2011)

  $2,872

 

Earned Income Tax Credit (TY 2011) [3]:

Number of returns with credit (millions)  

27.9

Amount claimed (billions of $)

  $62.9

 

Nonprofit Organizations  (TY 2009) [3,5]

Number of returns (Forms 990 & 990-PF filers)  

413,415

Assets controlled by nonprofits (billions of $)  

$3.2

 

Taxpayer Assistance  (FY 2012) [1]

Number assisted by writing, calling, or by walk-in

96,867,755

 

 



Sources and footnotes:

[FY] Fiscal Year 
[TY] Tax Year
[1] Source: IRS Data Book, publication 55B
[2] Excludes S Corporations.
[3] Source—SOI data.
[4] Source— IRS Masterfile System
[5] Organizations tax-exempt under Section 501(c)(3)
 

Revised: August 2013


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Page Last Reviewed or Updated: 24-Jan-2014

The Free Irs Tax Filing Online

Free irs tax filing online 5. Free irs tax filing online   Excise Taxes Table of Contents Introduction Topics - This chapter discusses: Useful Items - You may want to see: Prohibited Tax Shelter TransactionsEntity Level Tax Excess Benefit TransactionsTax on Disqualified Persons Tax on Organization Managers Excess Benefit Transaction Excess Business Holdings Taxable Distributions of Sponsoring Organizations Exception. Free irs tax filing online A donor advised fund does not include: Taxes on Prohibited Benefits Resulting From Donor Advised Fund Distributions Excise Taxes on Private Foundations Excise Taxes on Black Lung Benefit Trusts Excise Tax on Failure to Meet the Community Health Needs Assessment Requirements Introduction An excise tax may be imposed on certain tax-exempt organizations. Free irs tax filing online Topics - This chapter discusses: Prohibited tax shelter transactions Excess benefit transactions Excess business holdings Taxable distributions of sponsoring organizations Taxes on prohibited benefits distributed from donor advised funds Excise taxes on private foundations Excise taxes on 501(c)(21) black lung benefit trusts Excise Tax on Failure to Meet the Community Health Needs Assessment Requirements of Hospitals Useful Items - You may want to see: Forms (and Instructions) 4720 Return of Certain Excise Taxes Under Chapters 41 and 42 of the Internal Revenue Code See chapter 6 for more information about getting Form 4720. Free irs tax filing online Prohibited Tax Shelter Transactions Section 4965 imposes an excise tax on: Certain tax-exempt entities that are party to prohibited tax shelter transactions, and Any entity manager who approves or otherwise causes the entity to be a party to a prohibited tax shelter transaction and knows or has reason to know that the transaction is a prohibited tax shelter transaction. Free irs tax filing online  Additionally, section 6033 provides new disclosure requirements on a tax-exempt entity that is a party to a prohibited tax shelter transaction. Free irs tax filing online Tax-exempt entities. Free irs tax filing online   Tax-exempt entities that are subject to section 4965 include: Entities described in section 501(c), including but not limited to the following common types of entities: Instrumentalities of the United States described in section 501(c)(1); Churches, hospitals, museums, schools, scientific research organizations, and other charities described in section 501(c)(3); Civic leagues, social welfare organizations, and local associations of employees described in section 501(c)(4); Labor, agricultural, or horticultural organizations described in section 501(c)(5); Business leagues, chambers of commerce, trade associations, and other organizations described in section 501(c)(6); Voluntary employees' beneficiary associations (VEBAs) described in section 501(c)(9); Credit unions described in section 501(c)(14); Insurance companies described in section 501(c)(15); and Veterans' organizations described in section 501(c)(19). Free irs tax filing online Religious or apostolic associations or corporations described in section 501(d). Free irs tax filing online Entities described in section 170(c), including states, possessions of the United States, the District of Columbia, political subdivisions of states and political subdivisions of possessions of the United States (but not including the United States). Free irs tax filing online Indian tribal governments within the meaning of section 7701(a)(40). Free irs tax filing online Entity manager. Free irs tax filing online    An entity manager is any person with authority or responsibility similar to that exercised by an officer, director, or trustee, and, for any act, the person that has authority or responsibility with respect to the prohibited transaction. Free irs tax filing online Prohibited tax shelter transaction. Free irs tax filing online   A prohibited tax shelter transaction is any listed transaction, within the meaning of section 6707A(c)(2), and any prohibited reportable transactions. Free irs tax filing online A prohibited reportable transaction is a confidential transaction within the meaning of Regulations section 1. Free irs tax filing online 6011-4(b)(3), and a transaction with contractual protection within the meaning of Regulations section 1. Free irs tax filing online 6011-4(b)(4). Free irs tax filing online See the Instructions for Form 8886 for more information on listed transactions and prohibited reportable transactions. Free irs tax filing online Subsequently listed transaction. Free irs tax filing online   Any transaction to which the tax-exempt entity is a party and is later determined to be a listed transaction after the entity has become a party to it, is a subsequently listed transaction. Free irs tax filing online Entity Level Tax Section 4965(a)(1) imposes an entity level excise tax on any tax-exempt entity described in 1, 2, 3, or 4 above that becomes a party to a prohibited tax shelter transaction or is a party to a subsequently listed transaction (defined earlier). Free irs tax filing online The excise tax imposed on a tax-exempt entity applies to tax years in which the entity becomes a party to the prohibited tax shelter transaction and any subsequent tax years. Free irs tax filing online The amount of the excise tax depends on whether the tax-exempt entity knew or had reason to know that the transaction was a prohibited tax shelter transaction at the time it became a party to the transaction. Free irs tax filing online To figure and report the excise tax imposed on a tax-exempt entity for being a party to a prohibited tax shelter transaction, file Form 4720. Free irs tax filing online For more information about this excise tax, including information about how it is figured, see the Instructions for Form 4720. Free irs tax filing online Manager Level Tax Section 4965(a)(2) imposes an excise tax on any tax-exempt entity manager who approves or otherwise causes the entity to be a party to a prohibited tax shelter transaction and knows (or has reason to know) that the transaction is a prohibited tax shelter transaction. Free irs tax filing online The excise tax, in the amount of $20,000, is assessed for each approval or other act causing the organization to be a party to the prohibited tax shelter transaction. Free irs tax filing online To report this tax, file Form 4720. Free irs tax filing online Excess Benefit Transactions Excise tax on excess benefit transactions. Free irs tax filing online   A disqualified person who benefits from an excess benefit transaction, such as compensation, fringe benefits, or contract payments from certain section 501(c)(3), 501(c)(4), or 501(c)(29) organizations, must correct the transaction and may have to pay an excise tax under section 4958. Free irs tax filing online A manager of the organization may also have to pay an excise tax under section 4958. Free irs tax filing online These taxes are reported on Form 4720. Free irs tax filing online   The excise taxes are imposed if an applicable tax-exempt organization provides an excess benefit to a disqualified person and that benefit exceeds the value of the benefit received in exchange. Free irs tax filing online   There are three taxes under section 4958. Free irs tax filing online Disqualified persons are liable for the first two taxes and certain organization managers are liable for the third tax. Free irs tax filing online    Taxes imposed on excess benefit transactions do not apply to a transaction under a written contract that was binding on September 13, 1995, and at all times thereafter before the transaction occurred. Free irs tax filing online Tax on Disqualified Persons An excise tax equal to 25% of the excess benefit is imposed on each excess benefit transaction between an applicable tax-exempt organization and a disqualified person. Free irs tax filing online The disqualified person who benefited from the transaction is liable for the tax. Free irs tax filing online See definition of Disqualified person, later at Disqualified person. Free irs tax filing online Additional tax on the disqualified person. Free irs tax filing online   If the 25% tax is imposed and the excess benefit transaction is not corrected within the taxable period, an additional excise tax equal to 200% of the excess benefit is imposed on any disqualified person involved. Free irs tax filing online   If a disqualified person makes a payment of less than the full correction amount, the 200% tax is imposed only on the unpaid portion of the correction amount. Free irs tax filing online If more than one disqualified person received an excess benefit from an excess benefit transaction, all such disqualified persons are jointly and severally liable for the taxes. Free irs tax filing online   To avoid the 200% tax, a disqualified person must correct the excess benefit transaction during the taxable period. Free irs tax filing online The 200% tax is abated (refunded if collected) if the excess benefit transaction is corrected within a 90-day correction period beginning on the date a statutory notice of deficiency is issued. Free irs tax filing online Taxable period. Free irs tax filing online   The taxable period means the period beginning with the date on which the excess benefit transaction occurs and ending on the earlier of: The date a notice of deficiency was mailed to the disqualified person for the initial tax on the excess benefit transaction, or The date on which the initial tax on the excess benefit transaction for the disqualified person is assessed. Free irs tax filing online Tax on Organization Managers If tax is imposed on a disqualified person for any excess benefit transaction, an excise tax equal to 10% of the excess benefit is imposed on an organization manager who knowingly participated in an excess benefit transaction, unless such participation was not willful and was due to reasonable cause. Free irs tax filing online This tax cannot exceed $20,000 ($10,000 for transactions entered in a tax year beginning before August 18, 2006), for each transaction. Free irs tax filing online There is also joint and several liability for this tax. Free irs tax filing online A person can be liable for both the tax paid by the disqualified person and the organization manager tax for a particular excess benefit transaction. Free irs tax filing online Organization Manager. Free irs tax filing online   An organization manager is any officer, director, or trustee of an applicable tax-exempt organization, or any individual having powers or responsibilities similar to officers, directors, or trustees of the organization, regardless of title. Free irs tax filing online An organization manager is not considered to have participated in an excess benefit transaction where the manager has opposed the transaction in a manner consistent with the fulfillment of the manager's responsibilities to the organization. Free irs tax filing online For example, a director who votes against giving an excess benefit would ordinarily not be subject to the 10% tax. Free irs tax filing online A person participates in a transaction knowingly if the person: Has actual knowledge of sufficient facts so that, based solely upon those facts, such transaction would be an excess benefit transaction; Is aware that such a transaction under these circumstances may violate the provisions of federal tax law governing excess benefit transactions; and Negligently fails to make reasonable attempts to ascertain whether the transaction is an excess benefit transaction, or the manager is in fact aware that it is such a transaction. Free irs tax filing online Knowing does not mean having reason to know. Free irs tax filing online The organization manager ordinarily will not be considered knowing if, after full disclosure of the factual situation to an appropriate professional, the organization manager relied on the professional's reasoned written opinion on matters within the professional's expertise or if the manager relied on the fact that the requirements for the rebuttable presumption of reasonableness have been satisfied. Free irs tax filing online Participation by an organization manager is willful if it is voluntary, conscious, and intentional. Free irs tax filing online An organization manager's participation is due to reasonable cause if the manager has exercised responsibility on behalf of the organization with ordinary business care and prudence. Free irs tax filing online Excess Benefit Transaction An excess benefit transaction is a transaction in which an economic benefit is provided by an applicable tax-exempt organization, directly or indirectly, to or for the use of any disqualified person, and the value of the economic benefit provided by the organization exceeds the value of the consideration (including the performance of services) received for providing such benefit. Free irs tax filing online The excess benefit transaction rules apply to all transactions with disqualified persons, regardless of whether the amount of the benefit provided is determined in whole or in part by the revenues of one or more activities of the organization. Free irs tax filing online To determine whether an excess benefit transaction has occurred, all consideration and benefits exchanged between a disqualified person and the applicable tax-exempt organization, and all entities it controls, are taken into account. Free irs tax filing online For purposes of determining the value of economic benefits, the value of property, including the right to use property, is the fair market value. Free irs tax filing online Fair market value is the price at which property, or the right to use property, would change hands between a willing buyer and a willing seller, neither being under any compulsion to buy, sell, or transfer property or the right to use property, and both having reasonable knowledge of relevant facts. Free irs tax filing online Donor advised fund transactions occurring after August 17, 2006. Free irs tax filing online   For a donor advised fund, an excess benefit transaction includes a grant, loan, compensation, or other similar payment from the fund to a: Donor or donor advisor, Family member of a donor, or donor advisor, 35% controlled entity of a donor, or donor advisor, or 35% controlled entity of a family member of a donor, or donor advisor. Free irs tax filing online   The excess benefit in this transaction is the amount of the grant, loan, compensation, or other similar payment. Free irs tax filing online For additional information, see the Instructions for Form 4720. Free irs tax filing online Supporting organization transactions occurring after July 25, 2006. Free irs tax filing online   For any supporting organization, defined in section 509(a)(3), an excess benefit transaction includes grants, loans, compensation, or other similar payment provided by the supporting organization to a: Substantial contributor, Family member of a substantial contributor, 35% controlled entity of a substantial contributor, or 35% controlled entity of a family member of a substantial contributor. Free irs tax filing online   Additionally, an excess benefit transaction includes any loans provided by the supporting organization to a disqualified person (other than an organization described in section 509(a)(1), (2), or (4)). Free irs tax filing online   The excess benefit for substantial contributors and parties related to those contributors includes the amount of the grant, loan, compensation, or other similar payment. Free irs tax filing online For additional information, see the Instructions for Form 4720. Free irs tax filing online   Excess benefit transaction rules generally do not apply to transactions between a supporting organization and its supported organization described in section 501(c)(4), (5), or (6) in furtherance of charitable purposes. Free irs tax filing online Date of Occurrence An excess benefit transaction occurs on the date the disqualified person receives the economic benefit from the organization for federal income tax purposes. Free irs tax filing online However, when a single contractual arrangement provides for a series of compensation or other payments to or for the use of a disqualified person during the disqualified person's tax year, any excess benefit transaction with respect to these payments occurs on the last day of the taxpayer's tax year. Free irs tax filing online In the case of benefits provided to a qualified pension, profit-sharing, or stock bonus plan, the transaction occurs on the date the benefit is vested. Free irs tax filing online In the case of the transfer of property subject to a substantial risk of forfeiture, or in the case of rights to future compensation or property, the transaction occurs on the date the property, or the rights to future compensation or property, is not subject to a substantial risk of forfeiture. Free irs tax filing online Where the disqualified person elects to include an amount in gross income in the tax year of transfer under section 83(b), the excess benefit transaction occurs on the date the disqualified person receives the economic benefit for federal income tax purposes. Free irs tax filing online Correcting the excess benefit. Free irs tax filing online   An excess benefit transaction is corrected by undoing the excess benefit to the extent possible, and by taking any additional measures necessary to place the organization in a financial position not worse than what it would have been if the disqualified person were dealing under the highest fiduciary standards. Free irs tax filing online   A disqualified person corrects an excess benefit by making a payment in cash or cash equivalents, excluding payment by a promissory note, equal to the correction amount to the applicable tax-exempt organization. Free irs tax filing online The correction amount equals the excess benefit plus the interest on the excess benefit. Free irs tax filing online The interest rate can be no lower than the applicable federal rate, compounded annually, for the month the transaction occurred. Free irs tax filing online   A disqualified person can, with the agreement of the applicable tax-exempt organization, make a payment by returning the specific property previously transferred in the excess transaction. Free irs tax filing online In this case, the disqualified person is treated as making a payment equal to the lesser of: The fair market value of the property on the date the property is returned to the organization, or The fair market value of the property on the date the excess benefit transaction occurred. Free irs tax filing online   If the payment resulting from the return of property is less than the correction amount, the disqualified person must make an additional cash payment to the organization equal to the difference. Free irs tax filing online   If the payment resulting from the return of the property exceeds the correction amount described above, the organization can make a cash payment to the disqualified person equal to the difference. Free irs tax filing online Exception. Free irs tax filing online   For a correction of an excess benefit transaction (discussed earlier), no amount repaid in a manner prescribed by the Secretary can be held in a donor advised fund. Free irs tax filing online Applicable Tax-Exempt Organization An applicable tax-exempt organization is a section 501(c)(3), 501(c)(4), or 501(c)(29) organization that is tax-exempt under section 501(a), or was such an organization at any time during a 5-year period ending on the day of the excess benefit transaction. Free irs tax filing online An applicable tax-exempt organization does not include: A private foundation as defined in section 509(a), A governmental entity that is: Exempt from (or not subject to) taxation without regard to section 501(a), or Not required to file an annual return, or A foreign organization, recognized by the IRS or by treaty, that receives substantially all of its support (other than gross investment income) from sources outside the United States. Free irs tax filing online An organization is not treated as a section 501(c)(3), 501(c)(4), or 501(c)(29) organization for any period covered by a final determination that the organization was not tax-exempt under section 501(a), but only if the determination was not based on private inurement or one or more excess benefit transactions. Free irs tax filing online Disqualified Person A disqualified person is: Any person (at any time during the 5-year period ending on the date of the transaction) in a position to exercise substantial influence over the affairs of the organization, A family member of an individual described in 1, and A 35% controlled entity. Free irs tax filing online For donor advised funds, sponsoring organizations, and certain supporting organizations occurring after August 17, 2006. Free irs tax filing online   The following persons will be considered disqualified persons along with certain family members and 35% controlled entities associated with them. Free irs tax filing online Donors of donor advised funds, Investment advisors of sponsoring organizations, and Disqualified persons of a section 509(a)(3) supporting organization that supports the applicable tax-exempt organization. Free irs tax filing online For certain supporting organization transactions occurring after July 25, 2006. Free irs tax filing online   Substantial contributors to supporting organizations will also be considered disqualified persons with respect to the supporting organizations, along with their family members and 35% controlled entities. Free irs tax filing online Investment advisor. Free irs tax filing online   Investment advisor means for any sponsoring organization, any person compensated by such organization (but not an employee of such organization) for managing the investment of, or providing investment advice for, assets maintained in donor advised funds owned by such sponsoring organization. Free irs tax filing online Substantial contributor. Free irs tax filing online   In general, a substantial contributor means any person who contributed or bequeathed an aggregate of more than $5,000 to the organization, if that amount is more than 2% of the total contributions and bequests received by the end of the organization's tax year in which the contribution or bequest is received. Free irs tax filing online A substantial contributor includes the grantor of a trust. Free irs tax filing online Family members. Free irs tax filing online   Family members of a disqualified person include a disqualified person's spouse, brothers or sisters (whether by whole or half-blood), spouses of brothers or sisters (whether by whole or half-blood), ancestors, children (including a legally adopted child), grandchildren, great grandchildren, and spouses of children, grandchildren, and great grandchildren (whether by whole or half-blood). Free irs tax filing online 35% controlled entity. Free irs tax filing online   A 35% controlled entity is: A corporation in which disqualified persons own more than 35% of the total combined voting power, A partnership in which such persons own more than 35% of the profits interest, or A trust or estate in which such persons own more than 35% of the beneficial interest. Free irs tax filing online   In determining the holdings of a business enterprise, any stock or other interest owned directly or indirectly shall apply. Free irs tax filing online Persons having substantial influence. Free irs tax filing online   Among those who are in a position to exercise substantial influence over the affairs of the organization are, for example, voting members of the governing body, and persons holding the power of: Presidents, chief executives, or chief operating officers. Free irs tax filing online Treasurers and chief financial officers. Free irs tax filing online Persons with a material financial interest in a provider-sponsored organization. Free irs tax filing online Persons not considered to have substantial influence. Free irs tax filing online   Persons who are not considered to be in a position to exercise substantial influence over the affairs of an organization include: An employee who receives benefits that total less than the highly compensated amount in section 414(q)(1)(B)(i) and who does not hold the executive or voting powers mentioned earlier in the discussion on Disqualified Person, is not a family member of a disqualified person, and is not a substantial contributor, Tax-exempt organizations described in section 501(c)(3), and Section 501(c)(4) organizations with respect to transactions engaged in with other section 501(c)(4) organizations. Free irs tax filing online Facts and circumstances. Free irs tax filing online   The determination of whether a person has substantial influence over the affairs of an organization is based on all the facts and circumstances. Free irs tax filing online Facts and circumstances that tend to show a person has substantial influence over the affairs of an organization include, but are not limited to, the following. Free irs tax filing online The person founded the organization. Free irs tax filing online The person is a substantial contributor to the organization under the section 507(d)(2)(A) definition, only taking into account contributions to the organization for the past 5 years. Free irs tax filing online The person's compensation is primarily based on revenues derived from activities of the organization that the person controls. Free irs tax filing online The person has or shares authority to control or determine a substantial portion of the organization's capital expenditures, operating budget, or compensation for employees. Free irs tax filing online The person manages a discrete segment or activity of the organization that represents a substantial portion of the activities, assets, income, or expenses of the organization, as compared to the organization as a whole. Free irs tax filing online The person owns a controlling interest (measured by either vote or value) in a corporation, partnership, or trust that is a disqualified person. Free irs tax filing online The person is a nonstock organization controlled directly or indirectly by one or more disqualified persons. Free irs tax filing online   Facts and circumstances tending to show that a person does not have substantial influence over the affairs of an organization include, but are not limited to, the following. Free irs tax filing online The person has taken a bona fide vow of poverty as an employee or agent of a religious organization or on its behalf. Free irs tax filing online The person is an independent contractor whose sole relationship to the organization is providing professional advice (without having decision-making authority) with respect to transactions from which the independent contractor will not economically benefit either directly or indirectly aside from customary fees received for the professional advice rendered. Free irs tax filing online Any preferential treatment the person receives based on the size of the person's donation is also offered to others making comparable widely solicited donations. Free irs tax filing online The direct supervisor of the person is not a disqualified person. Free irs tax filing online The person does not participate in any management decisions affecting the organization as a whole or a discrete segment of the organization that represents a substantial portion of the activities, assets, income, or expenses of the organization, as compared to the organization as a whole. Free irs tax filing online   In the case of multiple organizations affiliated by common control or governing documents, the determination of whether a person does or does not have substantial influence is made separately for each applicable tax-exempt organization. Free irs tax filing online A person may be a disqualified person with respect to transactions with more than one organization. Free irs tax filing online Reasonable Compensation. Free irs tax filing online    Reasonable compensation is the value that would ordinarily be paid for like services by like enterprises under like circumstances. Free irs tax filing online The section 162 standard will apply in determining the reasonableness of compensation. Free irs tax filing online The fact that a bonus or revenue-sharing arrangement is subject to a cap is a relevant factor in determining reasonableness of compensation. Free irs tax filing online   To determine the reasonableness of compensation, all items of compensation provided by an applicable tax-exempt organization in exchange for performance of services are taken into account in determining the value of compensation (except for economic benefits that are disregarded under the discussion Disregarded benefits , later). Free irs tax filing online Items of compensation include: All forms of cash and noncash compensation, including salary, fees, bonuses, severance payments, and deferred noncash compensation, The payment of liability insurance premiums for, or the payment or reimbursement by the organization of penalties, taxes, or certain expenses under section 4958, unless excludable from income as a de minimis fringe benefit under section 132(a)(4), All other compensatory benefits, whether or not included in gross income for income tax purposes, Taxable and nontaxable fringe benefits, except fringe benefits described in section 132, and Foregone interest on loans. Free irs tax filing online    Intent to treat benefits as compensation. Free irs tax filing online An economic benefit is not treated as consideration for the performance of services unless the organization providing the benefit clearly indicates its intent to treat the benefit as compensation when the benefit is paid. Free irs tax filing online   An applicable tax-exempt organization (or entity that it controls) is treated as clearly indicating its intent to provide an economic benefit as compensation for services only if the organization provides written substantiation that is contemporaneous with the transfer of the economic benefits under consideration. Free irs tax filing online Ways to provide contemporaneous written substantiation of its intent to provide an economic benefit as compensation include: The organization produces a signed written employment contract, The organization reports the benefit as compensation on an original Form W-2, Form 1099, or Form 990, or on an amended form filed before starting an IRS examination, or The disqualified person reports the benefit as income on the person's original Form 1040, or on an amended form filed before starting an IRS examination. Free irs tax filing online Exception. Free irs tax filing online   If the economic benefit is excluded from the disqualified person's gross income for income tax purposes, the applicable tax-exempt organization is not required to indicate its intent to provide an economic benefit as compensation for services. Free irs tax filing online Rebuttable presumption that a transaction is not an excess benefit transaction. Free irs tax filing online   Payments under a compensation arrangement are presumed to be reasonable and the transfer of property (or right to use property) is presumed to be at fair market value, if the following three conditions are met. Free irs tax filing online The transaction is approved in advance by an authorized body of the organization (or an entity it controls) which is composed of individuals who do not have a conflict of interest concerning the transaction. Free irs tax filing online Before making its determination, the authorized body obtained and relied upon appropriate data as to comparability. Free irs tax filing online (There is a special safe harbor for small organizations. Free irs tax filing online If the organization has gross receipts of less than $1 million, appropriate comparability data includes data on compensation paid by three comparable organizations in the same or similar communities for similar services. Free irs tax filing online ) The authorized body adequately documents the basis for its determination concurrently with making that determination. Free irs tax filing online The documentation should include: The terms of the approved transaction and the date approved, The members of the authorized body who were present during debate on the transaction that was approved and those who voted on it, The comparability data obtained and relied upon by the authorized body and how the data was obtained, Any actions by a member of the authorized body having conflict of interest, and Documentation of the basis of the determination before the later of the next meeting of the authorized body or 60 days after the final actions of the authorized body are taken, and approval of records as reasonable, accurate, and complete within a reasonable time thereafter. Free irs tax filing online Disregarded benefits. Free irs tax filing online   The following economic benefits are disregarded for section 4958 purposes. Free irs tax filing online Nontaxable fringe benefits that are excluded from income under section 132. Free irs tax filing online Benefits provided to a volunteer for the organization if the benefit is provided to the general public in exchange for a membership fee or contribution of $75 or less. Free irs tax filing online Benefits provided to a member of an organization due to the payment of a membership fee or to a donor as a result of a deductible contribution, if a significant number of disqualified persons make similar payments or contributions and are offered a similar economic benefit. Free irs tax filing online Benefits provided to a person solely as a member of a charitable class that the applicable tax-exempt organization intends to benefit as part of the accomplishment of its exempt purpose. Free irs tax filing online A transfer of an economic benefit to or for the use of a governmental unit, as defined in section 170(c)(1), if exclusively for public purposes. Free irs tax filing online Special Exception for Initial Contracts      Section 4958 does not apply to any fixed payment made to a person under an initial contract. Free irs tax filing online   A fixed payment is an amount of cash or other property specified in the contract, or determined by a fixed formula that is specified in the contract, which is to be paid or transferred in exchange for the provision of specified services or property. Free irs tax filing online   A fixed formula can, generally, incorporate an amount that depends upon future specified events or contingencies, as long as no one has discretion when calculating the amount of a payment or deciding whether to make a payment (such as a bonus). Free irs tax filing online   An initial contract is a binding written contract between an applicable tax-exempt organization and a person who was not a disqualified person immediately before entering into the contract. Free irs tax filing online   A binding written contract, providing it can be terminated or canceled by the applicable tax-exempt organization without the other party's consent (except as a result of substantial nonperformance) and without substantial penalty, is treated as a new contract, as of the earliest date any termination or cancellation would be effective. Free irs tax filing online Also, if the parties make a material change to a contract, which includes an extension or renewal of the contract (except for an extension or renewal resulting from the exercise of an option by the disqualified person), or a more than incidental change to the amount payable under the contract, it is treated as a new contract as of the effective date of the material change. Free irs tax filing online More information. Free irs tax filing online   For more information, see the Instructions to Forms 990 and 4720. Free irs tax filing online Excess Business Holdings Private foundations are generally not permitted to hold more than a 20% interest in an unrelated business enterprise. Free irs tax filing online They may be subject to an excise tax on the amount of any excess business holdings. Free irs tax filing online For purposes of section 4943, for tax years beginning after August 17, 2006, donor advised funds and certain supporting organizations are considered private foundations. Free irs tax filing online Donor advised fund. Free irs tax filing online   In general, a donor advised fund is a fund or account separately identified by reference to contributions of a donor or donors that is owned and controlled by a sponsoring organization and for which the donor has or expects to have advisory privileges concerning the distribution or investment of the funds. Free irs tax filing online Supporting organizations. Free irs tax filing online   Only certain supporting organizations are subject to the excess business holdings tax under section 4943. Free irs tax filing online These include (1) Type III supporting organizations that are not functionally integrated and (2) Type II supporting organizations that accept any gift or contribution from a person who by himself or in connection with a related party controls the supported organization that the Type II supporting organization supports. Free irs tax filing online Taxes. Free irs tax filing online   A private foundation that has excess holdings in a business enterprise may become liable for an excise tax based on the amount of holdings. Free irs tax filing online The initial tax is 10% (5% for tax years beginning before August 18, 2006) of the value of the excess holdings and is imposed on the last day of each tax year that ends during the taxable period. Free irs tax filing online The excess holdings are determined on the day during the tax year when they were the largest. Free irs tax filing online   A foundation that fails to correct the excess business holdings becomes liable for an additional tax of 200% of the remaining excess business holdings as of the earlier of tax assessment or mailing of a notice of deficiency. Free irs tax filing online   For more information on the tax on excess business holdings, see the Instructions for Form 4720. Free irs tax filing online Taxable Distributions of Sponsoring Organizations An excise tax is imposed on a sponsoring organization for each taxable distribution it makes from a donor advised fund. Free irs tax filing online An excise tax is also imposed on any fund manager of the sponsoring organization who agreed to the making of a distribution, knowing that it is a taxable distribution. Free irs tax filing online Taxable distribution. Free irs tax filing online   A taxable distribution is any distribution from a donor advised fund to any natural person or to any other person if: The distribution is for any purpose other than one specified in section 170(c)(2)(B), or The sponsoring organization maintaining the donor advised fund does not exercise expenditure responsibility with respect to the distribution in accordance with section 4945(h). Free irs tax filing online    However, a taxable distribution does not include a distribution from a donor advised fund to: Any organization described in section 170(b)(1)(A) (other than a disqualified supporting organization), The sponsoring organization of the donor advised fund, or Any other donor advised fund. Free irs tax filing online The tax on taxable distributions applies to distributions occurring in tax years beginning after August 17, 2006. Free irs tax filing online Sponsoring organization. Free irs tax filing online   A sponsoring organization is a section 170(c) organization that is neither a government organization (as referred to in section 170(c)(1) and (2)(A)) nor a private foundation. Free irs tax filing online Donor advised fund. Free irs tax filing online    A donor advised fund is a fund or account: Which is separately identified by reference to contributions of a donor or donors, Which is owned and controlled by a sponsoring organization, and For which the donor (or any person appointed or designated by the donor) has or expects to have advisory privileges concerning the distribution or investment of the funds held in the donor advised funds or accounts because of the donor's status as a donor. Free irs tax filing online Exception. Free irs tax filing online A donor advised fund does not include:    A fund or account that makes distributions only to a single identified organization or governmental entity, or Any fund or account for a person described in 3 above that gives advice about which individuals receive grants for travel, study, or similar purposes, if the following three requirements are met: The person's advisory privileges are performed exclusively by such person in their capacity as a committee member of which all the committee members are appointed by the sponsoring organization, No combination of persons with advisory privileges, described in 3 above, or persons related to those in 3 above directly or indirectly control the committee, and All grants from the fund or account are awarded on an objective and nondiscriminatory basis according to a procedure approved in advance by the board of directors of the sponsoring organization. Free irs tax filing online The procedure must be designed to ensure that all grants meet the requirements of section 4945(g)(1), (2), or (3). Free irs tax filing online Disqualified supporting organization. Free irs tax filing online   A disqualified supporting organization includes (1) a Type III supporting organization that is not functionally integrated and (2) any supporting organization where the donor or donor advisor (and any related parties) directly or indirectly controls a supported organization of the supporting organization. Free irs tax filing online Tax on sponsoring organization. Free irs tax filing online   A tax of 20% of the amount of each taxable distribution is imposed on the sponsoring organization. Free irs tax filing online Tax on fund manager. Free irs tax filing online   If a tax is imposed on a taxable distribution of the sponsoring organization, a tax of 5% of the distribution will be imposed on any fund manager who agreed to the distribution knowing that it was a taxable distribution. Free irs tax filing online Any fund manager who took part in the distribution and is liable for the tax must pay the tax. Free irs tax filing online The maximum amount of tax on all fund managers for any one taxable distribution is $10,000. Free irs tax filing online If more than one fund manager is liable for tax on a taxable distribution, all such managers are jointly and severally liable for the tax. Free irs tax filing online   For more information on the tax on taxable distributions of sponsoring organizations, see the Instructions for Form 4720. Free irs tax filing online Taxes on Prohibited Benefits Resulting From Donor Advised Fund Distributions Prohibited benefit. Free irs tax filing online   If any donor, donor advisor, or related party advises the sponsoring organization about making a distribution which results in a donor, donor advisor, or related party receiving (either directly or indirectly) a more than incidental benefit, then such benefit is a prohibited benefit. Free irs tax filing online The tax on prohibited benefits applies to distributions occurring in tax years beginning after August 17, 2006. Free irs tax filing online Donor advisor. Free irs tax filing online   A donor advisor is any person appointed or designated by a donor to advise a sponsoring organization on the distribution or investment of amounts held in the donor's fund or account. Free irs tax filing online Related party. Free irs tax filing online   A related party includes any family member or 35% controlled entity. Free irs tax filing online See the definition of those terms under Disqualified Person , earlier. Free irs tax filing online Tax on donor, donor advisor, or related person. Free irs tax filing online    A tax of 125% of the benefit resulting from the distribution is imposed on both the party who advised as to the distribution (which might be a donor, donor advisor, or related party) and the party who received such benefit (which might be a donor, donor advisor, or related party). Free irs tax filing online The advisor and the party who received the benefit are jointly and severally liable for the tax. Free irs tax filing online Tax on fund managers. Free irs tax filing online   If a tax is imposed on a prohibited benefit received by a donor, donor advisor, or related person, a tax of 10% of the amount of the prohibited benefit is imposed on any fund manager who agreed to the distribution knowing that it would confer a prohibited benefit. Free irs tax filing online Any fund manager who took part in the distribution and is liable for the tax must pay the tax. Free irs tax filing online The maximum amount of tax on all fund managers for any one taxable distribution is $10,000. Free irs tax filing online If more than one fund manager is liable for tax on a taxable distribution, all such managers are jointly and severally liable for the tax. Free irs tax filing online Exception. Free irs tax filing online   If a person engaged in an excess benefit transaction and received a prohibited benefit for the same transaction, the person is taxed under section 4958, and no tax is imposed under section 4967 for a prohibited benefit. Free irs tax filing online   For more information on taxes on prohibited benefits distributed from donor advised funds, see the Instructions for Form 4720. Free irs tax filing online Excise Taxes on Private Foundations There is an excise tax on the net investment income of most domestic private foundations. Free irs tax filing online Capital gains from appreciation are included in the tax base on private foundation net investment income. Free irs tax filing online This tax must be reported on Form 990-PF and must be paid annually at the time for filing that return or in quarterly estimated tax payments if the total tax for the year (section 4940 tax minus credits) is $500 or more. Free irs tax filing online Form 990-W is used to calculate the estimated tax. Free irs tax filing online In addition, there are several other rules that apply to excise taxes on private foundations. Free irs tax filing online These include: Restrictions on self-dealing between private foundations and their substantial contributors and other disqualified persons, Requirements that the foundation annually distribute income for charitable purposes, Limits on their holdings in any business enterprise (see Excess Business Holdings, earlier), Provisions that investments must not jeopardize the carrying out of exempt purposes, and Provisions to assure that expenditures further the organization's exempt purposes. Free irs tax filing online Violations of these provisions give rise to taxes and penalties against the private foundation and, in some cases, its managers, its substantial contributors, and certain related persons. Free irs tax filing online For more information on the excise taxes imposed on private foundations, see the Instructions for Form 4720 and the Instructions for Form 990-PF. Free irs tax filing online Excise Taxes on Black Lung Benefit Trusts A black lung benefit trust that makes any expenditures, payments, or investments other than those described in chapter 4 under 501(c)(21) - Black Lung Benefit Trusts must pay a tax equal to 10% of the amount of such expenditures. Free irs tax filing online If there are any acts of self-dealing between the trust and a disqualified person, a tax equal to 10% of the amount involved is imposed on the disqualified person. Free irs tax filing online Both of these excise taxes are reported on Schedule A (Form 990-BL). Free irs tax filing online See the Form 990-BL instructions for more information on these taxes and what has to be filed, even if the trust is excepted from filing. Free irs tax filing online Excise Tax on Failure to Meet the Community Health Needs Assessment Requirements For tax years beginning after March 23, 2012, new section 4959 imposes an excise tax on hospital organizations which fail to meet certain section 501(r) requirements for each of their hospital facilities. Free irs tax filing online These entities must meet section 501(r)(3) requirements at all times during their tax year. Free irs tax filing online Section 501(r)(3) requirements pertain to a hospital organization preparing a community health needs assessment (CHNA). Free irs tax filing online See Schedule H, Hospitals (Form 990), for details. Free irs tax filing online Prev  Up  Next   Home   More Online Publications