Tax Planning and Compliance for Tax-Exempt Organizations, 6th Edition

CHAPTER 1Distinguishing Characteristics of Tax-Exempt Organizations

• § 1.4 Role of the Internal Revenue Service
• § 1.8 Developments Responding to COVID-19
  • (a) CARES and SECURE Acts
  • (b) IRS Delays in Tax Payment and Return Due Dates

§ 1.4 Role of the Internal Revenue Service

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In preparing this supplement, I found that rereading the instructions gave me facts and IRS directions I was unaware of or had forgotten. Accordingly, the following is a listing of the items I needed to carefully consider as I review returns prepared by others in my office.

The instructions for 990-PF for 2020 begin with the following “What’s New” section:

• Reduced tax on net investment income. The Taxpayer Certainty and Disaster Tax Relief Act reduced the 2 percent Internal Revenue Code section 4940(a) excise tax on net investment income of private foundations to 1.39 percent effective for tax years beginning after December 20, 2019. This legislation also repealed Internal Revenue Code section 4940(e), which from January 1, 1985, through December 20, 2019, provided a reduced 1 percent tax when its qualifying distributions for that year exceeded the fair market value of its investment assets multiplied by the private foundation's average percentage payout for the prior five years. The 2020 990-PF form still contained Part V, Reduced Tax on Net Investment Income, which was no longer used and which the instructions said was not necessary to complete.

  Other various ...