A Comprehensive Guide for Foundation ManagersForm 990-PF is the annual information return that private foundations must file with the Internal Revenue Service. This form serves a dual purpose: it calculates the excise tax on investment income and reports the foundation's charitable distributions and activities. Understanding this form is essential for maintaining your foundation's tax-exempt status and avoiding costly penalties. IRS.gov

What the Form Is For

Form 990-PF is designed specifically for private foundations—those tax-exempt organizations under section 501(c)(3) that don't qualify as public charities. Every organization that qualifies for tax exemption under section 501(c)(3) is presumed to be a private foundation unless it falls into one of the categories specifically excluded from that definition under section 509(a). IRS Private Foundations

Every private foundation must file Form 990-PF annually, regardless of the size of its revenues or assets. This requirement applies to exempt private foundations, taxable private foundations (those that lost their exempt status), and section 4947(a)(1) nonexempt charitable trusts treated as private foundations. The form accomplishes several critical functions: it figures the tax based on investment income (generally 2% of net investment income for domestic foundations), tracks whether the foundation meets its minimum distribution requirement, and provides transparency by creating a public record of the foundation's activities and finances.

For section 4947(a)(1) nonexempt charitable trusts, Form 990-PF can serve as a substitute for Form 1041 (the trust income tax return) when the trust has no taxable income under regular income tax rules. IRS Instructions for Form 990-PF 2010

When You’d Use This Form (Filing Late or Amended Returns)

Original Due Date and Extensions

For the 2010 tax year, Form 990-PF must be filed by the 15th day of the 5th month following the close of your foundation's accounting period. For calendar-year foundations, this means the return for 2010 was due by May 15, 2011. If that deadline falls on a weekend or legal holiday, the due date shifts to the next business day. IRS Instructions for Form 990-PF 2010

Extensions: You can request an automatic 3-month extension by properly completing and filing Form 8868 by the original due date, along with any balance due. If you need additional time beyond that, you can request up to an additional 3 months, but this second extension isn't automatic—you must demonstrate reasonable cause for needing extra time.

Late Filing

If you missed the deadline, file as soon as possible and attach a detailed explanation of why the return is late. The IRS assesses daily penalties for late filing, so prompt action is critical.

Amended Returns

You can file an amended Form 990-PF to correct errors or provide missing information from a previously filed return. To amend, check the "Amended Return" box in block G on page 1 and complete the entire form with corrected information—not just the changed items. If you're claiming a refund of excise tax paid under section 4940 or 4948, you must file the amended return within 3 years from when you filed the original return, or within 2 years from when you paid the tax, whichever is later. IRS Instructions for Form 990-PF 2010

Key Rules for 2010

Minimum Distribution Requirement

Under section 4942, private non-operating foundations must annually distribute a minimum amount for charitable purposes. A foundation that fails to pay out the distributable amount in a timely manner is subject to a 30 percent excise tax under section 4942 on the undistributed income. IRS Taxes on Failure to Distribute Income The minimum investment return is calculated as approximately 5 percent of the excess of the aggregate fair market value of foundation assets (other than those used directly in carrying out the foundation's exempt purpose).

Excise Tax on Investment Income

Domestic private foundations pay a 2% excise tax on net investment income (or 1% if certain distribution requirements are met under section 4940(e)). This tax applies to interest, dividends, capital gains, rents, royalties, and similar investment returns. The tax must be paid by the 15th day of the 5th month after the accounting period closes. IRS Instructions for Form 990-PF 2010

Electronic Filing Threshold

For 2010, foundations filing at least 250 returns annually were required to file Form 990-PF electronically. Organizations below this threshold could file paper returns but were encouraged to e-file. IRS Instructions for Form 990-PF 2010

Estimated Tax Payments

If your foundation expected its excise tax liability to be $500 or more, you were required to make estimated tax payments. A foundation that does not pay the proper estimated tax when due may be subject to the estimated tax penalty under section 6655 for the period of the underpayment. IRS Instructions for Form 990-PF 2010

Three-Year Filing Requirement

Beginning with returns due in 2010, most tax-exempt organizations, other than churches, are required to file an annual Form 990, 990-EZ, 990-PF, or 990-N e-Postcard with the IRS. If an organization fails to file an annual return or notice for three consecutive years, it will automatically lose its tax-exempt status. IRS Instructions for Form 990-PF 2010

Step-by-Step Filing Process (High Level)

Filing Form 990-PF involves completing multiple interconnected parts. The IRS provides a sequencing chart to help limit jumping from one part of the form to another. Following this sequence minimizes confusion and ensures you have necessary information available when needed. IRS Instructions for Form 990-PF 2010

Step 1—Gather Financial Records

Collect your complete financial statements, including revenue records, expense documentation, balance sheet information, grant records, and investment income details.

Step 2—Complete the Heading

Fill in basic identifying information including your foundation's name, address, employer identification number (EIN), and accounting period. Indicate whether this is an initial return, final return, amended return, or address change.

Step 3—Prepare Balance Sheets (Part II)

Part II, column (c), with the exception of line 16, applies only to organizations having at least $5,000 in assets per books at some time during the year. Line 16, column (c), applies to all filers. IRS Instructions for Form 990-PF 2010

Step 4—Calculate Capital Gains (Part IV)

Report capital gains and losses for purposes of figuring the excise tax on investment income. Part IV does not apply to foreign organizations.

Step 5—Complete Revenue and Expenses (Part I)

Report all revenue, distinguishing between items included in investment income and those allocated to charitable activities. Part I, column (c), applies only to private operating foundations and to nonoperating private foundations that have income from charitable activities. IRS Instructions for Form 990-PF 2010

Step 6—Figure Minimum Investment Return (Parts X and XI)

Calculate the minimum amount your foundation must distribute for charitable purposes. Part X does not apply to foreign foundations unless they claim status as a private operating foundation. Part XI does not apply to foreign foundations or to private operating foundations. IRS Instructions for Form 990-PF 2010

Step 7—Report Qualifying Distributions (Part XII)

Detail all distributions that count toward meeting your minimum distribution requirement, including grants to organizations, direct charitable expenditures, and program-related investments.

Step 8—Calculate Excise Tax (Parts V and VI)

Determine whether you qualify for the reduced 1% tax rate under section 4940(e), then calculate your excise tax liability. Report estimated tax payments made during the year. Parts V and VI do not apply to organizations making an election under section 41(e). IRS Instructions for Form 990-PF 2010

Step 9—Answer Activity Questions (Part VII-A and VII-B)

Respond to questions about your foundation's activities, including prohibited transactions, legislative activities, and relationships with other organizations.

Step 10—Complete Supplementary Schedules

Fill out Part XV (grants and contributions made), Part VIII (officers, directors, and highly compensated employees), and any other applicable parts. Part XV applies only to foundations having assets of $5,000 or more during the year. IRS Instructions for Form 990-PF 2010

Step 11—Sign and File

An authorized officer must sign the return under penalty of perjury. Mail the completed return to the IRS Service Center in Ogden, Utah, or file electronically.

Common Mistakes and How to Avoid Them

The IRS has identified common errors made by exempt organizations when filing Form 990-PF. Here are the most frequent mistakes and strategies to prevent them: IRS Common Errors Filing Tips

Incomplete Schedule B

All organizations must complete and attach Schedule B or certify the organization is not required to attach Schedule B by checking the box in Line 2, Form 990-PF.

Missing Part XV Information

Part XV, line 3 must be completed if Part I, line 25 has an amount. Be sure to state the purpose of the grant or contribution. If the foundation only makes contributions to pre-selected charitable organizations and does not accept unsolicited applications for funds, check the box on line 2, Part XV.

Incomplete Balance Sheets

Complete Part II, Balance Sheets. Foundations with total assets of $5,000 or more at any time during the year must complete all of columns (A), (B) and (C). Foundations with total assets less than $5,000 at all times during the year must complete all of columns (A) and (B) and only line 16 of column (C).

Failing to Answer All Questions

Be sure to complete all required Parts. Enter amounts in all applicable lines. For Parts or lines that do not apply, enter "N/A" (not applicable). Answer "Yes", "No" or "N/A" to each question. To avoid filing an incomplete return, complete all applicable line items, answer "Yes," "No," or "N/A" to each question on the return, make an entry (including a zero when appropriate) on all total lines, and enter "None" or "N/A" if an entire part does not apply. IRS Instructions for Form 990-PF 2010

Missing Signatures

Sign the return. An officer of the organization must sign the return. An officer is the president, vice president, treasurer, assistant treasurer, chief accounting officer, corporate officer or tax officer. If the return is filed by a trust, it must be signed by the authorized trustee or trustees.

Incomplete Part X

Complete Part X. All domestic foundations, foreign foundations claiming status as a private operating foundation, and private operating foundations described in 4942(j)(3) or 4942(j)(5) must complete Part X.

Missing Part XV Completion

Complete Part XV, Supplementary Information. Part XV must be completed if the foundation had assets of $5,000 or more at any time during the year. Part XV must be completed if the foundation had assets of $5,000 or more at any time during the year, unless the foundation only makes contributions to pre-selected organizations.

What Happens After You File

IRS Processing

Once you file Form 990-PF, several important processes begin: The IRS processes your return and applies any estimated payments you made during the year. If you underpaid, you'll receive a bill for the balance plus any applicable penalties and interest.

Public Disclosure Requirements

Private foundation returns (Form 990-PF) filed on or after March 13, 2000, are subject to public disclosure rules. An exempt organization must make available for public inspection its annual information return (Form 990-PF) for three years from the date the return is required to be filed or is actually filed, whichever is later. IRS Public Disclosure Requirements

Organizations must provide copies to anyone who requests them, either in person at the organization's principal office or by mail. The organization may charge reasonable copying and postage fees. IRS Public Disclosure for Private Foundations

Penalty Assessment

If an organization fails to file a required return by the due date (including any extensions of time), it must pay a penalty of $20 a day for each day the return is late. The same penalty applies if the organization does not give all the information required on the return or does not give the correct information. In general, the maximum penalty for any return is the lesser of $10,500 or 5 percent of the organization's gross receipts for the year. For an organization that has gross receipts exceeding $1 million for the year, the penalty is $105 a day up to a maximum of $54,000. IRS Annual Return Penalties

There is also a penalty for not paying tax when due under section 6651. The penalty generally is 1/2 of 1% of the unpaid tax for each month or part of a month the tax remains unpaid, not to exceed 25% of the unpaid tax. IRS Instructions for Form 990-PF 2010

Automatic Revocation Risk

If an organization fails to file an annual return or notice for three consecutive years, it will automatically lose its tax-exempt status. IRS Instructions for Form 990-PF 2010

FAQs

Q1: What's the difference between Form 990-PF and regular Form 990?

Form 990-PF is specifically for private foundations, while Form 990 is for public charities and other tax-exempt organizations. Every organization that qualifies for tax exemption under section 501(c)(3) is a private foundation unless it falls into one of the categories specifically excluded from the definition under section 509(a). IRS Private Foundations Private foundations face unique requirements—including minimum distribution rules under section 4942 and excise taxes on investment income—that don't apply to public charities.

Q2: Can I file Form 990-PF electronically for the 2010 tax year?

Yes, electronic filing was available in 2010. If the foundation files at least 250 returns during the calendar year, it must file Form 990-PF electronically. If the foundation must file a return electronically but does not, the organization is considered to have not filed its return. The IRS may waive the requirements to file electronically in cases of undue hardship. IRS Instructions for Form 990-PF 2010

Q3: What happens if I discover an error after filing?

File an amended return as soon as you discover the error. To change the organization's return for any year, file an amended return, including attachments, with the correct information. The amended return must provide all the information required by the form and instructions, not just the new or corrected information. Check "Amended Return" in block G at the top of page 1. IRS Instructions for Form 990-PF 2010

Q4: Does my private operating foundation have the same filing requirements?

Private operating foundations file the same Form 990-PF but have different requirements for certain parts. Operating foundations are not subject to the tax imposed on the undistributed income of a private foundation under section 4942(a) and 4942(b). IRS Private Operating Foundations Part XI does not apply to private operating foundations, and Part XIV applies only to private operating foundations. IRS Instructions for Form 990-PF 2010

Q5: How do I calculate the minimum distribution requirement?

The process involves multiple steps across several form parts. Section 4942 requires private foundations to distribute a current minimum amount to charity. Section 4942(h) treats qualifying distributions as made first out of the undistributed income of the immediately preceding taxable year. IRS Treatment of Qualifying Distributions Part X calculates the minimum investment return, Part XI converts this to a distributable amount, and Part XII reports qualifying distributions that count toward meeting this requirement.

Q6: What if my foundation had zero activity during 2010?

You must still file Form 990-PF even if the foundation had no income, made no distributions, and conducted no activities during the year. All private foundations, including nonexempt trusts treated as private foundations, must annually file Form 990-PF, Return of Private Foundation. IRS Private Foundations Complete all applicable parts, entering zeros where appropriate. Failure to file for three consecutive years triggers automatic revocation of tax-exempt status.

Q7: Who must sign the return, and what if the authorized person is unavailable?

An officer of the organization must sign the return. An officer is the president, vice president, treasurer, assistant treasurer, chief accounting officer, corporate officer or tax officer. If the return is filed by a trust, it must be signed by the authorized trustee or trustees. IRS Common Errors Filing Tips The signature attests under penalty of perjury that the information is true, correct, and complete.

For More Information: Visit IRS.gov Form 990-PF page for current forms, instructions, and guidance. The IRS also offers a toll-free help line at 1-877-829-5500 for organizations with questions about completing Form 990-PF. IRS Instructions for Form 990-PF 2010

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