What IRS Form 990-PF (2020) Is For

IRS Form 990-PF is the annual tax return that private foundations must file to report their financial activities and calculate taxes on investment income. This form serves two essential purposes: calculating the excise tax based on net investment income and reporting charitable distributions and activities to ensure compliance with federal tax laws (IRS Instructions for Form 990-PF (2020)).

When You’d Use Form 990-PF for 2020 (Late or Amended Filing)

You would file a late 2020 Form 990-PF if you received IRS notices about unfiled returns, discovered errors in your original filing, or need to claim a refund of excise taxes paid. Common scenarios include receiving Notice CP-215 for late filing penalties, miscalculating the 1.39% excise tax, or reporting the wrong minimum distribution amount. For amended returns, claims for refunds must be filed within three years of the original due date or two years from when the tax was paid, whichever is later. Private foundations risk automatic revocation of exempt status if they fail to file for three consecutive years.

Key Rules Specific to 2020

• Excise tax change: 2020 introduced a flat 1.39% excise tax on net investment income, replacing the prior 2%/1% two-tier system.
  
  
• No Part V: Foundations no longer needed to complete Part V, as the reduced 1% rate option was eliminated.
  
  
• Electronic filing: Became mandatory for most foundations, though limited exceptions allowed paper filing.
  
  
• COVID-19 relief: Filing deadlines for many returns were extended from May 15, 2020, to July 15, 2020.
  
  

Step-by-Step (High Level)

• Gather records: Obtain account transcripts and collect investment statements, grant documentation, and financial records.
• Use correct form: Complete the official 2020 version of Form 990-PF using the 1.39% excise tax rate.
• Attach schedules: Include Schedule B for substantial contributors, penalty calculations if applicable, and supporting grant information.
• File electronically: Submit through an IRS-approved software provider, or paper file if exempted.
• Retain copies: Keep copies of the return and all schedules for at least three years, as these must be available for public inspection.

Common Mistakes and How to Avoid Them

• Errors on Schedule B: Always complete Schedule B or certify that it’s not required; leaving it blank is not acceptable.
  
  
• Incomplete grant reporting: All grants must be detailed in Part XII, including recipient details, purposes, and amounts.
  
  
• Wrong excise tax rate: Use the flat 1.39% rate for 2020; avoid applying outdated two-tier rules.
  
  
• Distribution calculation errors: Misreporting the 5% payout requirement can trigger excise taxes under section 4942.
  
  
• Balance sheet inconsistencies: Ensure beginning balances match the prior year’s ending balances.
  
  
• Unsigned returns: Missing an authorized officer’s signature results in the return being considered unfiled.
  
  

What Happens After You File

The IRS typically processes Form 990-PF in 12–16 weeks for paper returns and 8–12 weeks for e-filed returns. You’ll receive immediate confirmation for electronically filed returns, while paper submissions may take longer. If taxes or penalties are due, the IRS sends a notice with instructions and payment options, including installment agreements via Form 9465. Overpayments are refunded within 6–12 weeks. If the IRS challenges your filing, you will receive correspondence outlining proposed changes and your appeal rights. Amended returns, like originals, must be made available for public inspection.

FAQs

What penalties apply for late filing my 2020 Form 990-PF?

Late filers face penalties of $20 per day, up to a maximum of $10,500 or 5% of gross receipts. Larger organizations may face higher daily penalties. In addition, failure to pay excise tax owed results in monthly penalties of 0.5% on the unpaid balance, capped at 25%. Timely filing avoids these escalating costs.

Can I still get penalty relief for my 2020 return?

Yes, the IRS allows penalty relief under reasonable cause provisions and through first-time penalty abatement if your foundation has a clean compliance record. For 2020 specifically, certain COVID-19 circumstances may qualify for additional penalty relief. Providing full documentation explaining why you couldn’t file on time can increase your chances of abatement.

How do I get transcripts for my foundation’s prior returns?

You can request transcripts using Form 4506-A to obtain copies of previously filed Form 990-PF, including attachments. Alternatively, authorized users may access IRS online transcript services. These records help confirm past filings, payments, and assessed penalties, ensuring that any late or amended return you file properly aligns with your IRS account history.

Is there a refund deadline for overpaid 2020 excise taxes?

Yes, refund claims are subject to strict deadlines. You must file within three years of the original due date or two years from the date taxes were actually paid, whichever is later. Refund requests require a properly amended 2020 Form 990-PF, along with supporting documentation showing how the overpayment occurred.

Should I amend my state returns if I file an amended federal Form 990-PF?

Yes, many states require amended filings when you amend your federal return. Some states automatically receive Form 990-PF filings, while others require separate submissions. Check with each state’s attorney general or charitable registration office to ensure compliance, as deadlines and documentation requirements vary significantly from one jurisdiction to another.

Can I file my 2020 return electronically even though it’s late?

Yes, electronic filing remains open for late returns and is strongly encouraged. E-filing provides immediate confirmation of receipt, faster processing, and fewer errors compared to paper returns. While most private foundations must file electronically, paper submissions are only allowed under limited IRS-approved exceptions, making e-filing the most efficient option available.

What if I discover errors after filing my late return?

If you realize that your late-filed 2020 Form 990-PF contains errors or omissions, you can submit an amended return at any time. Use the correct 2020 form version, check the “Amended Return” box, and provide clear explanations of the changes. Remember, amended returns must also be made publicly available for inspection.

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