A layman-friendly summary of the IRS Form 990-PF Return of Private Foundation for tax year 2012

What the Form Is For

Form 990-PF is the annual information return that private foundations must file with the Internal Revenue Service. Think of it as the IRS's window into your foundation's financial health and activities for the year.

This form serves three primary purposes. First, it calculates any excise tax your foundation owes on its investment income—typically a small percentage (1-2%) of net investment income. Second, it reports all the charitable distributions and grants your foundation made during the year, ensuring you're meeting the legal requirement to distribute at least 5% of your assets annually for charitable purposes. Third, it documents your foundation's activities, governance, and compliance with federal tax law.

Unlike other tax-exempt organizations that might file the simpler Form 990 or 990-EZ, all private foundations—whether exempt or taxable—must file Form 990-PF, regardless of their asset size or income level. This also applies to section 4947(a)(1) nonexempt charitable trusts treated as private foundations. The form acts as a comprehensive disclosure document, with most of its contents available for public inspection, promoting transparency in the philanthropic sector.

IRS.gov

When You’d Use Form 990-PF

Late/Amended Filings

Regular Filing Deadline

Your Form 990-PF for 2012 is due by the 15th day of the 5th month after your foundation's accounting period ends. For calendar-year foundations, this means May 15, 2013. If this date falls on a weekend or legal holiday, you have until the next business day to file.

Extension Options

If you need more time, Form 8868 grants an automatic 3-month extension (no questions asked) if you file it and pay any tax due by the original deadline. Need even more time? You can request an additional 3-month extension, but this second extension isn't automatic—you must demonstrate reasonable cause for needing it.

Late Filing

If you miss the deadline, file anyway! The penalties continue to accrue daily until you file, so submitting late is always better than not filing at all. Attach a written explanation for the delay to potentially avoid or reduce penalties.

Amended Returns

Discovered an error after filing? File an amended return by checking the "Amended Return" box at the top of page 1. You must provide all the information originally required—not just the corrections. If you're claiming a refund of excise tax paid, you have 3 years from when you filed the original return or 2 years from when you paid the tax (whichever is later) to file the amended return. Remember: if you file an amended return with the IRS, you must also send copies to any state agencies where you originally filed.

IRS Instructions 990-PF 2012

Key Rules or Details for 2012

Several important requirements and thresholds applied specifically to the 2012 tax year:

Asset Threshold

If your foundation had $5,000 or more in assets at any time during 2012, you must complete the detailed Balance Sheets (Part II, column c) and the Supplementary Information section (Part XV). Foundations with less than $5,000 in assets have a lighter reporting burden.

Electronic Filing Mandate

Organizations filing 250 or more returns (of any type) during calendar year 2012 were required to file Form 990-PF electronically. Paper filings from these large-volume filers were not accepted.

5% Distribution Requirement

Private non-operating foundations must distribute approximately 5% of their investment assets annually for charitable purposes. This calculation appears in Parts XI and XIII of the form and is critical for avoiding penalty taxes on undistributed income.

Public Disclosure

All completed Form 990-PFs (except Schedule B contributor information in certain cases) are public documents. The IRS explicitly warns: "Do not include Social Security numbers on publicly disclosed forms." Anyone can request and receive a copy of your foundation's return.

Three-Year Rule

Starting with returns for tax years beginning in 2007, the IRS implemented an automatic revocation rule. If your foundation fails to file a required return for three consecutive years, it automatically loses its tax-exempt status. By 2012, this rule was in full effect, making consistent filing absolutely critical.

State Reporting

Many states accept Form 990-PF in place of their own reporting forms. However, you must still send copies to the Attorney General of: (1) each state listed in Part VII-A, line 8a, (2) the state where your principal office is located, and (3) the state where you were incorporated or created.

IRS Instructions 990-PF 2012

Step-by-Step (High Level)

Filing Form 990-PF involves working through 17 different parts, but don't let that intimidate you. Here's the logical sequence:

Step 1: Gather Your Records

Collect your financial statements, bank records, investment statements, grant documentation, and information about officers, directors, and highly paid employees. You'll need beginning and end-of-year balance sheets and a complete list of revenue and expenses for the year.

Step 2: Calculate Investment Income Tax (Part IV)

Begin with Part IV, where you'll report capital gains and losses from selling investments. This feeds into the excise tax calculation you'll need later.

Step 3: Complete Financial Statements (Parts I-III)

Fill in your Revenue and Expenses (Part I), Balance Sheets (Part II), and the Analysis of Changes in Net Assets (Part III). Part I asks you to separate revenue and expenses into different categories—some items go in column (a) for tax purposes, column (b) for charitable accounting, or both.

Step 4: Work Through the Heading and Entity Information

Complete the identification section at the top of page 1, including your foundation's name, address, EIN, and accounting period.

Step 5: Calculate Excise Tax (Parts V-VI)

Determine if you qualify for the reduced 1% tax rate (versus the standard 2%) in Part V, then calculate your actual excise tax liability in Part VI.

Step 6: Answer Activity Questions (Part VII)

This critical compliance section asks yes/no questions about prohibited activities like self-dealing, excess business holdings, jeopardizing investments, and taxable expenditures. Answer truthfully—checking "Yes" doesn't necessarily mean you owe penalties, but failing to disclose can trigger serious consequences.

Step 7: Report on People (Part VIII)

List your officers, directors, trustees, key employees, and contractors, including their compensation.

Step 8: Document Charitable Work (Parts IX-X)

Describe your direct charitable activities and program-related investments. Complete the Minimum Investment Return calculation in Part X—this determines your required annual distribution.

Step 9: Track Distributions (Parts XI-XIII)

Calculate your required distributions (Part XI), report qualifying distributions you actually made (Part XII), and reconcile any undistributed income from current or prior years (Part XIII).

Step 10: Additional Schedules (Parts XIV-XVII)

Complete any remaining parts that apply to your foundation's specific situation, such as private operating foundation status (Part XIV) or relationships with other organizations (Part XVII).

Step 11: Sign and Submit

An authorized officer (president, vice president, treasurer, or similar officer) must sign the return. Mail it to the IRS center in Ogden, Utah, or file electronically if you meet the e-filing requirement.

IRS Instructions 990-PF 2012

Common Mistakes and How to Avoid Them

Even experienced foundation managers make errors on Form 990-PF. Here are the most frequent pitfalls and how to avoid them:

Mistake #1: Incomplete Schedule B

Every foundation must either complete and attach Schedule B (listing contributors) or check the box certifying it's not required. Simply forgetting this schedule is the #1 error. Solution: Always review the Schedule B requirement, even if you had no contributions during the year.

Mistake #2: Missing Grant Purposes (Part XV)

When listing grants made, foundations often include the recipient and amount but forget to describe the purpose of each grant. Solution: For every grant listed in Part XV, line 3, write a brief but clear statement of its charitable purpose (e.g., "General operating support for youth literacy programs").

Mistake #3: Balance Sheet Errors

Foundations frequently omit column (c) of Part II or fail to reconcile beginning and ending balances. Solution: If you had $5,000+ in assets at any time during the year, complete all three columns. Your ending balance (column B) should match your books exactly.

Mistake #4: Miscalculating the 5% Distribution

The required distribution calculation (Part XI) involves subtracting acquisition debt from asset values—foundations often forget this step or use the wrong valuation method. Solution: Double-check that you're using fair market value (not book value) for Part X calculations and correctly accounting for any debt used to purchase assets.

Mistake #5: Leaving Blanks Instead of Writing "N/A" or "None"

Blank lines raise red flags for IRS reviewers. Solution: The instructions explicitly require entering "N/A" (not applicable) or "None" for parts or lines that don't apply to your foundation. Answer "Yes," "No," or "N/A" to every question in Part VII.

Mistake #6: Failing to Complete Required Parts

Some foundations skip Part X (Minimum Investment Return) or Part XV (Supplementary Information) thinking they don't apply. Solution: Carefully review which parts apply to your foundation based on asset size, foundation type, and activities. Most domestic foundations must complete Part X.

Mistake #7: Poor Recordkeeping for Investment Details

Part II requires detailed information about investments—shares, descriptions, book values, and FMV. Many foundations provide incomplete information. Solution: Maintain detailed investment records throughout the year so you have complete data at filing time.

Mistake #8: Overlooking State Filing Requirements

Focusing solely on the IRS filing, foundations forget to send copies to required state officials. Solution: Set up a checklist for state filings and send copies to the appropriate Attorney General offices at the same time you file with the IRS.

IRS Common Errors 990-PF

What Happens After You File

Once your Form 990-PF is filed, several things occur:

IRS Processing

The IRS logs your return into their system, which can take several weeks or months. If you're due a refund of excise tax, expect to wait 6-12 weeks for your check. If you owe additional tax or the IRS identifies issues, they'll send correspondence to your foundation's address of record.

Public Disclosure

Within a few months, your return becomes publicly available. The IRS posts it to their Tax Exempt Organization Search (TEOS) database at IRS.gov. Anyone can view your foundation's finances, grants, and governance information—this transparency is a cornerstone of the private foundation system.

Three-Year Retention

You must keep your filed Form 990-PF (and all supporting documentation) for at least three years from the filing date. However, best practice is to keep records for at least seven years, as the IRS can audit returns up to six years old in cases of substantial errors.

Public Inspection Requirement

Your foundation must make its three most recent Form 990-PFs available for public inspection upon request. You can charge a reasonable copying fee, but you cannot delay or refuse reasonable requests. Most foundations post their returns on their website to satisfy these requests automatically.

State Follow-Up

Some states may review your return and contact you with questions or requests for additional information. This is routine and doesn't necessarily indicate a problem.

Potential IRS Inquiry

If the IRS has questions or concerns about your return, you may receive a correspondence audit (questions via mail) or, less commonly, a field audit (in-person examination). Most foundations never experience an audit, but keeping detailed records ensures you're prepared if one occurs.

Compliance Monitoring

The IRS uses Form 990-PF data to monitor for prohibited transactions, inadequate distributions, and other compliance issues. Serious violations may trigger automatic penalty assessments via Form 4720 or generate notices requesting explanation.

IRS Annual Filing Requirements

FAQs

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

Form 990 is filed by most tax-exempt organizations, including public charities. Form 990-PF is specifically and exclusively for private foundations and certain trusts treated as private foundations. The key difference is control and funding: private foundations are typically controlled by a family or small group and funded by a limited number of sources, while public charities have broader public support. If you're a private foundation, you must file 990-PF—there's no option to file the regular 990.

Q2: What are the penalties for filing late in 2012?

For 2012, the penalty for late filing was $20 per day the return was late (up to a maximum of $10,000 or 5% of gross receipts, whichever is less). However, if your foundation had gross receipts over $1 million, you were considered a "large organization" and faced a stiffer penalty of $100 per day (maximum $50,000 or 5% of gross receipts). Additionally, if you didn't pay tax owed on time, you faced a separate penalty of 0.5% per month on the unpaid balance.

Q3: Can I file Form 990-PF on paper or must I e-file?

For 2012, you could file on paper unless your organization filed 250 or more returns of any kind during the calendar year. If you met that threshold, electronic filing was mandatory. Most small to mid-sized foundations filed paper returns by mailing them to the IRS center in Ogden, Utah.

Q4: What if my foundation had no activity during 2012?

You still must file! Even if your foundation made no grants, earned no income, and had no changes to assets, Form 990-PF is required. Complete all parts with zeros, "N/A," or "None" as appropriate. Remember the three-year rule: failing to file for three consecutive years results in automatic loss of tax-exempt status.

Q5: Do I have to list all my contributors publicly?

Not exactly. Schedule B (listing contributors) must be filed with the IRS, but it's generally not subject to public disclosure. However, substantial contributors—those who gave more than 2% of total contributions received or $5,000, whichever is greater—may be listed in Part VII-A of the public form. The IRS uses Schedule B for compliance monitoring while protecting donor privacy in most cases.

Q6: How much does my foundation have to give away each year?

Generally, private non-operating foundations must distribute approximately 5% of the average fair market value of their investment assets annually for charitable purposes. This is called the "minimum distribution requirement." The exact calculation appears in Parts X and XI of Form 990-PF. Grants, reasonable administrative expenses, and program-related investments can count toward this requirement. Failure to meet it triggers penalty taxes.

Q7: What if I discover an error after filing?

File an amended return as soon as possible. Check the "Amended Return" box, complete the entire form with corrected information, attach an explanation of the changes, and mail it to the same IRS address. If the error resulted in underpayment of tax, you'll owe the additional tax plus interest from the original due date. If you overpaid, you can claim a refund by filing the amended return within three years of the original filing or two years from paying the tax, whichever is later.

IRS Instructions 990-PF 2012 | IRS Common Errors

For More Information

Download 2012 Form 990-PF and instructions: IRS.gov/pub/irs-prior
Tax-exempt organization resources: IRS.gov/charities
Phone help: 1-877-829-5500 (Monday-Friday)
This summary is for informational purposes only and does not constitute legal or tax advice. Consult a qualified tax professional for guidance specific to your foundation's situation.

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