Knowledge Base

15898: 990 - Excise Taxes

990 Tax Exempt

How have the excise tax changes under the TCJA affected tax exempt organizations?
Starting in 2018, §4960 imposes an excise tax on any organization that pays to any covered employee more than $1 million in remuneration or pays an excess parachute payment during the year. Screen OFF (Officers, Directors, Employees) was updated to automatically calculate the tax and answer corresponding questions on Form 990 and Form 990-PF.

The tax will be calculated if there is either excess executive compensation or parachute payments, and either Highest compensated employee or Former covered employee (Sec.4960 information only) is selected. 

Excise Tax on Investment Income of Colleges and Universities:

§4968 imposes an excise tax on the net investment income of certain private colleges and universities. Use screen SCO (Schedule O) available from the Other Forms tab of the Data Entry Menu, to complete tests found in §4968 to determine if the organization is subject to this excise tax. If the organization has already determined that it is subject to the tax, complete Form 4720, Schedule O information on screen SCO and screen SCOR for any related organization.

Once Form 4720 is eligible for e-file, the IRS requires it to be e-filed. Only the Form 4720 generated for the entity is eligible for e-file. If any additional Forms 4720 are generated (i.e., for members, self-dealers, disqualified persons, donors, donor advisors, or related persons), they must be paper-filed (see 4720 EF Message 0018 for details). 

For more details, see the Tax Cuts and Jobs ActAbout Form 990, About Form 990-PF, or open the F1 field help for a particular data entry field within the tax program.

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