Taxes
IRS Says Tax-Exempt Orgs Don’t Need to File New Corporate AMT Form 4626
Tax-exempt organizations should maintain Form 4626 in their books and records for purposes of documenting whether they are an applicable corporation for purposes of the alternative minimum tax and, if so, for determining any corporate alternative minimum tax liability.
Oct. 23, 2024
The Department of the Treasury and the Internal Revenue Service announced on Oct. 22 that tax-exempt organizations have been granted a filing exception when it comes to Form 4626, Alternative Minimum Tax – Corporations PDF, for tax year 2023.
The Inflation Reduction Act of 2022 created an alternative minimum tax for corporations – a 15% minimum tax on the adjusted financial statement income (AFSI) of corporations that have average annual AFSI greater than $1 billion, beginning in 2023. For tax-exempt organizations, the corporate alternative minimum tax applies only to the AFSI of any unrelated trades or businesses.
Tax-exempt organizations should maintain Form 4626 in their books and records for purposes of documenting whether they are an applicable corporation for purposes of the alternative minimum tax and, if so, for determining any corporate alternative minimum tax liability. In addition, any tax-exempt organization that is liable for the alternative minimum tax must pay the tax and report the amount on Part II, Line 5 of Form 990-T, Exempt Organization Business Income Tax Return.
In Notice 2023-7 and in the proposed regulations published on Sept. 13, 2024, Treasury and the IRS provided a simplified method for determining whether a corporation is an applicable corporation, but this method did not take into account the specific AFSI adjustment provided by the statute for tax-exempt organizations. Comments on the proposed regulations are due Dec. 12, 2024.
To give taxpayers and the IRS time to consider the comments on the proposed regulations, including comments relating to reporting for tax-exempt entities and on the application of the simplified method for tax-exempt entities, tax-exempt organizations are exempted from the obligation to file Form 4626 for tax year 2023.