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Tax-exempt organizations granted exception from filing new Form 4626
October 2024
In brief
What happened?
The Treasury Department and the IRS on October 23 issued IR-2024-277 exempting tax-exempt organizations from the obligation to file Form 4626, Alternative Minimum Tax-Corporations, for tax year 2023.
Why is it relevant?
The filing exemption provides the IRS and tax-exempt organizations time to consider the comments on the proposed corporate alternative minimum tax (CAMT) regulations, including comments relating to reporting for tax-exempt entities and on the application of the simplified method for tax-exempt entities.
Action to consider
Tax-exempt organizations should maintain Form 4626 in their books and records for purposes of documenting whether they are an applicable corporation for CAMT purposes and, if so, for determining any CAMT liability. In addition, any tax-exempt organization that is liable for CAMT must pay the tax and report the amount on Part II, Line 5 of Form 990-T, Exempt Organization Business Income Tax Return.
In detail
The Inflation Reduction Act of 2022 created CAMT – 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, CAMT applies only to the AFSI of any unrelated trades or businesses.
Treasury and the IRS provided in Notice 2023-7 and in the proposed CAMT regulations 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 December 12, 2024.
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