IRS Form 990-PF: Filing, Distributions, and Excise Tax

IRS Form 990-PF is the annual information return that every private foundation in the United States must file, regardless of size or financial activity during the year. It gives the IRS a detailed look at the foundation’s income, expenses, investments, grants, and the people who run it. It also calculates the foundation’s excise tax on investment income, confirms whether it met its mandatory payout, and flags prohibited transactions that carry steep penalties.

Who Has to File

Three categories of organizations file this return every year. Private foundations that are tax-exempt under Section 501(c)(3) file to maintain their standing with the IRS.¹ Taxable private foundations file under Section 6033(d) of the Internal Revenue Code.² Nonexempt charitable trusts treated as private foundations under Section 4947(a)(1) have the same obligation.

A foundation working through a termination under Section 507(b)(1)(B) is still treated as a private foundation for filing purposes and must file for each year of the 60-month termination period, even if it qualifies as a public charity for other purposes during that time.¹ A foundation that has dissolved and distributed its remaining assets still needs to file a final return accounting for its closing financial position.

What the Return Covers

Part I lays out revenue and expenses, distinguishing book income from adjusted net income. Net investment income has its own calculation: interest, dividends, rents, royalties, and payments related to securities loans, minus the expenses of producing that income. Tax-exempt interest on government obligations is excluded.¹ That figure drives the excise tax discussed below.

Part II covers the balance sheet at the beginning and end of the tax year. Assets such as cash, stocks, bonds, and real property must be reported at both book value and fair market value, and capital gains and losses are broken out separately.¹ Those fair market values feed into the minimum investment return calculation that governs how much the foundation must distribute.

Part VII requires the names, addresses, and compensation of all officers, directors, and trustees, along with anyone else exercising similar authority during the year. The foundation must also list its five highest-paid employees and its five highest-paid independent contractors who each received more than $50,000.¹

Part XIV requires a line-by-line list of every grant and contribution paid during the year or approved for future payment, with the recipient’s name, address, and the charitable purpose of each.¹ Those grants, plus reasonable and necessary administrative expenses tied to charitable activities, count as qualifying distributions toward the mandatory payout.³

The 5 Percent Distribution Requirement

Private foundations cannot just sit on their assets. Every year, a foundation must distribute at least 5 percent of the fair market value of its non-charitable-use assets, minus any debt incurred to acquire them.⁴ That figure is the minimum investment return, and the year’s qualifying distributions must at least match it.

Falling short is expensive. An initial excise tax of 30 percent applies to any undistributed income remaining at the start of the second taxable year after it should have gone out. If the shortfall is not corrected by the end of the taxable period, a second-tier tax of 100 percent takes the rest.⁵

Excise Tax on Net Investment Income

Every domestic tax-exempt private foundation owes a flat excise tax of 1.39 percent on net investment income for the year.⁶ The rate applies to all tax years beginning after December 20, 2019.⁷

Self-Dealing and Other Prohibited Transactions

The form is also where a foundation reports and self-assesses excise taxes on transactions the IRS treats as abuses of private foundation status. The penalties escalate sharply if the underlying problem isn’t corrected.

The people at the center of these rules are “disqualified persons.” That category includes substantial contributors (generally, anyone who has given more than $5,000 if that amount exceeds 2 percent of total contributions), foundation managers, owners of more than 20 percent of entities that are substantial contributors, and the family members of all of the above. Corporations, partnerships, and trusts can also qualify if these individuals collectively own more than 35 percent of them.8

Self-Dealing

Almost any financial transaction between a private foundation and a disqualified person is self-dealing, including sales, leases, loans, and unreasonable compensation. The initial tax hits the self-dealer at 10 percent of the amount involved for each year the violation persists, plus 5 percent on any foundation manager who knowingly participated. If the transaction is not unwound during the taxable period, the self-dealer owes an additional 200 percent, and a refusing manager owes 50 percent. Manager liability is capped at $20,000 per act at each tier.⁹

Excess Business Holdings

A private foundation generally cannot own more than 20 percent of a business enterprise’s voting stock, reduced by whatever percentage disqualified persons already own. That limit rises to 35 percent if a third party has effective control. Holdings above the permitted amount trigger an initial tax of 10 percent of their value, and if the foundation does not divest within the taxable period, a second-tier tax of 200 percent applies.¹⁰

Jeopardizing Investments

Investing foundation assets in a way that jeopardizes the foundation’s charitable purpose triggers an initial 10 percent tax on both the foundation and any manager who knowingly participated. If the investment is not removed from jeopardy in time, additional taxes of 25 percent on the foundation and 5 percent on the refusing manager follow, with manager liability capped at $10,000 for the initial tax and $20,000 for the additional tax per investment.¹¹

Taxable Expenditures

Spending on lobbying, political campaigns, grants to non-charities without expenditure responsibility, or certain unapproved grants to individuals all count as taxable expenditures. The initial tax on the foundation is 20 percent of the amount spent, and a knowingly participating manager owes 5 percent up to $10,000. Uncorrected, the foundation owes an additional 100 percent and a refusing manager owes 50 percent up to $20,000.¹²

Filing Deadline and Extensions

Form 990-PF is due on the 15th day of the 5th month after the close of the foundation’s accounting period. For calendar-year foundations, that is May 15.¹³ A foundation that needs more time can file Form 8868 by the original due date for an automatic six-month extension. No explanation is required.¹⁴

Electronic Filing Is Mandatory

All Form 990-PF returns must be filed electronically. The IRS does not accept paper filings, and a foundation that mails in a paper return is treated as if it never filed.¹⁵ Penalty clocks start on the due date regardless of what was mailed. The requirement applies regardless of asset size.¹

Public Inspection

Private foundations must make their annual returns and exemption applications available to the public in three ways: in-person inspection at the foundation’s offices during business hours, copies furnished in response to written or in-person requests, and posting on the internet.¹⁶ Returns must remain available for three years, starting from the due date (including extensions) or the actual filing date, whichever is later.¹⁷

For written requests, the foundation must provide copies within 30 days and may charge a reasonable fee for reproduction and mailing.¹⁶ Once a return is e-filed, it typically shows up in the IRS’s bulk data downloads and third-party databases, so most 990-PFs are effectively public the moment they’re accepted.

Penalties for Late or Incomplete Returns

Late-filing penalties are structured to grow the longer the problem sits. For returns required to be filed in 2026:¹⁸

The standard penalty is $25 per day, capped at $13,000 or 5 percent of gross receipts for the year, whichever is less.
Foundations with gross receipts above $1,309,500 face $130 per day, capped at $65,000.
If the foundation is penalized and a responsible individual fails to comply by a specified date, that person can be charged $10 per day up to $6,500.

Public inspection failures carry their own penalty of $25 per day, up to $13,000 for each failure involving an annual return. There is no cap on the penalty for failing to provide a copy of the exemption application.¹⁸

The worst consequence of not filing is not measured in dollars. A private foundation that fails to file Form 990-PF for three consecutive years automatically loses its tax-exempt status.¹⁹ Reinstatement requires a new application, and the gap in exempt status can create tax liabilities and donor complications that dwarf any filing penalty.

1
Internal Revenue Service. 2025 Instructions for Form 990-PF
2
Office of the Law Revision Counsel. 26 USC 6033 – Returns by Exempt Organizations
3
Internal Revenue Service. Private Foundations: Treatment of Qualifying Distributions IRC 4942(h)
4
Internal Revenue Service. Minimum Investment Return
5
Office of the Law Revision Counsel. 26 US Code 4942 – Taxes on Failure to Distribute Income
6
Office of the Law Revision Counsel. 26 USC 4940 – Excise Tax Based on Investment Income
7
Internal Revenue Service. IRC Section 4946 – Definition of Disqualified Person
9
Office of the Law Revision Counsel. 26 US Code 4941 – Taxes on Self-Dealing
10
Office of the Law Revision Counsel. 26 USC 4943 – Taxes on Excess Business Holdings
11
Internal Revenue Service. Taxes on Jeopardizing Investments
12
Internal Revenue Service. Taxes on Taxable Expenditures – Private Foundations
13
Internal Revenue Service. Annual Exempt Organization Return Due Date
14
Internal Revenue Service. Extension of Time to File Exempt Organization Returns
15
Internal Revenue Service. Failure to Comply With Electronic Filing Requirement
16
Internal Revenue Service. Instructions for Form 990-PF (2025)
17
Internal Revenue Service. Public Disclosure and Availability of Exempt Organization Returns and Applications
18
Internal Revenue Service. Revenue Procedure 2024-40
19
Internal Revenue Service. Automatic Exemption Revocation for Nonfiling: Effect on Private Foundation