Exception from filing Form 4626 for tax year 2023
The U.S. Treasury Department and IRS today granted tax-exempt organizations an exception from filing Form 4626, Alternative Minimum Tax – Corporations, for tax year 2023.
As explained in the related IRS release—IR-2024-277 (October 23, 2024)—for tax-exempt organizations, the corporate alternative minimum tax (CAMT) applies only to the adjusted financial statement income (AFSI) of any unrelated trades or businesses. Thus, tax-exempt organizations need to maintain Form 4626 in their books and records for purposes of documenting whether they are an applicable corporation for purposes of CAMT 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 Notice 2023-7 and in the proposed regulations published on September 13, 2024, the Treasury Department and 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 December 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.
For more information, contact your usual KPMG tax professional or one of the following Washington National Tax professionals:
Ruth Madrigal | ruthmadrigal@kpmg.com
Preston Quesenberry | pquesenberry@kpmg.com