Tax-exempt groups don’t need to file corporate AMT form for 2023

The Treasury Department and the Internal Revenue Service granted a filing exception Wednesday for tax-exempt organizations, saying they don’t have to file Form 4626, Alternative Minimum Tax – Corporations, for tax year 2023.

The Inflation Reduction Act of 2022 created an alternative 15% minimum tax for corporations on the adjusted financial statement income of corporations, but it was aimed at the largest ones with an average annual AFSI over $1 billion, starting in 2023. However, it was feared that the new rules could ensnare some smaller companies as well, at least as far as tracking their income. The IRS and the Treasury proposed guidance last month on the CAMT. For tax-exempt organizations, the corporate AMT applies only to the AFSI of any unrelated trades or businesses.  

The Treasury and the IRS said Wednesday that 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 AMT and, if it does, for determining any corporate AMT liability. In addition, any tax-exempt organization that’s liable for the AMT needs to 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 issued on Sept. 13, 2024, the Treasury and the IRS offered a simplified method for determining whether a corporation is an applicable corporation, but this method didn’t 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 enough time to consider the comments they’ve been receiving 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 have been exempted from the obligation to file Form 4626 for tax year 2023.