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In our May article we explained what the excise tax is; now we tell you how to pay it!  The excise tax applies to the net investment income (NII) of most private foundations, which must be reported on Form 990-PF and paid annually at the time for filing that return or in quarterly estimated tax payments if the total tax for the year is $500 or more.

Private Foundations are responsible for paying an excise tax on their net investment income each year. There are a few different ways to pay the tax due. If the tax due is under $500 you can pay with the Form 990-PF. Be sure to write “2016 Form 990-PF” and the foundation’s name, address, and EIN on its check or money order.

Private Foundations with tax payments over $500 must make quarterly estimated tax payments. These payments should be made using the Electronic Federal Tax Payment System (EFTPS).  Taxpayers can make deposits online at or by calling EFTPS Customer Service at 1-800-555-3453.  For deposits made by EFTPS to be on time, the organization must initiate the transaction during business hours at least 1 business day before the date the deposit is due.

Alternatively, Private Foundations can also use ACH Credit or Same-Day Fedwire methods. Please check with the appropriate financial institution for the deadline to ensure timely transmission of funds.

Please keep in mind that these payment methods must be used when paying the quarterly estimated tax payments as well.

If you need help setting up a plan regarding your net investment tax (excise tax) and or paying your tax, please  contact your L&B professional for more information.

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