The US Department of Treasury and the Internal Revenue Service (IRS), in a release – IR-2024-277, granted a filing exception for tax-exempt organisations on 23 October 2024; they do not have to file Form 4626, Alternative Minimum Tax – Corporations (CAMT) for the 2023  tax year.

The Inflation Reduction Act of 2022 created an alternative minimum tax for corporations – a 15% minimum tax on the adjusted financial statement income (AFSI) of corporations that have an average annual AFSI greater than USD 1 billion, beginning in 2023. For tax-exempt organisations, the corporate alternative minimum tax applies only to the AFSI of any unrelated trades or businesses.

Tax-exempt organisations should maintain Form 4626 in their books and records for purposes of documenting whether they are an applicable corporation for purposes of the alternative minimum tax and, if so, for determining any corporate alternative minimum tax liability. In addition, any tax-exempt organisation that is liable for the alternative minimum tax 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 13 September 2024, Treasury and the 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 organisations. Comments on the proposed regulations are due 12 December 2024.

To give taxpayers and the IRS time to consider 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 organisations are exempt from the obligation to file Form 4626 for the 2023 tax year.