Protect your organization from intense IRS scrutiny

The Association News reported in November how nonprofit organizations should address Internal Revenue Service regulations of so-called "excess benefit transactions:"

"IRS Code Section 4958, also knows as Intermediate Sanctions, states that nonprofit organizations (groups that file as a 501(c)(3) or (4) organization) must pay certain employees at 'fair market value,'" wrote Amber Duncan. "Paying above that may trigger an "excess benefit transaction," subjecting the group to penalties and taxes and jeopardizing their tax-exempt status."

The newsletter article covers compensation to CEOs and COOs, purchasing property at above-market value, the recent step-up in government enforcement efforts, fines imposed by the IRS on nopnprofit executives and boards, compliance audits and reviews, and how nonprofits can protect themselves.

The new IRS Form 990 requests more information about executive compensation, data on past officers and explanations of practices for setting compensation and rewarding executive perks. The article outlines steps nonprofits can take to revise policies and procedures and protect themselves from intense scrutiny and penalties.