IRS seeks comment on its investigation of executive salaries

The Internal revenue Service released in March its Report on Exempt Organizations Executive Compensation, which details reporting errors in annual returns and recommends additional education of charitable organizations. Critical comments on the report were released by Senate Finance Committee Chairman Max Baucus (D-Mont.) and Ranking Member Charles Grassley (R-Iowa).

The IRS sent compliance check letters to 1,223 organizations, a sampling of nonprofits that filed Forms 990 and 990-PF that were missing information in certain categories. It followed up with 782 examinations, 179 of which resulted from responses to the compliance checks.

The initiative looked at salaries, benefits, excess benefit transactions and self-dealing by private foundations.  The program resulted in excise tax assessments amounting to more than $21 million against disqualified persons or managers.

According to GuideStar.org, which maintains a database of nonprofit financial information, the average CEO salary in the nonprofit sector is $118,252 a year.

In other IRS news:

• In preparation for the May 15 filing deadline for the Form 990, the IRS has released a new Q&A document to supplement the 2006 instructions.
• Other resources include an IRS online training for the Form 990 and the Urban Institute's National Center for Charitable Statistics' "efile Form 990 Online" instructions for user-friendly online filing.
• The first version of the new Form 990 is expected to be released for comment in June.