The new Form 990 requires organizations to indicate how they established the compensation paid to certain officers, directors, trustees, key employees and their highest compensated employees. The consequences for allowing these “charity insiders” to benefit improperly from the organization (i.e. private inurement) can carry stiff financial penalties or even revocation of tax-exempt status.
In this timely paper, attorney Karl Emerson explains private inurement, provides the legal perspective on issues such as excessive compensation, intermediate sanctions, and determining “fair and reasonable” compensation. You will also learn how a charity can establish a “rebuttable presumption” that will demonstrate to the IRS that the organization followed appropriate steps in setting compensation.
This is a must-read for anyone interested in understanding the new IRS compensation guidelines.
Karl E. Emerson is an attorney with Montgomery, McCracken, Walker & Rhoads, LLP in Philadelphia and a nationally recognized speaker on nonprofit compliance issues. He is past director of the Pennsylvania Bureau of Charitable Organizations and served as the president and vice president of the National Association of State Charity Officials (NASCO). (Read the Executive Summary.)
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