Section 501(c)(4) of the Internal Revenue Code ("IRC") exempts from the federal income tax certain nonprofit corporations that are operated exclusively for the promotion of social welfare (commonly referred to as "Social Welfare Organizations") and certain local employee organizations (the characteristics of local employee organizations are beyond the scope of this blog). Generally, Social Welfare Organizations are organizations that promote the common good and general welfare of the community as a whole.
An organization that primarily benefits a private group typically ...
To minimize the risk of engaging in an excess benefit transaction related to compensation paid in connection with an organization exempt from income tax under Section 501(c)(3) of the Internal Revenue Code of 1986, as amended (an "Exempt Organization"), the compensation should be (1) approved by a committee of the board of directors composed of persons who have no conflict of interest with respect to the disqualified person; (2) determined and based upon specific data that establishes that the compensation is reasonable; and (3) documented in the committee's minutes. If these ...
Many of us have both the privilege and the responsibility of serving as a board member or as a trustee of a charitable organization. Many of these charitable groups are organizations exempt from income tax as organizations described in Section 501(c)(3) of the Internal Revenue Code of 1986, as amended, (an "Exempt Organization"). Because these Exempt Organizations are exempt from tax and receive other income tax benefits, they are generally held to a higher standard of care and are subject to strict compliance rules in certain areas.
One example of this higher standard of care are the ...