Intermediate Sanctions allow the Internal Revenue Service (IRS) to assess excise taxes on excess benefit transactions that occur between a disqualified person and a 501(c)(3) or 501(c)(4) tax-exempt organization.
What is an excess benefit transaction?
An excess benefit transaction occurs when the value of the benefit to the disqualified person exceeds the fair market value of the services rendered. Examples of potential excess benefit transactions include, but are not limited to:
o Unreasonable compensation,
o Personal use of church property,
o Expense reimbursements that are not part of an accountable plan,
o Sale of an organization’s assets for less than fair market value, and
o Payment of personal expenses.
Do you need help in identifying taxable fringe benefits or excess benefit transactions? Contact us.
