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The IRS is Watching YOU – Part II: Exempt Organizations Executive Compensation Compliance Project Report
Audio CD & MP3
Recorded March 22, 2007

Faculty: Dan Mulholland, Henry Casale & Monica Hanslovan

It's OK. You are not paranoid. The IRS IS watching you — and several thousand other nonprofit, tax-exempt hospitals and health systems. There have been two important developments in the past few weeks that surely augur closer scrutiny of tax-exempt health care organizations in the months and years to come.

In February 2007, the IRS issued what it called a "preliminary draft" of proposed "guidelines" outlining Good Governance Practices for 501(c)(3) organizations. Then, on March 1, the Exempt Organizations Office of the IRS issued a report on its "Exempt Organizations Executive Compensation Compliance Project." Both of these documents signal that the IRS will be much more vigilant in reviewing and, where necessary, challenging governance and executive compensation practices in the health care field.

To help make sense of all this and to tell you what you should be doing now to get ready for the brave new world of exempt organization compliance and enforcement, HortySpringer presents two audio CDs.

  • What was this project and how was it conducted?
  • Summary of findings
  • The good news: most organizations were found to have followed the "rebuttable presumption" test in setting executive compensation
  • The bad news: 30% of the organizations reviewed were found to have errors and had to amend their 990 returns
  • The ugly news: 40 organization managers and "disqualified persons" were found to have engaged in excess benefit transactions and over $21,000,000 in excise taxes were assessed
  • Compensation practices that were questioned:
    • Excessive salary and incentive compensation
    • Payments for vacation homes, personal legal fees, or personal automobiles
    • Payments for personal meals and gifts that were not reported as compensation
    • Loans to directors and officers
  • How should you restructure your compensation policies?

Please be sure to also order Part I of this series.



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