Exempt Organizations Bulletin (June 2005)
Favorable Settlement in First
to Reach IRS Appeals
This article concerning the
"intermediate sanctions" excise tax applicable to certain exempt organizations is part of the
Shaw Pittman LLP Tax
Page, a World Wide Web demonstration project, no
portion of which is intended and cannot
be construed as legal or tax advice.
on the design or content of this material.
Attorneys at Pillsbury Winthrop Shaw Pittman
LLP recently reached a favorable settlement in the first excess benefit case brought by the Internal Revenue Service under section 4958 of the Code (also known as the "intermediate sanctions") to reach IRS Appeals. The case involved alleged excess compensation,
consulting and medical benefit issues.
The IRS proposed adjustments exceeding $3 million. Partners
William Bonano and
represented the client through the examination process, before the IRS National Office as part of the mandatory technical advice procedure required by the excess benefit provisions, and before EO Appeals.
Ms. Watts and
also frequently counsel nonprofit clients concerning compliance with the section 4958 regulations, including developing contemporaneous documentation to satisfy the regulations' "rebuttable presumption" safe harbor.
This material is not intended to constitute a complete analysis of all
tax considerations. Internal Revenue Service regulations generally
provide that, for the purpose of avoiding United States federal tax
penalties, a taxpayer may rely only on formal written opinions meeting
specific regulatory requirements. This material does not meet those
requirements. Accordingly, this material was not intended or written to
be used, and a taxpayer cannot use it, for the purpose of avoiding
United States federal or other tax penalties or of promoting, marketing
or recommending to another party any tax-related matters.
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