Washington (Aug. 11, 2004) -- The Internal Revenue Service has started a new enforcement effort to identify and halt abuses by tax-exempt organizations that pay excessive compensation and benefits to their officers and other insiders.


As part of the Tax Exempt Compensation Enforcement Project, the agency will contact nearly 2,000 charities and foundations to seek more information about their compensation practices and procedures. The IRS said that the enforcement project will consist of examinations as well as other contacts. Because part of the project’s objective is to gather information regarding current practices, the agency noted that contact by the IRS shouldn't necessarily imply improper activity by an organization.


IRS Commissioner Mark W. Everson said that the agency is concerned that some charities and private foundations are abusing their tax-exempt status "by paying exorbitant compensation to their officers and others.”


“Particular organizations that we contact may or may not have problems in the compensation area, but specific aspects of their operations have raised questions that must be answered,” Everson said.


-- WebCPA staff

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