Fringe Benefits Top List of IRS Intermediate Sanctions for Exempts

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Fringe benefits are probably the most common area where the Internal Revenue Service is imposing intermediate sanctions against exempt organizations under tax code Section 4958, an IRS official says. Charity executives sometimes receive fringe benefits as part of their compensation package, but the organizations are failing to include the value of those benefits in their calculation of total compensation paid to executives, says Peter Lorenzetti, tax-exempt area manager for the Northeast. IRS is conducting the National Research Program, a three-year study focusing on uncollected taxes in the area of employment, for both taxable and nontaxable entities. If an organization does not treat fringe benefits to its chief executives as income, it will be considered an automatic excess benefit, he says.

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