A powerful new tool for the IRS. (penalty taxes on nonprofit organizations)(includes related article on provisions of law)

Association Management, October, 1996 by Cowperthwaite, George F.; Lang, Andrew S.

A new law that imposes intermediate sanctions on certain activities of nonprofit organization members has been signed into law by Pres. Clinton on Jul. 30, 1996. This new law seeks to prevent financial abuses and is imposed on individuals and not on the nonprofit entity itself. The value of the initial tax is 25% of the excess economic benefit that a member has received. Transactions affected are those undertaken on or before Sep. 14, 1995.

On July 30, 1996, President Clinton signed into law a bill providing for intermediate sanctions on certain transactions involving some nonprofit organizations. The new law applies only to 501(c)(3) and 501(c)(4) organizations. Other nonprofit entities, such as 501(c)(6) associations and 501(c)(5) trade unions, are not subject to...

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