Wednesday, December 12, 2007

Did Former IRS Commissioner Violate Private Inurement or Excess Benefit Prohibition?

Recent news reports state that the American Red Cross is conducting a "forensic audit" to "determine whether former IRS Commissioner Mark Everson used "any of the charity’s money was inappropriately as he romanced a married female subordinate who is now reportedly pregnant."  If so, of course, the venerable organization would need to consider whether to report the inappropriate use as an excess benefit transaction.  Technically, even if all he did was take his "main squeeze" to dinner and a hotel once or twice a month using his ARC credit card, that would consititute private inurement and an IRC 4958 excess benefit transaction, it seems to me.  There is no de minimus exception and this high profile story probably reminds nonprofits that they need to review their credit card use policies.  I'd suggest having recipients sign a form annually acknowledging that the card is for official business only.  Why, oh why, do we men do such stupid things?!  For more on ARC's dismissal of Everson -- who should have known better -- see here.

dkj

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