Form St 04-20 - Recommendation For Disposition Page 7

ADVERTISEMENT

of $14,201. Three other officers, ABC’s President, Vice-President, and Treasurer, with
each officer spending 1-2 hours/week “devoted to [their] position” earned zero in
compensation from ABC. However, each of the three officers was compensated by The
Institute for (the “Institute”) and was listed on ABC’s Form 990 for 2002 as earning
“compensation from related organizations.”
ABC is controlled by the Institute and ABC’s bylaws state that the applicant shall
have one member with full voting rights, which shall be the Institute. Tr. pp. 11, 15, 57;
Applicant’s Ex. No. 2 and 7. In 2002, the Institute paid the President of ABC $532,233
plus “contributions to employee benefit plans” of $52,298. The Institute paid the Vice-
President of ABC $165,871 plus $17,176 in benefits and the Treasurer of ABC was paid
$327,360 plus $35,924 in benefits. The executive director of ABC was paid $84,192 by
ABC plus $9,211 in benefits. Thirty-three employees of ABC were paid over
$50,000/year in 2002. Dept. Ex. No. 2.
Such substantial salaries are not, per se, unreasonable, but they are more
indicative of salaries paid by a profit-making business than of salaries paid by an
“exclusively” charitable organization. ABC argues that the salaries are “reasonable”
because the Internal Revenue Service imposes an excise tax on 501(c)(3) organizations if
they pay more than “reasonable” salaries. “This compensation … has been submitted to
the IRS, and the IRS has not imposed an excise tax.” “… [T]he excise tax has not been
imposed, and therefore, it’s reasonable compensation.” Tr. pp. 101-102. ABC’s argument
is insufficient for me to find that these salaries are “reasonable.”
The Form 990
containing the above salary information was signed on February 9, 2004.
No
documentary evidence was offered by ABC to show that the Internal Revenue Service
7

ADVERTISEMENT

00 votes

Related Articles

Related forms

Related Categories

Parent category: Legal