IRS Advisory Committee Recommends Online Guide for Setting Executive CompensationOn July 1, 2010 by Schnader
It is well known that Congress, the IRS and state attorneys general have become increasingly focused in recent years on the level of compensation nonprofit organizations provide to their executives. One has only to look at the newly revised IRS Form 990 to see that the reasonableness of executive compensation is under scrutiny in the nonprofit sector. But there are other signs as well. Some examples include: increased penalties for intermediate sanctions; compliance projects, audits and questionnaires designed to gather data on compensation; and compensation initiatives developed by state attorneys general to encourage boards of directors to be more deliberate about setting compensation.
In an effort to assist, ACT recommended, in its latest Report of Recommendations, that the IRS provide the sector with some guidance for understanding the proper procedures for setting reasonable compensation.
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