At year’s end, we often reflect on lessons learned and experiences shared, and also on those people and the things for which we are grateful. In a break from our usual fare, what follows is a more personal reflection from our law firm’s attorney Jonathan Hwang on some aspects of the unique nature and culture of Wagenmaker & Oberly.
Are tax-exempt organizations required to disclose their major donors on their IRS Form 990 Schedule B’s, or not? In July 2018, the IRS issued Revenue Procedure 2018-38, answering “no” for Section 501(c)(4) and other tax-exempt organizations, but leaving the disclosure requirement intact for Section 501(c)(3) organizations and Section 527 political action committees (known as PACs).
How much is too much compensation for nonprofit executives? Many nonprofits face the opposite challenge, with below-market pay provided to key leaders who are willing to make financial sacrifices. A new tax law nonetheless aims to curb abuses of Section 501(c)(3) organizations offering either very high salaries or too generous severance pay upon departure. The penalty? A 21% excise tax on the amount deemed to be excessive compensation. Nonprofits thus may continue with such compensation largesse, but only if they pay Uncle Sam too.