Check board pay and related-party dealings against the private-inurement and excess-benefit rules
Key facts
- Human involvement
- YellowClose supervision
- How AI is used
- Extract compensation, loans and other benefits to insiders from the minutes and the accounts into a table with the consideration the file records. Do not decide whether a benefit is excess.
- What the lawyer must review
- Section 501(c)(3) requires that no part of net earnings inure to a private shareholder or individual. The IRS exemption page says an excess-benefit transaction with a person who has substantial influence can bring an excise tax on that person and on organisation managers who agree to it. Section 4958 imposes a tax equal to 25 percent of the excess benefit on the disqualified person, and a tax equal to 10 percent of the excess benefit on an organisation manager who knowingly participates, unless the participation is not wilful and is due to reasonable cause. If the excess benefit is not corrected within the taxable period, a further tax equal to 200 percent of the excess benefit is imposed on the disqualified person. An excess-benefit transaction is one in which the economic benefit provided to a disqualified person exceeds the value of the consideration, including services, received. You decide whether the transaction is an excess-benefit transaction and what the board must do.
- Written for / version
- United States versionUS
Who does what
| Role | What they do |
|---|---|
| Assistance | Potential support includes extracting and organising information. Confirm the tool’s capability and permitted scope. |
| Lawyer | Set the scope, supervise the work closely, verify every part relied on, resolve omissions and exceptions, and approve the exact output. |
Checklist
- Confirm the output against the client’s instructions and the complete relevant source material, including omissions or contradictions.
- Resolve exceptions and record the responsible lawyer’s approval of the exact output and intended use.
Forms and precedents for this task
| Form or precedent | Kind | AI use | Summary |
|---|---|---|---|
| Section 501(c)(3) conflict of interest policy | Policy | AI use Yellow | A starting-point conflict of interest policy for an organisation described in section 501(c)(3). |
| Nonprofit board minutes checklist | Checklist | AI use Yellow | Checklist for minutes of a section 501(c)(3) governing body, including the conflict records described in the IRS sample. |
Signed-in accounts can read the full text of each one. All precedents.