COMPENSATION UPDATE BY LAWRENCE ASSOCIATES

Congress Looks at Tax-Exempt Organizations

Rick Lucash - Lindalee Lawrence — Thu, 17 May 2012 21:38:46 +0000

According to the Council on Foundations, “Rep. Charles Boustany Jr. (R-La.), chairman of the House Ways and Means Subcommittee on Oversight, said the subcommittee will hold t series of hearings [Wednesday] to look at the operations of tax-exempt organizations. The Ways and Means Committee’s web site states that “[t]he hearing will focus on certain current issues related to tax-exempt organizations, including the current IRS compliance initiative related to Universities, recently enacted reporting requirements for tax-exempt hospitals, recent efforts by tax-exempt organizations to design and implement good governance standards, and taxpayer involvement in redesigning the Form 990. In addition, the hearing will discuss the history of recent legislative changes to the tax code dealing with tax-exempt organizations and what prompted those changes.”

NY State Governor Executive Order Limits Use of State Funds for Nonprofit Salaries

Rick Lucash - Lindalee Lawrence — Mon, 20 Feb 2012 17:03:58 +0000

Apparently getting a jump on the legislative process, Governor Cuomo issued an Executive Order directing state agencies involved in health and other human services to implement regulations so that “State financial assistance or State-authorized payments shall not be provided for compensation paid or given to any executive by such provider in an amount greater than $199,000 per annum.” The $199,000 limit is subject to future adjustments, and waivers can be requested. Note also that the order does not impose a cap on compensation, only on the use of state funds to pay in excess of the cap, so the strongest impact is likely to be on entities who receive the bulk of their funding from the state.

This blog will follow further developments, since the scope and detailed operation of this rule will depend on the specific language of the regulations enacted by the various state entities subject to the Executive Order. Also, the Order is essentially implementing proposed legislation in the budget submitted by the Governor to the legislature. This in turn raises the possibility that the legislature could make changes when it passes the law requested by the Governor (or even decline to pass the law), which would raise questions about the final rules.

IRS issues EO 2011 Annual Report & 2012 Workplan; Updates for Hospitals, Colleges/Univesities and Foundations

Rick Lucash - Lindalee Lawrence — Fri, 10 Feb 2012 21:11:09 +0000

The IRS Exempt Organizations section has issued its 2011 Annual Report and 2012 Workplan. Of note for our clients are:

1. Hospitals: The Annual Report notes that the Affordable Care Act of 2010 requires the IRS to review the “community benefit activities” of hospitals, but that the reviews are expected to take place without the IRS contacting the hospitals. Of interest is the statement that the EO section will use the information gathered from the reviews for “compliance” purposes.

2. Colleges and Universities: In the 2012 Workplan, the IRS states that the EO is completing work on its review of questionnaire data, and of its examinations of selected colleges and universities, and will issue a final report. The questionnaires were sent to 400 colleges and universities. No firm date is given for the issuance of the report.

3. Private Foundations: Noting that “many private foundations hold substantial assets,” the Workplan states that the EO is examining “a selection of the largest private foundations.”

IRS Institutes 403(b) Compliance Project for Higher Education

Rick Lucash - Lindalee Lawrence — Thu, 23 Jun 2011 15:22:43 +0000

The IRS has announced a 403(b) compliance project for institutions of higher education, checking on whether the plans the Universal Availability non-discrimination plans. As described in the IRS notice, the purpose of the project is to identify noncompliant plans and assist the institutions in bringng their plans into compliance. The full IRS notice is here.

IRS Issues Ruling and Guidance on Terminating 403(b) Tax-Sheltered Annuities

Rick Lucash - Lindalee Lawrence — Sun, 17 Apr 2011 13:19:11 +0000

See Revenue Ruling 2011-7 and the Employee Plans News article.

Mass AG Seeks Control over Nonprofit Directors’ Compensation

Rick Lucash - Lindalee Lawrence — Thu, 14 Apr 2011 22:15:14 +0000

In a press release today, Martha Coakley, the Massachusetts attorney general, announced the issuance of a report rejecting the justification for directors’ compensation offered by the state’s four major not for profit health insurers. Of greater significance for the nonprofit world, the AG’s office announced it will seek legislation requiring its pre-approval of compensation for the directors of any public charity, coupled with the power to rescind the approval if the office later determines it is more than “reasonably necessary.”

NH to Examine CEO Salaries at Non-Profit Hospitals

Rick Lucash - Lindalee Lawrence — Wed, 16 Mar 2011 19:02:09 +0000

The Union Leader reports that the New Hampshire Attorney General is examining CEO compensation for the state’s 24 non-profit hospitals. See the article here.

IRS Expands Scope of Nonprofit Examination to Associations

Rick Lucash - Lindalee Lawrence — Tue, 01 Feb 2011 19:48:15 +0000

In its FY 2011 Annual Report and Workplan, the IRS states “In recent years, our examination program has concentrated on section 501(c)(3) organizations. Beginning in FY 2011, we are increasing our focus on section 501(c)(4), (5) and (6) organizations. With the additional information available on the new Form 990, we will look at issues including political activity, inurement and the extent of compliance with the requirements for tax exemption by organizations that self-identified themselves as a section 501(c)(4), (5) or (6) organization.”

Senator Questions Tax and Form 990 Exemptions of Religious Organizations

Rick Lucash - Lindalee Lawrence — Mon, 31 Jan 2011 21:51:26 +0000

The Economist reports that Senator Charles Grassley (R-Iowa) is calling for a reconsideration of religious organizations’ long-standing exemption from taxes and Form 990 filing requirements. According to the article Grassley is seeking to negotiate greater “transparency” instead of pressing to end the exemptions, which he states are not required by the Constitution.

Trends Predicted for Hospital CEO Compensation

Rick Lucash - Lindalee Lawrence — Tue, 28 Dec 2010 15:59:52 +0000

Here is an interesting post at Becker Hospital Review quoting Kathy Nolan of the consulting firm B.E. Smith on 5 trends in hospital CEO compensation for the coming year.