Friday, December 02, 2005

IRS Officials Stress Reasonable Compensation in Tax-Exempt Organizations
IRS officials on November 30 emphasized how important it is for the boards of tax-exempt organizations to take steps to ensure the compensation packages they design are reasonable.

At a program in Washington sponsored by the Exempt Organizations Committee of the D.C. Bar Taxation Section, Galina Kolomietz, an attorney in the IRS Office of Chief Counsel, Tax-Exempt/Government Entities (TE/GE) Division, discussed several governance areas boards should focus on...
[Tax Analysts]
You know, that would be areas like not paying $200,000+ of personal credit card charges for your financial officer, for items like the cost of flying his favorite dominatrix into town on a regular basis...
A charity executive used $210,000 meant to cure heart disease to get his own pulse pounding — repeatedly flying a dominatrix halfway across the country to spank him, law-enforcement sources said yesterday.

Abraham Alexander racked up charges on an employer credit card for a slew of personal items, including steamy S&M meet-and-beat sessions with Lady Sage, a world-renowned whip mistress based in Columbus, Ohio, the sources said.

Alexander, 45, is an accounts-payable exec at the not-for-profit Cardiovascular Research Foundation.
"Who watches the watchers?", asked Juvenal. And who watches the accounts paid by the accounts payable executive?

Lady Sage — who goes by her real name, Pam DeBord, outside her dungeon — says on her Web site that she charges $1,000 a day plus expenses to travel to clients. On top of that, clients pay $250 an hour for her spanking services...

The raven-haired 43-year-old poses in leather bondage outfits on her site — but in real life, she is a divorced former hairdresser and a mom of one who recently became a grandmother, her ex-husband said.

"She flies from America to Europe all the time for work and even the Middle East, places like Egypt," claimed the Ohio man, who did not give his name and who said he divorced her after learning that she worked as an S&M mistress behind his back...

One guesses she didn't share the money.
Officials at the Cardiovascular Research Foundation ... described as the world's largest private medical research foundation, said thefts will be covered by insurance... [NY Post]

Then no harm done, except to those of us who pay insurance premiums.

This subject of compensation abuse by tax-exempts is becoming recognized as a serious issue. A lot of people think executives of for-profit companies pay themselves too much -- well, if so they do it while being watched by their shareholders, the IRS, and the SEC in many cases, among others. And if they don't produce on the bottom line they get axed.

Officers of tax exempts aren't watched by anybody -- the IRS, for instance, doesn't waste resources auditing those it doesn't tax -- nobody blames a charity for not making money, and they have a hugely effective political defense against all investigations: "Hey, we're a charity, why are you picking on us?" So how much do you think they pay themselves relative to the work they do?

"Who watches the tax exempts?" More on this in posts to come, maybe.