Excessive compensation — Can you satisfy the rebuttable presumption?
Abstract: Exempt organizations across the country should be sensitive to the issue of excessive executive compensation. The IRS can impose excise taxes on the executive, and the organization will suffer reputational damage. Fortunately, a nonprofit can limit the potential liability of its members by taking advantage of a three-step procedure known as the rebuttable presumption. This article explains the three requirements for compensation arrangements to have a rebuttable presumption of reasonableness. A sidebar lists some of the issues that can create a conflict of interest for someone approving a compensation arrangement.