Can we pay salaries to our board members? Can we rent a building owned by a board member, or purchase equipment from a board member?
Tax law always permits the payment of reasonable compensation for goods or services actually rendered. If the IRS finds that amounts received by insiders are unreasonably high, however, they can fine both the insider who received the payment, and the board members who approved the payment. In extreme cases, they can take away the organization s tax exempt status. It is a good idea, therefore, to fully document the board s decision-making process when any kind of payment will be made to an insider. Place copies of all relevant information (salary surveys, job description, resumes, salary history, real estate appraisals, rent “comparables”) in the minutes, and never let a board member vote on his or her own compensation, or on the compensation of anyone related to him or her.
Related Questions
- Can we pay salaries to our board members? Can we rent a building owned by a board member, or purchase equipment from a board member?
- Why do members of the Orcas Island Yacht Club and the West Sound Community Club pay less than other individuals to rent the Hall?
- Can I receive my living expense funds before class starts so I can pay rent and purchase books and supplies?
