Intermediate Sanctions in United States

Definition of Intermediate Sanctions (in Charity Law)

A concept of Intermediate Sanctions in the context of charitable ogranizations applicable in the United States is provided here: The name given to Section 4958 of the Internal Revenue Code that allows the IRS to impose penalties on the persons (individuals or entities) who benefit from or approve an excess benefit transaction, rather than penalizing the organization. Prior to the passage of this law in 1996, the IRS’s only penalty for such transactions was to revoke the tax-exempt status of the organization, thus these “intermediate sanctions” offer penalties that stop short of this severe sanction on the organization. Intermediate sanctions rules apply to all 501(c) (3) organizations (except private foundations) and to organizations exempt from taxes under section 501(c)(4) of the Internal Revenue Code. See also Excess Benefit Transactions; Rebuttable Presumption.

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See Also

• Charity
• Foundation
• NGOs