Advisory Committee on Tax Exempt and Government Entities (ACT ...

The Appropriate Role Of The Internal Revenue Service With Respect To Tax-Exempt Organization Good Governance Issuesleadership of the organizations.” 290 In addition, Everson discussed a forthcoming plainlanguagebrochure on good governance practices:• To help tax-exempt organizations, we are developing a plainlanguagebrochure to set forth certain practices we believe willbe useful in promoting good governance, ethics, and internaloversight. This brochure will be available this fall.• The publication will explore practices that are not necessarilyrequired by law but that may elevate the standards, conduct,and workings of exempt organizations. Although the IRS doesnot have authority to require organizations to follow specificpractices, organizations without effective governance controlsare more likely to have compliance problems. The publicationis intended to provide exempt organizations, and in particularpublic charities, with a list of practices that will help guardagainst abuses involving, among other things, inappropriatefinancial transactions and operations. Among the topics weexpect to cover are standards of integrity; the role, selectionand duties of the governing board; conflict of interest policies;record-keeping; checks and balances that help prevent abuses;and fundraising practices, to name a few. 291June 19, 1992, Speech by Jay RotzIn a speech to the Tax Exempt Organizations <strong>Committee</strong> of the American Institute ofCertified Public Accountants on June 19, 1992, four years before the passage of section4958 intermediate sanctions, Jay Rotz, Executive Assistant, Exempt OrganizationsTechnical Division, IRS, stated that the IRS is concerned with compensation levels intax-exempt organizations. 292 He explained: “The problem with nonprofits is that thereare no shareholders to serve as a brake; there’s no one there unless there is aresponsible board of directors or, as a last resort, the IRS.” 293 In addition, Rotz stressedthat it is doubtful the IRS would challenge compensation set at arm’s length by anindependent board that weighed the skills and duties of the executive.290Id. at 4.291Id. at 6-7. The brochure he refers to may ultimately have been released as “Good Governance Practices for 501(c)(3)” in 2007.292Paul Streckfus, Rotz Addresses AICPA on Current EO Tax Issues, Tax Notes Today, 92 TNT 129-8 (June 23, 1992).293Id.ADVISORY COMMITTEE ON TAX EXEMPT AND GOVERNMENT ENTITIES (ACT) June 11, 2008 112