- 61 - exempt entity, the sale constitutes inurement and revocation may be appropriate. Anclote Psychiatric Ctr., Inc. v. Commissioner, T.C. Memo. 1998-273. With the enactment of section 4958, however, the issue whether the tax-exempt status of the Sta-Home tax-exempt entities should be revoked must now be considered in the context of the “intermediate sanction” provisions. As noted above, the intermediate sanction regime was enacted in order to provide a less drastic deterrent to the misuse of a charity than revocation of that charity’s exempt status. The legislative history explains that “the intermediate sanctions for ‘excess benefit transactions’ may be imposed by the IRS in lieu of (or in addition to) revocation of an organization’s tax-exempt status.” H. Rept. 104-506, supra at 59, 1996-3 C.B. at 107. A footnote to this statement explains: “In general, the intermediate sanctions are the sole sanction imposed in those cases in which the excess benefit does not rise to a level where it calls into question whether, on the whole, the organization functions as a charitable or other tax-exempt organization”. Id. n.15, 1996-3 C.B. at 107. Although the imposition of section 4958 excise taxes as a result of an excess benefit transaction does not preclude revocation of the organization’s tax-exempt status, the legislative history indicates that both a revocation and the imposition of intermediate sanctions will be an unusual case.Page: Previous 51 52 53 54 55 56 57 58 59 60 61 62 63 64 65 66 67 68 69 70 Next
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