When the organization makes a payment to a disqualified for services, it must contemporaneously document its intent to treat such payment as consideration for services. The easiest way to do that is by an employment contract with the issuance of a Form W-2, but there can be other ways.
Fail to do that and it is almost certain that you have an excess benefit, even if the disqualified person is truly working there and even if the payment is reasonable. Think of it as “per se”: it just is.
(1) An independent Board approves the payment in advance.
(2) Prior to approval, the Board does comparative analysis and finds the amount reasonable, based on independent data.
(3) All the while the Board must document its decision-making process. It could hire an English or History graduate to write everything down, I suppose.
- A&A Auto Salvage
- Derby Quick Lube
- Westar Energy
- T&S Tree Service
- Gene’s Stump Grinding Service
- an animal clinic
- St John’s Military School (her son’s tuition)
- The exhumation and DNA testing of her father’s remains