If a tax-exempt organization is found by the IRS to have paid excessive benefits,the organization must pay a tax penalty of 25% of the excess benefit and the employee must pay a 10% penalty,but the employee is entitled to keep the benefits.

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If a tax-exempt organization is found to have paid excessive benefits, the organization must be corrected the excess benefit. The tax penalty for the organization could be up to 200% of the excess benefit. The employee who received the excessive benefit may also be subject to a penalty of 25% of the excess benefit if they knowingly participated in the transaction. The employee may also be required to return the excessive benefit to the organization.

If a Tax-Exempt Organization Is Found by the IRS to Have