April 6, 2009

IRS scrutinizes non-profits’ pay practices

An Internal Revenue Service official has put U.S. non-profits on notice -- the IRS will be looking at their executive compensation practices.

The caution came at a meeting in Washington of lawyers representing non-profit organizations, The Wall Street Journal reported Monday. IRS Exempt Organizations Division Director Lori Lerner told the attorneys the stepped-up scrutiny -- at a time when the issue of executive compensation in the private sector is coming in for increasing criticism -- means non-profit officials need to be able to justify their compensation levels.

If you're not looking, we're looking, she said,

Speaking Monday at a conference at Georgetown University Law Center, Lerner said an IRS report on compensation at 489 non-profit hospitals found that the average pay for the top official at such institutions was $490,000 a year. She said at 20 hospitals with higher pay scales, the average top salary was $1.4 million.

The IRS did not name the hospitals, the Journal said.