Intermediate Sanctions Regulations Checklist

The intermediate sanctions rules prohibit tax-exempt organizations from providing more than fair market value economic benefits to their “disqualified persons.” The intermediate sanctions rules apply to all section 501(c)(3) and section 501(c)(4) organizations except for private foundations, which are subject to special, private foundation “self-dealing” rules. All grantmakers that are public charities, a category that includes community foundations and public foundations, are subject to the intermediate sanctions rules. To prevent violations of the intermediate sanctions rules, four steps should be taken.