Proposed Regulations for Intermediate Sanctions Rules

On July 30, 1998, some two years after the enactment of Section 4958, the Internal Revenue Service issued proposed regulations under the “intermediate sanctions” rules that govern transactions between Section 501(c)(3) and (4) organizations and persons “in a position to exercise substantial influence” over the affairs of such organizations. The proposed regulations were nearly as long in the making as the statute itself, and they reflect a significant effort on the part of the IRS to provide more detailed guidance about the application of a statute that is hardly a model of clarity. Writing these proposed regulations was daunting, however. Many questions remain, and the IRS has identified and invited comments about some of these open issues.

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