June 17, 1999 | Read Time: 1 minute
The Internal Revenue Service has sent a chill through corporate grant makers that help company workers cope with such emergencies as floods, fires, and severe illnesses.
The I.R.S. ruled that an emergency-relief program run by a company foundation, which it did not identify, improperly gave the corporation significant benefits, including the ability to “recruit and retain a more stable and productive work force” that would find the program appealing.
The revenue service also said that the foundation was wrong to allow only company workers to qualify for help. “The public interest may very well be better served by providing resources to persons who may be in much more dire conditions than persons who happen to be employed by a particular employer,” the I.R.S. said (Letter Ruling 199914040).
Although the revenue service had approved the same relief program in a 1995 ruling, the government now concluded that the foundation had engaged in “self-dealing” and owed a penalty for making grants and loans that did not carry out a charitable mission.
The position of the Internal Revenue Service was foreshadowed in a chapter of the tax agency’s training handbook for agents published last year (The Chronicle, September 10).
