Which of the following statements regarding intermediate sanctions is correct?
A)Intermediate sanctions are self-assessing (i.e. ,calculated and paid by the taxpayer rather than being imposed by the IRS).
B)The tax is imposed on the exempt organization.
C)Both a first-level tax and a second-level tax may apply.
D)The corporate tax rates apply in calculating the amount of the tax liability.
E)None of the above is correct.

Question

Quizplus · Accepted Answer

Intermediate sanctions can potentially result in both a first-level tax (imposed on the person responsible for excess benefit transaction) and a second-level tax (imposed on the organization if the initial tax is not corrected). Option A is incorrect because intermediate sanctions are imposed by the IRS, not self-assessing. Option B is incorrect because the tax is imposed on the person responsible for the excess benefit transaction, not the exempt organization. Option D is incorrect because intermediate sanctions are not subject to corporate tax rates.

Which of the Following Statements Regarding Intermediate Sanctions Is Correct