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 excise tax is imposed on the exempt organization and on disqualified persons.
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 result in both a first-level tax and a second-level tax. The first-level tax is imposed on the excess benefit transaction, while the second-level tax is imposed on the organization's managers who were responsible for the transaction. Option A is incorrect because intermediate sanctions are imposed by the IRS, not self-assessed by taxpayers. Option B is incorrect because the excise tax is only imposed on the exempt organization, not on disqualified persons. Option D is incorrect because corporate tax rates do not apply to intermediate sanctions.

Which of the Following Statements Regarding Intermediate Sanctions Is Correct