Prohibition on Receipt of Compensation from Private Foundations (Taxes on Self-Dealing)
February 7, 2002
MEMORANDUM
| TO: | Deputy Ethics Counselors Ethics Contacts |
| FROM: | Edgar M. Swindell Associate General Counsel for Ethics Designated Agency Ethics Official |
| SUBJECT: | Prohibition on Receipt of Compensation from Private Foundations (Taxes on Self-Dealing) |
This memorandum transmits a revised installment in our series of summaries dealing with specific ethics topics. The attached summary describes an obscure tax provision that creates several unusual prohibitions relating to receipt of compensation from private foundations. These rules apply to non-career employees at any pay level (Schedule C, Non-Career SES, PA, and PAS) and to career employees compensated at or above the lowest rate of basic pay for the SES, currently $113,000, as well as to their personal or executive assistants or secretaries irrespective of grade or salary level. A minor statutory amendment changed the monetary threshold for career employees from 120% of the rate of basic pay for GS 15, Step 1, to the lowest rate of basic pay for SES Level 1.
As indicated in the following examples, the prohibitions can arise in several contexts: (1) a Senior Executive Service employee cannot be compensated for an outside activity with the Ford Foundation; (2) a General Schedule employee in metropolitan Washington-Baltimore compensated at Grade 15, Step 8, (currently $113,543) cannot accept an award from the Robert Wood Johnson Foundation in a recognition category open only to Government employees; and (3) a Senate confirmed Presidential appointee cannot enter into an employment agreement with the Pew Charitable Trust if the appointee will remain on the federal payroll for more than 90 days before leaving to go to the new job.
The attached summary describes the rules in some detail and directs the reader to the Internal Revenue Service web site [https://www.irs.gov/] for more information. If you have any questions, please call the Ethics Division at (202) 690-7258.
Attachment
cc: Deputy General Counsels, Associate General Counsels, Chief Counsels, Regions I-X
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For additional information, contact your IC's Deputy Ethics Counselor or your Ethics Coordinator.
Updated: 2/19/13