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Nonprofit Law/501c-3 related party


I own a management company that has a contract to manage the day to day operations of an ice rink that is owned by a 501c-3. I do not sit on the board of directors. As part of my contract, all employees work for the management company, not the 501c-3. I am reimbursed for payroll on a bi-monthly basis. My son is an employee of the management company, and I outsource my HR and payroll to a company owned by my sister. The 3rd party auditor who is currently conducting the yearly audit requested that I fill out a SAS 99, and wants to disclose in the audit that my son works for the management company and my sister roll with my company as well. I have no problem disclosing this, however, as a matter of law, am I required too?

No. The is no law that requires your company to comply with that request of the 501 organization.  The proper way that nonprofits make such reporting to the as required is for them to have a clause in the management agreement requiring it.

Harvest Mechanic
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Nonprofit Law

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Harvey Mechanic


DO NOT GIVE ME INFORMATION THAT YOU WANT KEPT CONFIDENTIAL. I am an attorney and I volunteer time to answer general questions about U.S. Federal income tax issues of nonprofit 501(c)(3) public charities only. Those questions could be about establishing and maintaining legal requirements for such non-profit organizations in the United States, including Internal Revenue service filings and requirements. I will not be working on this free forum to answer questions about Nonprofit's possible unrelated or for-profit businesses or how to fill out forms. This forum is only for general questions about federal tax law, not as the law applies to your specific situation. If you do not make your question public then I will not be spending much of my donated time on answers that would not benefit the public. If you have other questions, please contact me at I will reply from my email. In any case, do not reveal confidential information to me until after I have contracted with you to provide personal legal services. My responses on this forum are intended to be general statements of law, should not be relied upon as legal advice, and do not create an attorney/client relationship. For me to consider your individual situation and how the law applies, I would need to gather extensive information about the situation. To search my previous answers you can do a Google search by "" without the quotes and then add your search terms before hitting enter.


I have been practicing law and especially the law of nonprofit organizations since 1990 when I was admitted to the New York Bar and I have maintained my status with the Bar since that time.


B.S. Columbia University in New York City, 1970

J.D. (Law Degree) Brooklyn Law School, 1990 -- Cum Laude.

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