Intermediate Sanctions

Non-disqualified persons

Under the regulations, there are three groups that are classified as NOT being disqualified persons (legal definition – the “person” could be an entity, not just an individual).

These are:

1. any organization that is tax-exempt as a charitable entity, a Section 501(c)(3) organization. In order to qualify for 501(c)(3) status, an organization must be operated exclusively for religious, charitable, scientific, testing for public safety, literary, or education purposes, or to foster national or international amateur sports competition, or for the prevention of cruelty to children or animals.
2. a tax-exempt social welfare organization, Section 501(c)(4), with respect to any other tax-exempt social welfare organization. To quality for 501(c)(4) an organization must be a nonprofit and must be operated exclusively for the purpose of furthering the common good and general welfare of the people of the community.
3. any full- or part-time employee of the organization who is NOT a substantial contributor to the organization as defined in Section 507(d)(2)(A), taking into account only contributions received during the current year and the 4 preceding years