The documented story
and The Berkshire Eagle
You read it here first!
"It's like income tax evasion. I am scared
to death that if I were to do anything wrong, I would be the one guy in
a million who got caught, despite the fact that I believe I ought to pay
my share of our taxes. We all know that very few tax cheats get caught."
Alan Chartock - Blog,
June 20, 2005.
Listener $$$ lavished on CEO's personal
Cars, Chauffeur, Intown apartments!
Cuomo book cost WAMC!
How Alan Chartock conspired with WAMC
to avoid paying IRS.
Failure to report CEO's 'fringe benefits'
could leave trustees liable.
By G.M. Heller
Originally published: Thursday, May 11, 2006
Updated: June 25, 2006
For more than two
decades, radio station chief executive Alan
S. Chartock has been the recipient of expensive fringe benefits
provided by his employer, WAMC
Northeast Public Radio, benefits that consistently went unreported
to IRS apparently in an effort by the public broadcaster to shield
its CEO from having to pay income taxes on their value.
The result is that money due IRS on these
taxable perquisites - 'perks' - could leave Mr. Chartock owing Uncle
Sam tens of thousands of dollars in back taxes. Add to that 'late'
fees, penalties, interest, plus 'excess
benefit transaction' excise taxes from 10% to 200% of the benefits
received, and the total owed IRS could go well into six-figures.
of Excise Tax on Disqualified Persons; and Organization Managers
Further, if IRS determines that WAMC's
CEO engaged in so-called 'self-dealing'
transactions, which, according to the Non-profit
Coordinating Committee of New York, includes "the furnishing
of services to a board member without charge or at a price below their
market value," it could result in IRS leveling upon the public
radio executive a five percent excise tax on each act of self-dealing.
Expansion' -- Non-profit Coordinating Committee of New York.
fringe benefits reported to IRS.
Additionally, if any of the above activities
is deemed by the agency to be willful tax evasion, the former SUNY
professor could be subject to criminal prosecution since there is no statute
of limitations on the filing of false or fraudulent returns, or on a willful
attempt to evade tax.
of Limitations For Exempt Organization Returns" -- IRS
As if that were not enough, not only could
WAMC's long-time boss be on the hook to IRS, but if it were determined
by the agency that members of WAMC's board of trustees were complicit over
the years in the failure to report the fair market value of perks given
the radio executive, such finding could leave the station's executive
committee trustees liable, like the CEO, for excess benefit excise
taxes on the value of the unreported perks, and, of greater import, could
expose the public broadcaster to loss of its cherished tax-exempt status.
Tax on Excess Benefit Transactions.
Mr. Chartock's taxable benefits over the
past twenty-plus years include free use of: WAMC-owned vehicles to commute
to and from work and for personal travel; apartments in WAMC-owned buildings;
WAMC-owned assets for personal purposes; and organization employees on
company time to perform personal services and to engage in work intended
for the CEO's personal gain.
All of the above transacted during Mr.
Chartock's tenure as WAMC's board chairman and executive director, and
as president and CEO. During this time, Mr. Chartock was acting with
the blessing of WAMC's board of trustees, in particular its executive
committee. Also, the organization's finances were being audited
regularly by the accounting firm, Urbach,
Kahn & Werlin, Advisors, Inc., the
public broadcaster's long-time CPA.
WAMC trustee, officer, or other insider was furnished with "goods, services,
or facilities," IRS told.
IRS has publications explaining exactly
how fringe benefits are defined, and how, under the tax code, they are
to be treated. The Employer's
Tax Guide to Fringe Benefits defines fringe benefit as: "...
a form of pay for the performance of services" and gives the following
example: "... you provide an employee with a fringe benefit when you
allow the employee to use a business vehicle to commute to and from work."
Compensation - Fringe Benefits Audit Techniques Guide (02-2005) --
Also SEE: Publication
525 -- IRS
Another agency publication, the Taxable
Fringe Benefit Guide, states: "Fringe benefits for employees
are taxable wages unless specifically excluded by a section of the Internal
Revenue Code," and "Taxable fringe benefits are valued at the Fair
This means, for example, that the vehicles
WAMC has provided yearly to Mr. Chartock to commute to and from work are
a form of pay that IRS considers taxable income.
Even a cursory look at WAMC's IRS Form
990, the annual return filed by organizations exempt from income tax, shows
WAMC's failure to report accurately its executive employee fringe benefits.
SEE: WAMC's annual IRS
For example, in the past eight years, WAMC
consistently reported 'None'
or zero dollars next to CEO Chartock's name in the space provided where
expense accounts, allowances, taxable and non-taxable fringe benefits are
to be tallied and reported.
990, Part V - 'List of Officers, Directors and Trustees' - WAMC - Fiscal
Years 2005-1998 - showing that WAMC has regularly reported to IRS that
'None' or 'Zero' fringe benefits were paid to CEO Chartock.
Also SEE: '2005
Instructions for Form 990' - a publication of IRS.
annual Form 990 IRS returns have always been signed by CEO Alan Chartock.
Albany CPA William M. Kahn signed as tax preparer.
Similarly during those years, WAMC consistently
to the question of whether any trustee, officer or other insider was furnished
services, or facilities" (such as would indicate self-dealing,
below-market transactions, or being given special consideration) by the
990, Schedule A, Part III - "Statements About Activities" - WAMC - Fiscal
Years 2005-1998.- showing that WAMC regularly reported to IRS that
no 'goods, services, or facilities' were furnished to
WAMC's trustees, officers, or insiders.
Also SEE: 'Self-Dealing
Expansion' -- a further explanation of Schedule A, Part III - Non-profit
Coordinating Committee of New York.
What all this means is that WAMC regularly
declared to IRS that, other than actual salary, Mr. Chartock received
other forms of taxable compensation (e.g.: no fringe benefits) from
Yet, this appears to be blatantly false,
based not only upon eyewitness accounts of current and former WAMC employees,
but also upon data contained in the organization's own detailed lists of
assets (part of its Form 990).
What's more, the charity's returns going
back to the 1980's show similar evidence that the CEO's taxable perks were
never reported, or at best, drastically under-reported.
Since 1981, the signature page of all of
WAMC's annual Form 990 returns have been signed by Mr. Chartock as WAMC's
CEO. His signed oath states:"Under penalties of perjury,
I declare that I have examined this return, including accompanying schedules
and statements, and to the best of my knowledge and belief, it is true,
correct, and complete."
990, Signature Page - WAMC - Fiscal 2002 - Typical signature page showing
CEO Chartock as the only WAMC executive signing the organization's return,
and swearing to the accuracy of the information reported to IRS. The second
signature is that of CPA William M. Kahn, WAMC's tax preparer,
WAMC, Inc. is registered with IRS as a
501c3, not-for-profit, charitable, educational broadcaster. In WAMC's
latest filing with IRS, Fiscal 2005, the station claimed revenues totaling
more than $6 million. About a third of this amount comes from listeners
making contributions during on-air fund drives; the rest is from corporate
underwriters and grants from private foundations and government.
If IRS were to take away WAMC's exempt status, it would mean contributions
to the broadcaster would no longer qualify as tax deductible.
'Perks' that listener-supported
WAMC gave its CEO, but failed to report to IRS:
Free Cars, Free Chauffeur (Just
why does a public radio exec need a chauffeur!?!)
Alan Chartock began using organization
vehicles for commuting and for personal travel almost as soon as WAMC,
Inc. bought its first 'company' car. This was not long after the
newly-formed non-stock corporation took over in 1981 the 90.3 educational
FM broadcast license originally held by Albany Medical College. WAMC's
freshly-minted board of trustees, with Mr. Chartock at its helm both as
chairman and salaried full-time executive director, began providing the
boss with the first in a long line of new or late-model vehicles.
The benefit annually to Mr. Chartock in
being able to use all-expenses-paid company vehicles, rather than having
to buy and maintain his own, is obvious to the average vehicle owner.
Cash savings are substantial and immediate (especially during times of
Market Value for a company-provided vehicle.
Many WAMC staffers, especially those owning
their own vehicles, have been keenly aware of the boss's sweet deal with
the charity. One former employee, who asks to remain anonymous, remembers
a then-brand-new 1995 Chevrolet Lumina sedan owned by WAMC, but used exclusively
by Mr. Chartock, "Last I remember, Alan had a blue or green Chevy Lumina.
The Geo Metro and the van (other company-owned vehicles in the station's
small fleet) are the employee cars. I don't recall anyone ever
using the Lumina except Alan," says the former staffer. "I
don't recall Alan ever driving any car but the Lumina which I'm sure is
a station car. It was always described to us as one of his perks."
At some point, Mr. Chartock determined
that a driver was necessary to chauffeur him to appointments and destinations,
even to places having nothing to do with organization business. WAMC
employees were enlisted for this purpose, even hired specifically for the
That is how one rough-and-ready 28-year-old
Marine Corps veteran came to work for WAMC. Joshua Cohen had
served a tour of duty with Uncle Sam that ended in 1990. He had gone
on to graduate from SUNY-New Paltz in 1993 with a Bachelor's in Political
Back then, Mr. Cohen (Josh to his friends)
was looking to start a career in Albany. He answered an advertisement
Times-Union in late January 1994 for an entry-level 'gofer'
position at WAMC. "One of the requirements of the job was that I'd have
to drive Alan to New Paltz once a week," Cohen says he was told during
the interview process at the station, "And I was asked if I was okay
with that, with driving him there. I told them there'd be no problem
Mr. Cohen says that when he phoned WAMC
the day after the interview, he was told he got the job. The position worked
out well enough that Cohen served as Chartock's regular driver from February,
1994 through August, 1995, a period of nineteen months. He was thus
able to observe the radio executive at close range in his daily travels,
routines and habits, as well as for hours at a time within the confines
of an automobile.
When Cohen drove, Chartock would usually
sit up front. The times he went in back were to nap. This propensity
to sit up front made it relatively easy for Mr. Cohen to overhear Mr. Chartock's
side of multitudes of cellular telephone conversations.
One of his regular chauffeured stops for
Chartock, according to Cohen, was SUNY's UAlbany campus. As a full-time
professor of political science and communications, Chartock would teach
classes there and meet with students. Cohen says he would deliver
Chartock to campus, a distance less than four miles from WAMC, then drive
back to the station to pursue his day's other tasks. Later, he would
return to pick-up the WAMC boss for the drive back to the studio.
Mr. Chartock got in the habit of commuting
in this fashion around and about Albany. Another regular destination
was a local television station where Mr. Chartock appeared nightly on the
evening newscast to give commentary composed of personal insights into
the realm of politics. At times, Mr. Cohen was told to wait. Thus,
while Mr. Chartock was inside being paid by the TV station, his driver
outside was being paid by WAMC. Another favored stop was The
Legislative Gazette, a student-run weekly newspaper, then located
in the Alfred E. Smith Building about 1.3 miles from WAMC. (Mr. Chartock
is still listed as executive publisher and project director.)
Chauffeured destinations were not limited
to Albany's metro area. There were, of course, the weekly trips to
SUNY's New Paltz campus, about 75 miles south of Albany. "Every
Friday that there was a class, I'd drive him,"
says Mr. Cohen, "It'd
be an hour and a half each way. We'd go every Friday during semesters."
Chartock's instructions were for Cohen to wait while the professor spent
all day either in classes or meeting with students at his on-campus office.
Mr. Cohen was not complaining; he was on
WAMC's clock while the professor during these periods was on SUNY time.
be gone from 8:30 til 4:30. I'd hang out with my friends," says
Cohen, who, since he had recently graduated from New Paltz, still knew
people at the school. At the end of the day, Cohen would pick up
his boss and they would make the long drive back to the station.
One of the various tasks that fell to Mr.
Cohen at WAMC was making sure the organization's small fleet of vehicles
-- a Chevy Lumina mini-van, a red Geo Metro, and the blue Lumina used by
Chartock -- were kept maintained, cleaned, and fueled. "Except
with Alan's car, he always kept after me to keep it really clean and washed
all the time. It was more than I thought really was appropriate,"
Cohen. "..... there were more important things that the station needed
done than taking care of his personal car."
Mr. Cohen never saw Mr. Chartock drive
anything but his WAMC-owned vehicle. Asked what kind of car did Mr. Chartock
actually own, he replies, "I never even saw one. To my knowledge,
he did not have a private car of his own. His wife had a car, but when
I would sometimes have to drive him to Great Barrington, and stopped at
his house, there was never any car in the driveway. His wife works.
I never saw him drive any vehicle besides those owned by WAMC."
The distance from Mr. Chartock's Great
Barrington residence to WAMC's studio runs about 51 miles each way.
This means Mr. Chartock, in addition to his various travels around Albany
and beyond, was putting 500 to 600 miles weekly on the company car just
in commuting to and from work -- and this did not include side trips to
go sushi bar-hopping or food shopping along Route 7 near his home.
As a corporate perk, a vehicle is obviously
one of the more desirable, and according to Mr. Cohen, WAMC paid for everything.
my knowledge, he used the WAMC station-owned vehicle as if it were his
own. I had the station's credit card, and I was told to put the gas
in at the Mobil down the street,"
Indeed, WAMC spared nothing. Mr.
Chartock not only got use of new or late model vehicles over the years,
but the cost of everything ancillary was paid for by the radio station
-- applicable new car sales taxes, titling fees, insurance premiums, annual
inspections, maintenance and gasoline.
While it is not unusual for a US corporation
to allow its executives use of company-owned vehicles for business-related
IRS regulations make very clear that the company is responsible
for reporting as a fringe benefit the value when the vehicle, as in Mr.
Chartock's circumstance, is used primarily for commuting to and from work,
or for purposes unrelated to the firm's business.
Fringe Benefits and Fair Market Value for a company-provided vehicle.
There were other chauffeured destinations,
according to Mr. Cohen who is married now with two young children, is employed
as a technical analyst in the defense industry, and lives within range
of WAMC's Plattsburg station, WCEL-FM.
Chartock would be invited to speak before
various assembled groups. Cohen says Chartock would usually be compensated
for his public speaking efforts. He would have Cohen chauffeur him
to these private gatherings. "I once drove him to a speech that he gave
in the 'Borscht' belt. We got there and I waited all day for Alan
to finish," recalls Cohen.
Market Value for a company-provided chauffeur.
Asked whether Chartock's chauffeured trips
had anything to do with WAMC business, Mr. Cohen replies, "Most of the
time I'd drive him to events,
(which) most of the time had nothing
to do with his radio station job, but had some other purpose."
On a few occasions, Cohen would be instructed
to drive to Chartock's Great Barrington residence. One time, Cohen
recalls, Chartock had him transport a computer technician who brought along
a new personal computer to install in Chartock's home. Chartock wanted
the PC connected to a special Intra-net line that Cohen believes his boss
had the phone company install to connect his house to WAMC's computer network.
While Chartock waited back at the station, the trusted Cohen kept watch
in Chartock's home while the techie connected the computer to the new Intra-net
link. Afterwards, Cohen returned the techie back to Albany.
Cohen says the station provided the PC and the expensive Intra-net line
so Chartock could access office e-mail from home.
According to Cohen, Chartock had use of
at least two cellular phones provided by the radio station. This was during
a time when cellular was relatively new to the Albany area and having even
one cell phone was considered something of a status symbol since the expense
of the service was considerably more than it is today. "He had a nice
one at the time, he even showed it to his class in New Paltz once,"
Cohen says, adding, "He also had a car phone in the WAMC vehicle he
used. There was no car cell phone installed in any other WAMC-owned
vehicle. When in the vehicle, he used the car phone." According
depreciation report, the charity paid $489 to
equip Mr. Chartock's vehicle with its car phone.
Today, WAMC's chief executive is driving
the station's latest vehicle purchase, a 2006 Subaru
Forester 2.5X, 'The L.L. Bean Edition' (MSRP $27,520), a car specifically
picked out by and for Mr. Chartock.
This replaces a 2004 Forester still carried
on the station's books. At two years, it was apparently too old to
be of any more use to a public broadcasting executive.
At night, the new Forester, a gleaming
metallic gray, can be seen parked in the Chartock driveway on Hollenbeck
WAMC's CEO commutes to
work 500-600 miles weekly in the organization's 2006 Subaru Forester.
When asked recently about Chartock's local
use of the vehicle, a high-profile Great Barrington town employee, who
asked not to be identified but prides himself on being more aware than
most of the comings and goings of folks around this wealthy southern Berkshire
enclave of seventy-five hundred, laughed and said,
"Oh yeah, I see him
driving it around all the time!"
Free In-Town Pied-a-terre
The old Albany and Schenectady Turnpike
Road, now called Central Avenue, has been home to WAMC for twenty-five
years. To its credit, the organization has invested heavily in its
neighborhood by renovating buildings it either buys with listener contributions,
or obtains in exchange for somebody else's write-off to the tax-exempt
A few doors down from the studio on the
same side of the street (going in the opposite direction from the WAMC
Center for the Performing Arts) is a very special WAMC-owned property.
Once home to a lending institution, it now houses Mr. Chartock's intown
-- a rent-free home away from home. Another former staffer recalls,
apartment is located on the second floor at the old Evergreen bank building
... . I only saw it when it was a crumbling mess."
This staffer, who also requests anonymity,
is referring to the space upstairs at 300 & 304 Central Avenue that
WAMC provides to Mr. Chartock for his personal use. After WAMC obtained
the land and set of buildings in September, 1996 from Evergreen
Bank, WAMC invested at least $160,000 in renovations to the
parcel, according to the station's depreciation reports.
The second floor was converted to a spacious, multi-bedroom apartment suite.
About that converted space, the anonymous staffer says,
"I believe it
has two bedrooms - it takes up the entire 2nd floor. It's not a luxury
pad, but I'm sure it's nice."
Luxury or not, WAMC spared no expense in
fixing up that second floor space by shelling out, according to its depreciation
reports, at least another $25,000 in renovations (on top of the $160,000).
always said it would be available for people who were stuck at the station
because of weather, but I've never known anyone to ever stay there besides
says the anonymous staffer, who, in an e-mail, adds,
know who furnished it but I can't imagine Alan did - I'm sure everything
- furnishing, utilities, etc. is all covered by the station and this $$$
is not reflected in Alan's official compensation." The
staffer may not know, but WAMC's
list numerous entries for furniture purchases.
Mr. Chartock has nearly always had some
form of WAMC-provided after-hours accommodations though perhaps not as
expansive as his present quarters. Josh Cohen remembers when he was
there that Chartock
"had a furnished room on the second floor of WAMC,"
above the main office at 318 Central Avenue. The radio station provided
the space, he says, paying for all utilities and outfitting it with all
sorts of amenities, even adding a shower for the boss's convenience.
Market Value for a company-provided in-town pied-a-terre.
Free Labor to Produce 'Me and Mario
Back when Alan Chartock and former New
York Governor Mario
M. Cuomo were on speaking terms, Mr. Chartock's name appeared as
author on a compilation of interviews entitled
Me and Mario Cuomo: Conversations
in Candor (Barricade
Books, Inc., 1995, 304 pages).
foot the bill for creating the book 'Me and Mario Cuomo'
In it, the author proffers dialogue extracted
from The Capital Connection, a WAMC radio program whereon
Mr. Chartock weekly lobbed ingratiating questions to the then-serving Governor.
To get the book published necessitated
converting spoken words on audio tape into manuscript form. This
meant that a few hundred hours of CapCon recordings (the rights
to which are owned by WAMC's in-house subsidiary, National
Productions) had to be played-back and transcribed by typists
using wordprocessors. The whole thing then had to be printed-out,
edited and compiled. It was a lot of drudge work.
To these ends, Mr. Chartock enlisted as
many as four others. They were employed by, or connected with WAMC, including
at least one senior management employee and one trustee who, at the time,
sat on the executive
committee. WAMC office space and equipment were commandeered
for the project. The employees doing the work were on company time.
Josh Cohen recalls vividly in an e-mail,
I was there when the idea came up and when the book was put together."
Cohen says the project took "several weeks, more then (sic) one
month, but I don't think it went past two."
Mr. Cohen adds, "... Selma
Kaplan essentially put the whole thing together, Alan editied (sic)
it, basically by reading it in Selma's presence and telling her what to
change." Cohen says he saw "... Selma use her WAMC office,
during her time on the project, and, he adds,
"everything she needed in her office was used." Kaplan's
title today at WAMC is vice president for administration and development.
About the trustee, Mr. Cohen says, "One
of the board members was also involved ..... I think the name was 'Metronni'
or something like that," referring to Aaron Mitrani who in 1995
was WAMC's corporate treasurer. Cohen adds, "... this is the one who
helped in some way to get the book published .... ." Mr. Mitrani,
a long-time trustee and friend of Mr. Chartock, died in March, 2005.
Mr. Cohen names two other WAMC staffers
whom he believes worked on the project and had "some role but this is
not certain, they usually helped Selma with all she did regardless of what
it was." He adds, "I think they (referring to Chartock and WAMC)
hired out a company to do some of the work, at least I recall hearing this
mentioned." Asked who paid for the outside company, Cohen says,
certainly would have been the payer,"
but Cohen acknowledges he is
not entirely sure the outside firm was ever hired.
Alan Chartock's name and image appear on
the book's cover as author. Barricade Books is named
as publisher. In the book's "Acknowledgments" section, Mr.
Chartock thanks "all the teaching assistants at SUNY who helped transcribe
so many years' worth of broadcasts," as well as Ms. Kaplan who he says,
an awful lot of credit for reading, editing and typing the manuscript in
several versions." Never acknowledged was WAMC, which owns the
rights to The Capital Connection program, nor WAMC's contributing
listeners all of whom actually foot the bill for this private publishing
Market Value for company-provided labor.
Getting away with it
So just how (and of course, why) over
the years has WAMC's CEO been allowed to receive from the organization
taxable benefits worth tens of thousands of dollars that were concealed
and not reported to IRS?
The obvious answer to both questions is
that WAMC's board of trustees - plainly as docile a group as ever there
was running a public broadcaster - has apparently been more than willing
to let Mr. Chartock have his way at the station, so much so that he has
been allowed near absolute control of the public broadcaster. The
trustees, particularly the board's executive committee, appear simply to
look the other way, and let Mr. Chartock shield his taxable benefits from
disclosure to IRS.
Telephone inquiries made to WAMC executive
committee members, including Mr. Chartock as well as board chairman
S.W. Lewis, professor of English at Skidmore College (where
Mr. Lewis holds the title of Quadracci Professor of Social Responsibility),
seeking comment as to why the organization failed over the years to account
properly for Mr. Chartock's taxable benefits have thus far proven fruitless.
Repeated messages were left, but no calls ever were returned.
When asked about the relationship between
Mr. Chartock and his board of trustees, Josh Cohen, who during his employ
at the station says he personally attended and observed no less than fifteen
of the monthly trustee meetings, says, "I never got the feeling he [referring
to Chartock] was concerned about any regulatory or oversight body at
WAMC -- he really acted like no one could touch him."
Asked in an e-mail why he had attended
so many board meetings, Cohen replied, "I was present at nearly every
single one during the time I worked there as it was my job to go out and
get food for them in the form of fruit, chinese food. I had to set
up a room for the board meetings and then break it down after. It was part
of my job to support the meetings in that manner as well as stay at the
station when until they ended and everyone left."
About Chartock's board, Cohen recalls,
board and trustees seemed like something Alan had to do to keep the non-profit
status, though it was not a group that held any influence at all, at least
as I could tell." Cohen adds, "He really never talked
about them, nearly as if they did not exist or did not matter, at least
that was my impression."
Accompanying Mr. Chartock's signature
on WAMC's Form 990 appears that of tax preparer, William
M. Kahn, managing director and certified public accountant with
Kahn & Werlin Advisors, Inc., a CPA firm located on State Street
in Albany. WAMC is "his account," according to a staffer in
Mr. Kahn's firm. Kahn has been the public broadcaster's accountant
since at least the late 1980's.
990, Signature Page - WAMC - Fiscal 2002 - Signature page showing CPA
William M. Kahn's affirmation of WAMC's IRS return.
When contacted by telephone at his office,
Mr. Kahn acknowledged, "We are the accountants for WAMC; we conduct
audits; we also prepare the tax returns." He further confirmed
that his tax preparer number was indeed the one appearing on WAMC's Form
990's filed over the years with IRS. He would not confirm though,
that the signature on the form was actually his. He was asked about
WAMC's accounting for employee fringe benefits, but refused to answer that
or any further questions about WAMC, claiming, "Our professional standards
as CPA's preclude us from discussing any matters regarding clients with
When asked what his firm recommends in
general to tax-exempt clients regarding accounting for taxable and non-taxable
fringe benefits, Mr. Kahn refused to answer and hung-up on his caller.
For more than twenty years, WAMC has used
to audit its books and to prepare the organization's IRS filings.
The firm has expanded from its local roots, and its Web site says the name
is now UHY
LLP Certified Public Accountants. It claims a full range
of public accounting services as well as tax and business consulting, with
offices in multiple states and the District of Columbia.
WAMC has steadfastly maintained its relationship
with UKW/UHY LLP despite the fact that other public broadcasters
are heeding the intent of the Sarbanes-Oxley
Act of 2002. That Act, passed by Congress in the
wake of corporate accounting scandals at public corporations like Enron,
Worldcom and Global Crossing, requires auditors to
be 'rotated' every five years.
203: Audit Partner Rotation, Sarbanes-Oxley Act of 2002.
The way the law is now written, publicly-owned
corporations come under the jurisdiction of Sarbenes-Oxley, but
tax-exempts like WAMC do not. Nonetheless, many public broadcasters,
concerned about maintaining listener and viewer trust and support, are
following the lead of Sarbanes-Oxley in order to prevent the kind
of breakdown and conflicts-of-interest that occurred, for example, between
former 'Big 5' accounting firm, Arthur Andersen
and officials at its corporate client, Enron. Andersen
was indicted for falsifying
Enron's financial statements.
Coincidentally, another long-time UKW/UHY
LLP client, and a tax-exempt entity like WAMC, was the Saratoga
Performing Arts Center. SPAC was the subject of intense public
scrutiny in 2004 when its patron, the New York State Office of Parks,
Recreation and Historic Preservation, ordered the organization to have
an outside auditor examine its finances. The
report that ultimately issued exposed executive mismanagement, ineptitude
at the board level, and a pattern of corruption within the arts organization.
audit highlighted bloated executive salaries, inadequate financial
controls, executive self-dealing, no-limit expense and travel accounts,
and financial relationships between SPAC's former president Herbert
Chesbrough and board members who did business with SPAC. The report
noted, for example, that Chesbrough approved his own expenses and signed
his own checks. The revelations ultimately led to a shake-up of SPAC's
board of trustees and cancellation of a 'sweetheart' separation agreement
the board had made with Chesbrough to buy-out his employment contract.
In addition to the fact that the two not-for-profits,
WAMC and SPAC, shared the same auditor (though UKW/UHY LLP is no
longer SPAC's accountant), there is another practice the two shared in
common, and which may indicate self-dealing and inadequate financial controls
within WAMC's executive suite. It is the practice of allowing the
CEO dual authority both to approve expenses as well as to sign company
When asked whose signatures appeared on
his bi-weekly WAMC paychecks, Josh Cohen replied, "That's an easy
one, Alan Chartock," and he adds, "I don't recall a co-signer." «««
Related Articles of Interest:
Abuse Rampant in Nonprofits, IRS Says'; The Washington Post,
April 5, 2005.
Abuses Cost Federal Government Billions of Dollars, IRS Chief Tells Senators';
Chronicle of Philanthropy, April 5, 2005.
shakes public radio, Men kept freebies meant for station, prosecutors allege';
Free Press, March 17, 2006.
Taxable Fringe Benefits
and Fair Market Value:
FMV for a company-provided
According to the Employer's
Tax Guide to Fringe Benefits, one option in 2006 is for the employer
to calculate the taxable fringe benefit for an employee's use of a company
car at $0.445 cents per mile (if the vehicle's value does not exceed $14,800).
For someone commuting 600 miles per week, that benefit to the employee
is the equivalent of an extra $13,350 per year in taxable wages ($0.445
x 600mpw x 50wks). Fuel costs are automatically included when using this
Another option for employers
is to use the guide's Annual Lease Value Table to compute the annual
benefit using the vehicle's
Fair Market Value. Fair Market
Value of an automobile is defined as: "... the amount a person would
pay to buy it from a third party in an arm's-length transaction in the
area in which the automobile is bought or leased. That amount includes
all purchase expenses, such as sales tax and title fees."
For a vehicle valued over
$14,800 (as is the case with the WAMC-owned Subaru that Mr. Chartock now
drives which has an MSRP of $27,520), using the Lease Value Table might
lower the employee's overall tax bite, except that by using the Table,
fuel costs, if paid by or reimbursed through the employer, must be accounted
for as a separate and additional taxable benefit.
FMV for a company-provided
To calculate Fair Market
Value (FMV) for a taxable benefit like a personal driver on call, it helps
to consult the
Tax Guide to Fringe Benefits which states, "Neither the
amount the employee considers to be the value of the fringe benefit nor
the cost you (the employer) incur to provide the benefit determines
its FMV." The Guide repeatedly defines FMV to be
amount the employee would have to pay a third party in an arm's-length
transaction to buy or lease the benefit." SEE:
Tax Guide to Fringe Benefits, General Valuation Rule, pg.17.
A search in Google
using the terms
limousine service' generates leads to a number of competitively-priced
carriers in the capital region. The one nearest WAMC is possibly
Limousine located on Lark Street just nine-tenths of a mile from the
studio. A caller to Advantage elicited the following rate
schedule for the firm's least expensive chauffeured services: Trips within
the Albany metro area lasting less than two hours duration come under the
'basic transfer rate' of $110.08. That all-inclusive total
pays for a driver, a 2005 four-door Lincoln Continental or Cadillac
Sedan Deville, driver's gratuity, and all fees. For trips outside
metro, driver with sedan costs $60 per hour, plus 15% gratuity and 8% fuel
charge. Corporate accounts are eligible for a 20% discount.
FMV for a company-provided
In WAMC's neighborhood of
downtown Albany, a standard-sized, two-bedroom unit, unfurnished
with utilities, rents for between $600 to $750 per month. To determine
Fair Market Value for the pied-a-terre that WAMC renovated for Alan
Chartock requires a few extra calculations. Take into account the
fact that in downtown Albany, a newly refurbished, multi-bedroom apartment
suite encompassing a whole floor is not going to be cheap, especially one
coming fully furnished with all expenses paid plus amenities including
heat, utilities, telephone, TV with cable service, and computer with Internet
access. Free parking, of course, is provided in WAMC's secured private
lot next door. Given the local real estate market, it is conceivable
FMV to lease such a place could be $1500 to $2300 monthly (admittedly a
rough guess). Alternatively, if usage were calculated on a per
diem basis (such as might apply if the CEO were staying locally at,
for example, a Marriott
Suites), the FMV could be $139-and-up per day.
FMV for company-provided
The Fair Market Value to
have as many as four employees working on a private project for as long
as two months would likely be in the five-figure range.
WAMC's Depreciation Expense
WAMC's "Depreciation Expense
Reports" can be seen here by clicking on the applicable Fiscal Year, then
scrolling through the indicated pages of the .pdf file.
[Editor's note about "Fiscal
Year". FY is not the same as "Calendar Year" (imprinted in the upper right
corner of the first page of each IRS Form 990 report). Example: Fiscal
Year 2005 has the Calendar Year 2004 imprinted on the IRS form.]
to see .pdf (Adobe) page nos.
- See: pgs. 16 to 21.
2004 - DER unavailable.
2003 - DER unavailable.
- See: pgs. 32 to 66.
- See: pgs. 29 to 59.
- See: pgs. 26 to 58.
- See: pgs. 23 to 52.
IRS Informant Program for
Matters Related to Tax-Exempt Organizations --
IRS Non-Profit Tax-Exempt Organization
office: (877) 829-5500
IRS Albany office - Criminal
Division: (518) 427-4154
IRS National office: (800) 829-0433
Write to the following
address (include whatever information you believe would be useful
to IRS examiners):
IRS - E.O. Classification
IRS 'Bounty' Program:
Attorney's Office - Albany:
1100 Commerce Street
Dallas, Texas 75242-1198
James Foley Bldg.
Tax ID information:
445 Broadway, Room 218
Albany, New York 12207
Phone: (518) 431-0247
Fax: (518) 431-0249
Notice to All CPA's and Tax
318 Central Avenue
Albany, New York 12206
Employer ID #: 22-2400593
Web site: www.wamc.org
For the sake of accuracy
(and fairness), The WAMC Pirates invite feedback on the above article
from certified public accountants and others with knowledge of federal
and/or state tax laws and regulations.
If there is any documentation,
information or other material we neglected to include as part of this article,
but should have (e.g.: additional likely tax law violations, legal
interpretations, etc.), we would like to know about it.
Likewise, if there is any
information, legal interpretation, documentation, citation, material or
data contained within the above article that is inaccurate, misleading,
in any way, we also would like to be told about
Please feel free to bring
suggested additions or deficiencies to our immediate attention so that
the article can be properly amended. Contact The Pirates
via e-mail at
via telephone at 202.973.2141. Thank you!
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