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.
SEE: Imposition 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.
SEE: 'Self-Dealing Expansion' -- Non-profit Coordinating Committee of New York.

$0.00 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.
SEE: "Statute 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.
SEE: Excise 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. 

No 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." 
SEE: Executive Compensation - Fringe Benefits Audit Techniques Guide (02-2005) -- IRS
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 Market Value."

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 Form 990's.

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.
SEE:Form 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.

WAMC's 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 answered 'NO'  to the question of whether any trustee, officer or other insider was furnished with "goods, services, or facilities" (such as would indicate self-dealing, below-market transactions, or being given special consideration) by the organization.
SEE: Form 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 no other forms of taxable compensation (e.g.: no fringe benefits) from the organization. 

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 depreciated 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."
SEE: Form 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, see below.

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. 

Not-For-Whose-Profit?
'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 expensive fuel).
SEE: Fair 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 task.

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 Science. 

Back then, Mr. Cohen (Josh to his friends) was looking to start a career in Albany.  He answered an advertisement in the 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 with that."

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. "We'd 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," says 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. "To 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," he says.

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 travel, 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. 
SEE:Taxable 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.
SEE: Fair 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 to WAMC's 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 Avenue. 

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 charity. 

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 pied-a-terre -- a rent-free home away from home.  Another former staffer recalls, "The 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). "Alan 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 Alan," says the anonymous staffer, who, in an e-mail, adds, "I don't 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 depreciation reports 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.
SEE: Fair Market Value for a company-provided in-town pied-a-terre.

Free Labor to Produce 'Me and Mario Cuomo'
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). 

WAMC 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, "Yes, 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, computer, telephone," 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' (sic) 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, "WAMC 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, "deserves 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 effort.
SEE: Fair 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 Thomas 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, "The 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."

The Auditors
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 Urbach, 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.
SEE: Form 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 the press."

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 UKW  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.
SEE: Section 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. 

The outside 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 checks.

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:
'Tax Abuse Rampant in Nonprofits, IRS Says'; The Washington Post, April 5, 2005. 
'Nonprofit Abuses Cost Federal Government Billions of Dollars, IRS Chief Tells Senators'; The Chronicle of Philanthropy, April 5, 2005.
'Scandal shakes public radio, Men kept freebies meant for station, prosecutors allege'; Detroit Free Press, March 17, 2006. 

Taxable Fringe Benefits and Fair Market Value:
FMV for a company-provided vehicle.
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 cents-per-mile rule. 

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 chauffeur
To calculate Fair Market Value (FMV) for a taxable benefit like a personal driver on call, it helps to consult the Employer's 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 "the amount the employee would have to pay a third party in an arm's-length transaction to buy or lease the benefit." SEE: Employer's Tax Guide to Fringe Benefits, General Valuation Rule,  pg.17.

A search in Google using the terms 'albany limousine service' generates leads to a number of competitively-priced carriers in the capital region.  The one nearest WAMC is possibly Advantage 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 carrier's '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-town pied-a-terre.
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 labor.
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 Reports.
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.]
FY   Scroll to see .pdf (Adobe) page nos.
2005  -  See:   pgs. 16 to 21.
2004  -  DER unavailable. 
2003  -  DER unavailable.
2002  -  See:   pgs. 32 to 66.
2001  -  See:   pgs. 29 to 59.
2000  -  See:   pgs. 26 to 58.
1999  -  See:   pgs. 23 to 52.

I.R.S. Contact Information..

• IRS Non-Profit Tax-Exempt Organization office: (877) 829-5500
• IRS Albany office - Criminal Division: (518) 427-4154
• IRS National office: (800) 829-0433

IRS - E.O. Classification
4910-DAL
1100 Commerce Street
Dallas, Texas 75242-1198

• 'Rewards For Information Provided By Individuals  to the IRS'
• IRS  'Policy Statement 4-27'
• 'Application For Reward For Original Information' - IRS Form 211
• 'How Do You Report Suspected Tax Fraud Activity?'
• 'Information Referral' - IRS Form 3949a

James Foley Bldg.
445 Broadway, Room 218
Albany, New York 12207
Phone: (518) 431-0247
Fax: (518) 431-0249

WAMC, Inc. 
318 Central Avenue
Albany, New York 12206 
Employer ID #: 22-2400593
Telephone: (518) 465-5233
Web site: www.wamc.org

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, or inapplicable in any way, we also would like to be told about it. 

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 editor@wamc.net, or via telephone at 202.973.2141.  Thank you!