IRS Assessed $76 Million in Excise Taxes
Two co-owners of a nonprofit virtual school have challenged multi-million dollar excise tax assessments from the IRS.
Updated on Oct. 2, 2026 in Taxes
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The IRS has assessed more than $76 million in federal excise taxes against David Chaney and Benjamin Harris. Each individual has been ordered to pay $38.2 million related to alleged excess financial benefits.
Why it matters
The assessments stem from management fees the pair allegedly received from a nonprofit virtual school, Community Strategies Inc., during 2018 and 2019. This challenge highlights the regulatory scrutiny surrounding financial benefits taken from nonprofit entities.
The IRS assessed $38.2 million in excise taxes against each individual, totaling $76 million. The final liability remains unresolved while the challenge proceeds through the US Tax Court.
The players
David Chaney
Co-owner of Epic Youth Services LLC who is currently challenging a multi-million dollar IRS excise tax assessment.
Benjamin Harris
Co-owner of Epic Youth Services LLC who is currently challenging a multi-million dollar IRS excise tax assessment.
IRS
The federal agency responsible for tax collection and enforcing compliance with tax laws governing nonprofit financial benefits.
Community Strategies Inc.
A nonprofit virtual school linked to the management fees that triggered the federal excise tax assessments.
The details
The IRS claims that David Chaney and Benjamin Harris, co-owners of Epic Youth Services LLC, improperly extracted financial benefits through management fees. In response to these multi-million dollar assessments, both individuals filed formal challenges in US Tax Court. The legal process will now determine if the IRS findings regarding these nonprofit financial transactions are upheld.
Timeline
2018: Period of alleged excess financial benefits.
2019: Period of alleged excess financial benefits.
September 28, 2026: Formal challenges filed in US Tax Court.
Money Landscape
This case follows the ongoing IRS effort to police the distribution of funds from nonprofit entities to private stakeholders. It serves as a reminder of the strict limitations regarding personal compensation and management fees within nonprofit organizations.
While this case involves specific nonprofit management fees, it underscores the importance of maintaining clear documentation for all income received from tax-exempt entities. Taxpayers should consult with a qualified tax professional to ensure their compensation structures comply with federal regulations.
The takeaway
The IRS is actively investigating the flow of funds from nonprofit virtual schools to their associated management companies. Monitor future US Tax Court rulings if you serve as a stakeholder in a nonprofit entity, and review your financial disclosures with a professional.
Further reading
For more on managing federal tax obligations, visit Taxes.
Source note: This article includes information reported by Bloombergtax.
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