Business Owners Challenged $76 Million IRS Tax Bill
David Chaney and Benjamin Harris filed a legal challenge in US Tax Court regarding excise tax assessments.
Updated on Oct. 2, 2026 in Taxes
Live Poll
Do you trust the IRS to fairly audit management fees paid by non-profit entities?
David Chaney and Benjamin Harris have filed formal challenges in US Tax Court against $76 million in federal excise tax assessments. The IRS claims both individuals received excess financial benefits from the nonprofit Community Strategies Inc. during 2018 and 2019.
Why it matters
The IRS asserts that these management fees constitute improper financial gains from a nonprofit virtual school. This case highlights how tax authorities scrutinize financial relationships between nonprofits and their associated private business entities.
The IRS assessed $76 million in total federal excise taxes against David Chaney and Benjamin Harris. Each individual faces a specific liability of $38.2 million related to management fees collected between 2018 and 2019.
The players
David Chaney
He is a co-owner of Epic Youth Services LLC who is currently challenging a multi-million dollar tax assessment.
Benjamin Harris
He is a co-owner of Epic Youth Services LLC who is currently challenging a multi-million dollar tax assessment.
Community Strategies Inc.
This is a nonprofit virtual school that served as the source of the funds investigated by the IRS.
US Tax Court
This is the federal court of record that hears disputes between taxpayers and the Internal Revenue Service.
The details
The dispute centers on funds allegedly diverted from Community Strategies Inc., a nonprofit virtual school co-owned by Chaney and Harris through Epic Youth Services LLC. The taxpayers are seeking to overturn the federal excise tax assessments through their recent court petition.
Timeline
The alleged receipt of excess financial benefits occurred throughout 2018.
The alleged receipt of excess financial benefits continued through 2019.
The formal legal challenge was filed in US Tax Court on September 28, 2026.
Market Dynamics
This dispute reflects a broader regulatory effort to enforce the IRS excess benefit transaction rules under Section 4958. It illustrates the increased oversight applied to the financial ties between nonprofit entities and for-profit service providers.
This case serves as a warning for business owners regarding the importance of maintaining strict arms-length agreements with nonprofit partners to avoid personal excise tax liability. Retail investors should ensure that any corporate structures involving nonprofits are properly documented to prevent significant personal financial exposure.
The takeaway
Maintaining clear financial separation between private management firms and nonprofit organizations is essential for regulatory compliance. Entrepreneurs should prioritize robust governance structures to defend against potential IRS scrutiny regarding fund management.
Further reading
For more information on federal tax regulations, visit the Taxes section.
Source note: This article includes information reported by Bloombergtax.
Live Poll
Do you trust the IRS to fairly audit management fees paid by non-profit entities?
