The LMT - CoS / IRS Closing Agreement

This section VI sets forth sanctions to provide assurance to the Service that the Church Tax Compliance Committee will ensure that all Scientology-related entities will operate in a manner consistent with Code section 501(c)(3) and will carry out specified obligations under this Agreement during the transition period. The provisions of this section are in addition to, and not in lieu of, any other enforcement measures available to the Service under this Agreement, the Code, at law or in equity. Thus, notwithstanding any provisions of this section or this Agreement in its entirety, the Service may question its recognition or exemption of any Scientology-related entity for any taxable year subsequent to 1992 (and for previous years if this Agreement is not final by reason of section IX. paragraph H.) or take any other action permitted under the Code, without regard to whether the Service has asserted (successfully or otherwise) any penalty under this section VI. Nevertheless, it is intended that the consensual sanctions set forth in this section are to provide the Service with intermediate sanctions for activities or conduct not in accordance with the provisions of Code section 501(c)(3) for which revocation of recognition of exemption may be too harsh or otherwise inappropriate as a sanction, and that the Service will notify and consult with the CTCC prior to pursuing any sanctions under this Agreement.

B. Self-Dealing Transactions.

1. First-tier penalties.

a. On Individual CTCC member who is a self-dealer or who is related to a self-dealer. Under this Agreement, there is a penalty imposed on each knowing act of self-dealing between a disqualified person and a Scientology-related entity. The penalty shall equal 5 percent of the amount involved with respect to the act of self-dealing for each taxable year (or part thereof) in the sanction period (defined below). The penalty imposed by this paragraph shall be paid by each Individual CTCC member: (i) who is the disqualified person who engaged in such act of self-dealing; or (ii) who is related (as described in section VIII. paragraph N.2. through 9., including the attribution rules contained therein) to any person that participates in the act of self-dealing. No penalty shall be due under this paragraph B.1.a.if and to the extent that an act of self-dealing has been corrected within the correction period.

b. On Individual CTCC members with knowledge of transaction. In any case in which a penalty is imposed by section VI. paragraph B.1.a., there is an additional penalty imposed on the participation of any Individual CTCC member in an act of self-dealing between any disqualified person and a Scientology-related entity, knowing that it is such an act, equal to 2 1/2 percent of the amount involved with respect to the act of self-dealing for each taxable year (or part thereof) in the sanction period, unless such participation is not willful and is due to reasonable cause. The penalty imposed by this paragraph shall be paid by any Individual CTCC member who participated in the act of self-dealing. No penalty shall be due under this paragraph B.1.b. if and to the extent that an act of self-dealing has been corrected within the correction period.

2. Second-tier penalties.

a. On Individual CTCC member who is a self-dealer or who is related to a self-dealer. In any case in which a first tier penalty is imposed by section VI. paragraph B.1. on an act of self-dealing by a disqualified person with a Scientology-related entity and the act is not corrected within the sanction period, there is hereby imposed a penalty equal to 200 percent of the amount involved. The penalty imposed by this paragraph shall be paid by each Individual CTCC member: (i) who is the disqualified person who engaged in such act of self-dealing; or (ii) who is related (as described in section VIII. paragraph N.2 through 9., including the attribution rules contained therein) to any person that participates in the act of self-dealing. No penalty shall be due under this paragraph B.2.a. if and to the extent that an act of self-dealing has been corrected within the correction period.

b. On Individual CTCC member refusing to correct.

i. In any case in which a second tier penalty is imposed under section VI. paragraph B.2.a., if any Individual CTCC member refuses to agree to part or all of the correction, a penalty is imposed equal to 50 percent of the amount involved. The penalty imposed by this paragraph shall be paid by each Individual CTCC member who refused to agree to part or all of the correction.

ii. In addition, in the event that correction does not occur by reason of any officer or director of any Scientology-related entity refusing to agree to part or all of the correction, there is a penalty equal to 50 percent of the amount involved. The penalty imposed under this paragraph shall be paid by each Individual CTCC member.

iii. No penalty shall be due under this paragraph B.2.b. if and to the extent that an act of self-dealing has been corrected within the correction period.

3. Self-dealing.

a. In general. For purposes of this section VI., the term "self-dealing" means any direct or indirect:

i. sale or exchange, or leasing, of property between a Scientology-related entity and a disqualified person;

ii. lending of money or other extension of credit between a Scientology-related entity and a disqualified person;

iii. furnishing of goods, services, or facilities between a Scientology-related entity and a disqualified person;

iv. payment of compensation (or payment or reimbursement of expenses) by a Scientology-related entity to a disqualified person;

v. transfer to, or use by or for the benefit of, a disqualified person of the income or assets of a Scientology-related entity; and

vi. payment by any Scientology-related entity of any penalty imposed under this section VI. upon any Individual CTCC member.

b. Special rules. For purposes of section VI. paragraph B.3.a.--

i. the transfer of real or personal property by a disqualified person to a Scientology-related entity shall be treated as a sale or exchange if the property is subject to a mortgage or similar lien which the Scientology-related entity assumes or if it is subject to a mortgage or similar lien which a disqualified person placed on the property within the 10-year period ending on the date of the transfer;

ii. the lending of money by a disqualified person to a Scientology-related entity shall not be an act of self-dealing if the loan is without interest or other charge (determined without regard to Code section 7872) and if the proceeds of the loan are used exclusively for purposes specified in Code section 501(c) (3);

iii. the furnishing of goods, services, or facilities by a disqualified person to a Scientology-related entity shall not be an act of self-dealing if the furnishing is without charge and if the goods, services, or facilities so furnished are used exclusively for purposes specified in Code section 501(c) (3);

iv. the furnishing of goods, services, or facilities by a Scientology-related entity to a disqualified persona shall not be an act of self-dealing if such furnishing is made on a basis no more favorable than that on which such goods, services, or facilities are made available to the general public; and

v. the payment of compensation (and the payment of reimbursement of expenses) by a Scientology-related entity to a disqualified person for personal services which are reasonable and necessary to carrying out the exempt purpose of Scientology-related entities shall not be an act of self-dealing if the compensation (or payment or reimbursement) is not excessive.

c. Exceptions. Notwithstanding section VI. paragraphs B.3.a. and B.3.b., the following shall not be treated as an act of self-dealing:

i. The provision to a disqualified person of goods, services and facilities by a Scientology-related entity on the same basis as generally provided to other members of the Sea Organization, with commensurate adjustments for the ecclesiastical rank and responsibilities of the disqualified person. The goods, services and facilities described in this section VI. paragraph B.3.c.i. include all benefits generally provided by Scientology-related entities to members of the Sea Organization, including but not limited to room and board, medical care, uniforms, child care and education, use of corporate vehicles and ministry of religious services.

ii. The provision of insurance coverage by any Scientology-related entity to any disqualified person against a claim of misconduct in his or her capacity as an executive of any Scientology-related entity (but not including any penalty imposed under this section VI. paragraph B. upon any Individual CTCC member), as well as reasonable litigation costs and attorneys' fees incurred in defending any such claim.

iii. The direct payment, without the use of insurance, by any Scientology-related entity of a disqualified person's personal liability arising from any claim of misconduct in his or her capacity as an executive of any Scientology-related entity (excluding a penalty imposed under this section VI. upon any Individual CTCC member), as well as payment or reimbursement of reasonable litigation costs and attorney's fees incurred in defending against any such claim (including defense against a penalty imposed under this section VI. upon any Individual CTCC member), provided that the board of the Scientology-related entity that is making the expenditure and the other Individual CTCC members determine, upon appropriate review of the circumstances and consultation with outside legal counsel, that the Individual CTCC member acted reasonably under the circumstances, in the best interest of the relevant Scientology-related entity or entities, and without knowledge or reason to believe that such action would be in violation of any applicable law or of this Agreement.

iv. Any transaction for which the disqualified person and the affected Scientology-related entity have obtained guidance in advance from the Service that the proposed transaction would be in the best interest of the continued operation of the affected Scientology-related entity and will not be penalized under this Agreement. Any request for such guidance shall be sent to the Assistant Commissioner as provided in section IX of the Agreement. If after 120 days no response to the request has been received, the transaction described in the ruling request shall be deemed not to create a situation in which the penalties of this section VI will be applied.

v. Theft, embezzlement or other misappropriation of property or funds from a Scientology-related entity is an act of self-dealing only if, and only to the extent, that a disqualified person participates in such misconduct.

d. Amount involved. For purposes of this section VI., paragraph B., the term "amount involved" means, with respect to any act of self-dealing, the greatest of (i) the amount of money and the fair market value of the other property given; (ii) the amount of money and the fair market value of the other property received; or (iii) the sum of $100,000. Notwithstanding the preceding sentence, in the case of services described in section VI. paragraph B.3.iv., the amount involved shall be the greater of $100,000 or the excess compensation. In addition, in the case of a lease or loan, the amount involved shall be the greatest of (i) the fair market interest rate or rental, (ii) the amount actually charged, or (iii) $100,000. For purposes of determining the amount involved, the fair market value in the case of the penalties imposed by section VI. paragraph B.1.a., shall be determined as of the date on which the act of self-dealing occurs; and in the case of the penalties imposed by section VI. paragraph B.1.b., shall be the highest fair market value during the sanction period.

C. Noncharitable Expenditures.

1. First-tier penalties.

a. On Corporate CTCC members. Under this section VI. paragraph C., a penalty is imposed on each noncharitable expenditure (as defined in section VI. paragraph C.3.) of any Scientology-related entity described in the Code section 501(c) (3). The penalty shall be equal to 10 percent of the amount involved as defined in paragraph C.5.. The penalty imposed by this paragraph shall be paid on a joint and several basis by the CTCC Corporate members. No penalty shall be due under this paragraph C.1.a. if and to the extent that a taxable expenditure has been corrected within the correction period.

b. On Individual CTCC members. There is hereby imposed on the agreement of any Individual CTCC member to the making of an expenditure or undertaking an activity, knowing that it is a noncharitable expenditure, a penalty equal to 2 1/2 percent of the amount involved, unless such an agreement is not willful and is due to reasonable cause. The penalty imposed by this paragraph shall be paid by any Individual CTCC member who agreed to the making of the expenditure of undertaking the activity. No penalty shall be due under this paragraph C.1.b. if and to the extent that a taxable expenditure has been corrected within the correction period.

2. Second-tier penalties.

a. On Corporate CTCC members. In any case in which a first tier penalty is imposed by section VI. paragraph C.1.a. by reason of a noncharitable expenditure and such expenditure or activity is not corrected within the sanction period, there is hereby imposed a penalty equal to 100 percent of the amount involved. The penalty imposed by this paragraph shall be paid on a joint and several basis by the CTCC Corporate members. No penalty shall be due under this paragraph C.2.a. if and to the extent that a taxable expenditure has been corrected within the correction period.

b. On Individual CTCC members.

i. In any case in which an additional penalty is imposed by paragraph C.2.a., if an Individual CTCC member refused to agree to part or all of the correction, there is hereby imposed a penalty equal to 50 percent of the amount involved. The penalty imposed by this paragraph shall be paid by each Individual CTCC member who refused to agree to part or all of the correction.

iii. No penalty shall be due under this paragraph C.2.b. if and to the extent that a taxable expenditure has been corrected within the correction period.

3. a. Noncharitable expenditure. For purposes of this section VI., the term "noncharitable expenditure" means:

i. any amount paid or incurred by a Scientology-related entity described in Code section 501 (c) (3):

(a) to an entity or individual unless:

(1) the recipient entity is described in Code section 501 (c) (3), or

(2) the payment will directly further a charitable purpose and the Scientology-related entity exercises expenditure responsibility with respect to such payment as required and in accordance with paragraph C.3.b.

(b) any amount paid or incurred by a Scientology-related entity for any purpose other than one specified in Code section 170 (c) (2) (B).

ii. any amount paid or incurred by a Scientology-related entity as a special noncharitable expenditure as defined in paragraph C.4.

b. Expenditure responsibility. The expenditure responsibility referred to in section VI. paragraph C.3.a.i. (a) (1) means that the Scientology-related entity is responsible to exert all reasonable efforts and to establish adequate procedures during the transition period:

i. to see that the payment is spent solely for the charitable purpose for which made,

ii. to obtain full and complete reports from the recipient on how the funds are spent, and

iii. to make full and detailed reports on such expenditures to the Service as part of the Annual Report described in section IV paragraph C.7.

Expenditure responsibility is required under this section VI. paragraph C.3.b. only to the extent the CTCC is required to report with respect to its expenditure responsibility as part of the Annual Report under section IV., paragraph C.7.

c. Governing principles. In determining whether a particular expenditure is a noncharitable expenditure, the Service shall be guided by principles of section 53.4945-6 (b) (2) of the Treasury Regulation (regardless of whether the expenditure involves an administrative expense), under which it is neither the policy nor the prerogative of the Service to substitute its judgment for the reasonable exercise of business judgment by executives of the affected Scientology-related entity.

4. Special noncharitable expenditure. For purposes of this section VI., the term "special noncharitable expenditure" means any amount paid or incurred by a Scientology-related entity or Scientology-related individual in connection with the following:

a. Any act or omission that any CTCC member knew would impair the efficacy of the guaranty of collection set forth in section IV. paragraph A.3.d. of this Agreement.

b. The diminution of assets in violation of section IV. paragraph A.3.d.viii.

c. Any expenditure by a Scientology-related entity that has not been recognized as tax exempt under section III. of this Agreement or by any Scientology-related individual, if such expenditure jeopardizes the tax-exempt status of any Scientology-related entity recognized under section III. of this Agreement as described in Code section 501 (c) (3).

d. The conduct or support of litigation by a Scientology-related entity or a Scientology-related individual against the Service or any present or former Service employee in violation of section II. paragraph C.4. or C.5. of this Agreement.

e. The financial support by a Scientology-related entity or Scientology-related individual of a tax refund claim against the Service in violation of section VII., paragraph G..

5. Amount involved. For purposes of this section VI. paragraph C., the term "amount involved" as it relates to the penalties provided under this section imposed on a noncharitable expenditure means:

a. For the penalties imposed under this section VI. paragraph C. (except as provided below with respect to certain of the special noncharitable expenditures and noncharitable activities described in paragraph C.4.), the "amount involved" shall be the greater of (1) the amount paid or incurred in connection with a noncharitable expenditure or (2) the sum of $25,000.

b. For the penalties imposed by reason of special noncharitable expenditure defined in paragraph C.4.a., the "amount involved" is equal to the greater of (1) the difference between the assets of the CTCC Corporate members before the impairment of the guaranty and the assets of the CTCC Corporate members subsequent to the impairment, or (2) the sum of $25,000.

c. For the penalties imposed by reason of special noncharitable expenditure defined in paragraph C.4.b., the "amount involved" is equal to the greater of (1) the excess value of the assets over 10-percent of the difference between the assets of the CTCC Corporate members before the transfer and the assets of the CTCC Corporate members subsequent to the transfer, or (2) the sum of $25,000.

d. For the penalties imposed by reason of special noncharitable expenditure or noncharitable activity defined in paragraphs C.4.d. and C.4.e., the "amount involved" is equal to the greatest of (1) the number of staff hours of Service or Department of Justice attorneys required for the year to respond to any litigation, multiplied by $100, (2) the cost to indemnify the Service and the United States in any litigation for the year and for all costs including any damages, or (3) the sum of $25,000.

D. Reporting Obligations.

1. Penalty on Corporate CTCC members. A penalty is imposed jointly and severally on the Corporate CTCC members in the event of certain failures in providing the Annual report.

a. In the case of a failure to submit the Annual Report required under section IV. paragraph A.3.a. of this Agreement by the date and in the manner prescribed therefor (determined with regard to any extension of time for filing), there shall be paid $250 for each day until the submission of such report.

b. In the case of a failure to include within the Annual Report any of the information required to be shown under this Agreement or to show information that is materially correct, there shall be paid by the Corporate CTCC members $250 for each day during which such failure continues.

The maximum penalty under this section VI. paragraph D.1. with respect to any one Annual Report shall not exceed $75,000.

2. Penalty on Individual CTCC members. Upon a failure to submit an Annual Report in a timely and complete fashion, the Service may make a written demand on the CTCC specifying therein a reasonable future date by which the Annual Report shall be submitted (or the missing or correct information furnished) for purposes of this paragraph.

a. Failure to comply with demand. If the CTCC fails to comply with any demand under paragraph D. 2. on or before the date specified in such demand, there shall be paid by each Individual CTCC member $250 for each day after the expiration of the time specified in such demand during which such failure continues. The maximum penalty imposed under this paragraph on all Individual CTCC members for failures with respect to any one Annual Report shall not exceed $75,000 per Individual member.

b. Application of penalties for failure to provide information. Each failure to include with the Annual Report information required under any single subparagraph of section IV. paragraph B. or section IV. paragraph C. of this Agreement shall be treated as a separate failure to provide information and shall be subject to a separate penalty or penalties under this section VI., except that the $75,000 maximum applies to the Annual Report as a whole and, therefore, is not increased by reason of multiple failures to comply within the same Annual Report.

3. Exception for reasonable cause. No penalty shall be imposed under this section VI. paragraph D. with respect to any failure if the CTCC shows that such failure is due to reasonable cause.

4. Exception for inability to certify specific information. If the CTCC is unable to certify any matter as required under this Agreement due to an actual or potentially noncompliant act or acts or failure to act, no penalty shall be imposed under this section VI. paragraph D. with respect to the failure to provide such certification, provided that:

a. the CTCC makes the required certifications with respect to all but those actual or potentially noncompliant acts,

b. the CTCC takes appropriate and timely steps to determine whether a potentially noncompliant act is in fact noncompliant,

c. the CTCC discloses all noncompliant acts as soon as possible under the circumstances, and currently discloses that it is investigating a particular act or acts that may be noncompliant,

d. the CTCC takes appropriate and timely steps to correct all noncompliant acts, and

e. the CTCC reports to the Service with respect to the correction of noncompliant acts as soon as possible under the circumstances.

E. Joint and Several Liability and Certain Penalty Limitations for Individual CTCC Members.

1. The Corporate CTCC members shall be jointly and severally liable for payment of the penalties imposed by section VI. paragraphs C.1.a., C.2.a., and D.1. The penalties on the Individual CTCC members are to be paid by the specific Individual CTCC member subject to the penalty.

2. The maximum amount of any penalty imposed on any Individual CTCC member under section VI. with respect to (1) any one act of self-dealing under paragraph B., (2) any one noncharitable expenditure under section VI. paragraph C., or (3) deficiencies in the Annual Report under section VI., paragraph D., shall not exceed the lesser of (i) the individual CTCC member's total compensation for the taxable year from all Scientology-related entities, or (ii) the sum of $50,000 each taxable year, except that the maximum penalty on an individual CTCC member charged with an act of self-dealing in no event shall be less than the sanction imposed for that act.

3. No single act or expenditure by a Scientology-related entity shall be subject to multiple penalties under paragraphs B.1.b, C.1.b, and/or D.2, or multiple penalties under paragraphs B.2.b, C.2.b, and/or D.2. (for example, an expenditure constituting both an act of self-dealing under paragraph B. and a noncharitable expenditure under paragraph C.). Such an act or expenditure shall be subject to the applicable penalty in paragraph B., C., or D. that results in the highest penalty amount.

F. Additional Penalty. If any person or entity becomes liable for any penalty under paragraphs B. or D. of this section VI. by reason of any act or failure to act which is not due to reasonable cause and either:

1. such person has theretofore been liable for a penalty under any of such paragraphs; or

2. such act or failure to act was both willful and flagrant;

then such person shall be liable for an additional penalty equal to the amount of the applicable first tier penalty.

G. Third-Tier Penalty.

1. If there has been (i) willful, repeated and flagrant misconduct, and (ii) a failure to correct such misconduct, giving rise to penalties under paragraphs B. and/or C. of this section VI., there is imposed on the Corporate members of the CTCC a penalty equal to $50,000,000.

2. For purposes of this section VI., various terms are defined as follows:

a. the phrase "flagrant misconduct" means:

(i) For any act of self-dealing under section VI. paragraph B., the intentional diversion of assets from one or more Scientology-related entities that is not corrected within the correction period.

(ii) For any noncharitable expenditure under paragraph C., the intentional use of assets from one or more Scientology-related entities for any purpose other than one specified in Code section 170 (c) (2) (B) that is not corrected within the correction period.

b. The phrase "diversion" means the transfer of assets by a Scientology-related entity that constitutes the private inurement of its net earnings to the benefit of a private shareholder or similarly-situated individual.

c. The phrase "repeated," with respect to misconduct, means more than two occurrences of conduct resulting in the imposition of second-tier sanctions under this Agreement.

H. Procedures for Penalty Determinations

1. a. First-tier Penalty

i. With respect to a claimed penalty arising from information in the Annual Report, the Service shall notify the CTCC in writing of its belief than an event subject to penalty under paragraphs B.1., C.1. or D. of this section VI. has occurred within 180 days of receipt of the Annual Report. Such notice (hereinafter the "initial notice") shall identify the expenditure, act (or failure to act) or transaction the Service believes warrants the imposition of penalties and an explanation of its reasons for this conclusion. The notice shall specify the exact provisions of the applicable law or of this Agreement the Service believes has been violated and shall, subject to the requirements of Code section 6103, cite and append evidence in its possession that supports its belief.

ii. Upon receipt of the initial notice, the CTCC shall investigate the matter and report its conclusions back to the Service within 90 days of receipt of the initial notice.

iii. If, following receipt of the CTCC's report under section VI. paragraph H.1.a.(ii), or in the event of a failure to respond, the Service still believes that an event warranting imposition of a penalty has occurred and has not been corrected, the Service will provide a conference of right with the Assistant Commissioner to undertake a discussion on the merits of the respective positions of the CTCC and the Service.

iv. If, following the conference of right under paragraph H.1.a.(iii) of this Section VI., the Service still believes that an event warranting imposition of a penalty has occurred and is not in the process of being corrected, the Service will issue a final determination of penalty and send notice thereof to the CTCC. Such notice shall specify the exact provisions of applicable law or of this Agreement the Service believes have been violated and shall, subject to the requirements of Code section 6103, cite and append evidence in its possession that supports its belief, including its reasons for not accepting the arguments and evidence submitted by the CTCC in support of its position that no violation has occurred.

v. With respect to a claimed penalty arising from information in the Annual Report, the Service must issue a final determination of first-tier penalty to the CTCC no later than one year from the date the Service receives the CTCC report described in section VI. paragraph H.1.a.(2).

vi. If the CTCC continues to disagree with the Service's determination of a first-tier penalty notice, it shall so notify the Service in writing. Upon receipt of such notice, the Service may sue under paragraph H.1.e. to collect the first-tier penalty. Until the completion of such suit, including the exhaustion of any appeals or other proceedings for appellate review, the CTCC need not pay any first-tier penalty determined by the Service.

b. Second-tier penalties. If an event subject to a first-tier penalty under this Agreement has not been corrected with the sanction period as defined in section VIII. P., the Service may issue a notice of final determination of second-tier penalty. The Service must issue any notice of final determination of second-tier penalty no later than 90 days after expiration of the sanction period. No second-tier penalty shall be due under this Agreement if and to the extent that a taxable expenditure has been corrected within the correction period.

c. Other penalties. In the case of penalties other than those described in paragraphs H.1.a. or H.1.b. of this determination of penalty to the CTCC.

d. No notice of determination, initial or final, may be made under this Agreement if the notice is not sent by certified mail to the CTCC by the 120th day after the end of the transition period. In addition, no penalty may accrue for any period after December 31, 1999. However, provided that the initial notice was mailed prior to this date, the penalty asserted may be collected and enforced notwithstanding the expiration of the transition period.

e. Any penalty imposed under this section VI. is payable upon notice and demand, and may be collected by the Service through suit. The Service and the Corporate, Individual and At-large CTCC members agree that all parties shall have the right to specific performance (in addition to all other remedies available under the Code, at law, in equity or under this Agreement).

f. Should correction, as defined in section VIII., paragraph S., occur within the correction period, as defined in section VIII. paragraph T., no penalty shall be collected under this section VI.

2. Interest. In the event that any penalty under this section VI. is asserted by the Service and the CTCC fails to make payment within 90 days of the final notice of penalty, interest on the amount of such penalty shall accrue from the date of issuance of such final notice to the date of payment at the Federal short-term applicable rate (as set forth and applied in Code sections 6621(b) and 6622).

3. Non-assertion of penalties.

a. If it is established to the satisfaction of the Service, in the exercise of its reasonable discretion, that any event subject to penalty has been correction during the correction period for such event, then any penalty imposed with respect to such event (including interest) shall not be asserted, and if asserted, shall not be collected, and, if collected, shall be promptly credited or refunded to the extent permitted by law.

b. The Service shall not assert any penalty under this section VI. when the CTCC has established to the Service's satisfaction in the exercise of its reasonable discretion, that:

i. what would otherwise constitute a transaction or event warranting imposition of penalties caused no financial detriment to charitable interests;

ii. the transaction of expenditure has been corrected;

iii. the CTCC has acted promptly and in good faith to correct any such transaction or expenditure and prevent its recurrence; or

iv. the penalty is disproportionate to the severity of the transaction or expenditure.

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