11VAC20-20-100 Financial reporting, penalties, inspections, and audits

Para K. Salaries and wages of employees whose primary responsibility is to provide services for the principal benefit of an organization’s members shall not qualify as a business expense.

Since the non-profits have gone from volunteer workers to paid employee we are now treated as a small business as such required to pay taxes, w/holding, workman’s compensation and other.  If these costs are not permissible this organization will not be able to meet financial obligations. 

Recommendation:  Change this ruling to allow salaries and wages as a qualifying business expense.