EO Tax Journal

1 – New York Times’ Primer on EO Tax Law

2 – Ofer Goes Where Lions Fear to Tread: Is a Political Contribution a Gift?
___________________________

1 – New York Times’ Primer on EO Tax Law

Who would have guessed that the New York Times would devote two articles appearing today in its print edition to explain basic concepts of EO tax law. Of course we know “basic concepts” don’t take you far in EO election tax law, as it’s all facts and circumstances, as Judy Kindell is fond of explaining. The Times’Michael Luo gets it mostly right in his bold attempt to go where no IRS has gone before. I’ve noted in CAPS my comments. Continue…

1 – Old Business

1 – Old Business

In regard to yesterday’s email update, former IRSer Bill Brockner chides me for not pointing out that Senator Durbin is incorrect in his press release in stating that “U.S. tax law requires that the primary purpose of 501(c)(4) organizations … cannot be political….” According to Bill, “There is no primary purpose test for (c)(4)s — including most if not all (c)s aside from (c)(3)s. What we have for (c)(4)s is a primary activity test, which is more quantifiable than a purpose test — if you can figure what and how to quantify.”

In regard to Wednesday’s email update, in which I noted recentPhiladelphia Inquirer articles about the Milton Hershey School, the newspaper has a blistering editorial today:

Inquirer Editorial: Hershey deals leave bad taste Continue…

This has to be a frustrating time for Democrats. Faced with a possible landslide against them in a couple of weeks, they are complaining to the IRS about Republican groups improperly using section 501(c)(4) status, the latest complaint in a letter reprinted below by Senator Durbin. While these allegations may be correct, I’m not sure what difference it would make even if the IRS were “to quickly investigate the tax status of Crossroads GPS and other [(c)(4)] organizations that are directing millions of dollars into political advertising without disclosing their funding sources,” as Durbin seeks. Yesterday’s Washington Post has added to the fray, with two more articles reprinted below.

The IRS is caught in the middle. And the political consequences could be severe if the IRS were to go after Republican groups. The next Congress could be in Republican hands, with the Republicans controlling not only the tax-writing committees but also the appropriations committees. Best to lay low if you are the IRS.

On the other hand, I can understand the frustration of Democrats. Lack of disclosure is killing them, and adding a Republican Congress to a Republican Supreme Court is going to make it very lonely for the current occupant of the White House.

For the IRS’ EO function, Republican control of Congress may not be so bad. If Senator Grassley regains the chair of the Senate Finance Committee, he should be able to move on his EO initiatives and to demand that the IRS become more active in the EO area. Continue…

Yesterday I mentioned that Cathy Livingston is the new Health Care Counsel, “leading a small group in the Chief Counsel’s office to tackle projects connected with the Affordable Care Act.” I neglected to mention that she will be coordinating IRS efforts in this area with the Chief Counsel in reaching out to folks in TE/GE and other divisions. One of my readers says this will be a huge effort with huge responsibilities — assuming of course that the Republicans don’t repeal the Affordable Care Act next year.

I’ve discussed the situation with the Milton Hershey School. See Email Update 2010-124 (9/3/10), where I observed that the situation reminded me of the Bishop Estate — a relatively small school supported by a massive trust, hence with lots of money sloshing about.

My thanks to Richard L. Fox of Dilworth Paxson, Philadelphia, for sending along two recent articles. I’ve added my comments in CAPs. Continue…

1 – More 501(c)(4) Developments

1 – More 501(c)(4) Developments

For earlier developments, see EO Tax Journal Updates 2010-116, 120, 128, 129, 133, 134, 135, 136, 139, 141, 142, and 143. As I noted in Email Update 2010-128 (9/13/10), “Opening an audit involving the U.S. Chamber of Commerce will bring a firestorm of criticism from Republicans who will charge White House complicity. Clearly a no-win situation for Commissioner Shulman whose budget may be in Republican hands next year.” Continue…