EO Tax Journal

EO skullduggery right under my nose for the past 25 years and I missed it. As has been reported in recent months, Maryland-based Erickson Retirement Communities (ERC) is in bankruptcy court. In brief, ERC is a for-profit developer and manager of nonprofit retirement communities — 501(c)(3)s — in Maryland and nearby states.

ERC was built from scratch by John C. Erickson starting in the early eighties. The first retirement community, Charlestown, is not far from where I grew up in Baltimore. I have an aunt who is a current resident of the grandly named “Renaissance Gardens at Charlestown.” One of her sons, prior to his recent retirement, was one of the top tax officials in Maryland state government.

The ERC “concept” was simple in its design, more complex in execution. After ERC created a retirement community as the developer, it would sell the “campus” to an allegedly independent nonprofit organization, which would finance the purchase, at least in part, by tax-exempt bonds, and then enter into management contracts with ERC. It appears that the numerous nonprofits are largely controlled by National Senior Campuses Inc., a 501(c)(3) supporting organization, which appears to be largely controlled by ERC through overlapping officers and directors.

On April 4, The Washington Post did a great summary of what has transpired in recent years with ERC. Perhaps the IRS could have done more, but at least they were on the scene. My criticism today is directed at the State of Maryland, which, as I have mentioned in the past, is no fan of charity regulation. The reason is mostly political. No aspiring Maryland governor or attorney general wants to run on a platform that includes charity regulation in a state that is saturated with nonprofits. While no one likes excessive government regulation, without any regulation you get cases like ERC, where lots of innocent people get hurt. End of sermon.

Continue…

Yesterday’s Washington Post had an article on an unusual “church” in “C Street House Is Target of Clergy’s IRS Complaint.” An article in the Columbus Dispatch is reprinted below, along with a complaint letter to the IRS prepared by the law firm of Caplin & Drysdale, Washington.

Continue…

God willing and the Creek don’t rise, I should have a transcript of Sarah Hall Ingram’s February 5 remarks in the next day or two. Speaking of Sarah and her domain, I think most people are coming around to the reality that we have a serious problem with charity regulation in this country. Now everyone is trying to come up with solutions, which is good, but most of the proposed solutions seem to me to come with their own problems. In this vein, The Chronicle of Philanthropy had two interesting viewpoint articles in its February 25 issue.

Continue…

If this transmission is successful, I have in the wings (sorry for the redundancy) a transcript of the recent ABA panel on supporting organizations ready to go. I suspect a lot of people would like to read what was discussed in Texas with Emily Lam and Phil Hackney, so we’ll see. Hopefully you received the panel discussion on News from the IRS and Treasury, sent on Monday.

Continue…

1 – David Epstein on Marc Owens’ Comments on Need for Determinations Function

2 – Jim Hasson on University Tax Avoidance

3 – Pay Rises for Leaders of Colleges, Survey Says
_______________________
Continue…