EO Tax Journal

1 – No Recession in EO Hiring?

6 – Tax Court Finds NEA Members Have a Legal Right to Receive NEA Publications, Resulting in Allocation of a Portion of Members’ Dues to Circulation Income Continue…

Earlier this year, an article appeared in the New York Times, “IRS Takes on Tax Abuse by Charity Support Groups,” Feb. 14, 2011, which noted the revocation of 72 supporting organizations by the IRS. In addition, the article noted that 59 supporting organizations were reclassified as private foundations.

The article stated that “Several supporting organizations that have lost tax exemptions in the last several years, for example, were involved with Merrill Scott & Associates Ltd. of Utah. Merrill Scott is in receivership after a Securities and Exchange Commission investigation that claimed it had operated a Ponzi scheme. (In 2008, Merrill Scott’s principals were charged, among other things, with tax evasion and money laundering.)”

I don’t know if the following case, filed in Tax Court earlier this year, is a product of Merrill Scott & Associates. In any event, I think it is a case worth watching. The supporting organization (SO) was set up and received its exemption in 2002, but not a dime for its supported charities in the period under audit (2002 – 2005). The sole contribution of $1,064,000 to the SO was invested in a limited parnership — so much for diversification and cash reserves. The designated “primary charity” is the Wishes Are Forever Foundation of Salt Lake City, Utah, which has been deleted from the IRS’s Cumulative List of Organizations Contributions to Which are Deductible under Section 170. Continue…

1 – 275,000 Organizations on Automatic Revocation List

2 – Cat Lady Goes To Tax Court

3 – National Education Association Fighting Million Dollar Tax Deficiency in Tax Court Continue…

As I’ve noted, the Tax Court makes it difficult for the press and the public to follow what is going on in its docketed cases, almost all of which contain public information, but because of the Tax Court’s Rule 27, access is severely limited.

As a result, I can only obtain information about current cases at great difficulty and expense. Today’s case is Capital Gymnastics Booster Club, Inc. v. Commissioner. The case is fully briefed and went to trial in November 2010 before Judge David Gustafson. The Pretrial Memorandum for Respondent, reprinted below, lays out the issues. The case file contains a copy of the IRS Exempt Organizations Continuing Professional Education Technical Institute Program textbook chapter from FY 1993 that is directly on point, which is also reprinted below.

Once again, I have to ask (as I have with the Bartels and Polm cases), why? Why is the taxpayer going to court with, in my opinion, little or no chance of winning? Then again, you have the recent Driscoll case, so I suppose anything’s possible. Continue…

Weekend reading while waiting to see if Animal Kingdom can win the Preakness (of course, if tomorrow is truly Judgment Day, we may not have a Preakness). The Viralam case, reprinted below, seems to have escaped notice for a number of reasons, but I think it makes for interesting reading. Continue…