EO Tax Journal

In regard to Monday’s email update, Theresa Pattara, in her personal capacity, has this to say:

“Paul, I write with the usual disclaimer that I make when I speak publicly, i.e., I am not speaking, or in this case, writing, on behalf of Senator Grassley or his office. But I couldn’t help but write since I got a chuckle out of reading your post on Monday — it made me think of Goldilocks and The Three Bears. I’d put you in the ‘porridge is too cold’ category because you don’t think the Senator went far enough. Of course there are plenty who think the ‘porridge is too hot’ because the Senator shouldn’t be considering these issues at all. It’s the same criticism he received in 2004 when the staff proposals regarding general charity reform were issued and then again when the hospital proposals were issued.

“Many thought that the 2005 report issued by the Panel on the Nonprofit Sector, convened to respond to the 2004 staff proposals, wouldn’t result in anything. Yet, many of the ideas addressed in it — and some that weren’t in the Panel’s report — were included one year later in the Pension Protection Act of 2006. This despite the fact that many thought the provisions, particularly those regarding supporting organizations and donor advised funds, would be removed in conference.

“With respect to hospitals, Senator Grassley had a longer timeframe. He wrote to ten hospital systems in 2005, issued the staff summary of those responses and held a hearing in 2006, issued staff proposals and sponsored a roundtable in 2007, and then negotiated common sense reforms into the 2009 Senate version of the health care bill. Many thought the hospital provisions would similarly be on the chopping block since he ultimately wound up not supporting the larger package.  Yet, the provisions stayed in because both the Catholic Health Association (CHA) and Congress agreed they were common sense reforms. And, unlike other provisions of the healthcare bill, they will not be subject to repeal. Continue…

Today, I’m reprinting the Supreme Court’s decision in Mayo Foundation v. U.S. I’ve always seen the never-ending litigation involving medical residents as an attempt by hospitals to deprive their residents of the benefits and protections of Social Security coverage. Congratulations to Cathy Livingston and her folks for pursuing these cases as well as the attorneys at the Department of Justice.

I’m also reprinting from the National Taxpayer Advocate’s 2010 Annual Report to Congress — Most Serious Problem #8 — “The Failure of the Office of Appeals to Adequately Document Prohibited Ex Parte Communications May Violate Taxpayer Rights and Damage the Public’s Perception of its Independence.”

In the discussion of Most Serious Problem #8, there is an interesting dissertation on the appeals process, which should be of interest to EO practitioners considering same. In addition, there is expressed in the report a rather strong disagreement between the Taxpayer Advocate and the Office of Appeals.

Since we’re talking bureaucratic legalese here, the back-and-forth is not on a par with those late seventies exchanges on SNL between Jane Curtin and Dan Aykroyd (“Jane, you ignorant slut” and “Dan, you pompous ass”), but I wouldn’t be surprised if the two sides weren’t thinking along those lines. To quote the new philosopher king, Rex Ryan, “This is personal.” Here are parts of the report I found amusing: Continue…

More Holiday Reading

1 – McGuireWoods Lawyers Publish Article on Colleges and Universities

2 – IRS Releases Revised Publication 571 on 403(b) Plans

3 – If  You Care about Conservation Easements Continue…

It’s Friday, it’s snowy, and it’s cold. And the holiday season begins in earnest for many folks this weekend or maybe just shopping for that special gift for that special someone. (Those jewelry store ads are the worst.)

My advice: buy a book or read a court case. I have both for you today.

I didn’t expect to enjoy reading an 800-page book about Warren Buffett, but I did. I saw it in the library and thought, what the heck, if it doesn’t grab me in the first 50 pages, it can go back and I’ll start reading about Mickey Mantle (The Last Boy — and the End of America’s Childhood, by Jane Leavy).

Actually I found I could not put the Buffett book down (The Snowball — Warren Buffett and the Business of Life, by Alice Schroeder). As I think the author says, simple tastes, complex man.

We all know Buffett is giving billions to charity through the Gates Foundation. His views toward charity and charities developed over time. In the early seventies, he was delighted to help bring to light the Boys Town scandal. What was the key document in the investigation?

Here are Buffett’s quoted words: “I was sitting there in the family room doing the Form 990 for the Buffett Foundation, and it just hit me — if I had to file a return, maybe they did too.” Twenty days later they got the Boys Town Form 990 from the IRS. (Try doing that today.)

Later in the seventies, Buffett was getting advice about foundations from Walter Annenberg. His advice to Buffett: be very wary lest your money end up in the hands of a McGeorge Bundy, who Henry Ford II described as “the most arrogant son of a bitch in the country, who developed the lifestyle of an Arabian prince on Ford Foundation money.”

The book has the best definition of leverage I’ve seen. Leverage is like gasoline. In a rising market, a car uses more of it to go faster. In a crash, it is what makes the car blow up. A lesson seemingly always forgotten.

Tax Court Creates Another Tax Shelter? Pun Intended.

I’m reprinting an interesting 7-6 Tax Court decision. I personally agree with the dissenters. While the vast majority of ministers don’t have the problem of multiple homes, if I’m a televangelist with millions of dollars coming in, why not have ten homes and use this case to have the parsonage allowance under section 107 apply to all of them? Continue…

1 – Working Group Rips Treasury for Unproductive Discussions and Chilling Vital Charitable Activity

2 – Yes, Virginia, There Is a Section 501(d) Continue…