EO Tax Journal

I’m assuming all readers of this missive subscribe to the IRS’ EO Update, so unless there is something controversial — heaven forbid — I don’t comment on what the IRS has to say. I will say the latest issue (2010-20) is out for anyone who has been napping or, in the case of Bill Brockner, traipsing about Scotland.

In December, 2008, my incredibly shrinking hometown newspaper, the Baltimore Sun, somehow found the resources to do a devastating (for Maryland hospitals) investigative series on hospital debt-collection practices and lack of charity care, which may have been a factor in Congress passing section 501(r). While not as extensive, the Sun has found the resources to do another report on Maryland hospitals, this one focusing on executive compensation, using Form 990 data.

Hospital CEOs Get Seven-figure Salaries, Country Club Memberships

Critics Question Whether Nonprofits Should Pay So Handsomely

By Andrea K. Walker, The Baltimore Sun, August 28, 2010 Continue…

1 – Old Business (More on Z Street)

2 – New Business (Americans for Prosperity Foundation) Continue…

A case filed on Wednesday, August 25, 2010, is attracting national attention, probably for all the wrong reasons. As a service to readers, I’m sending out a copy of the complaint (reprinted below) in the case of Z Street v. Shulman.

While I do not have any independent knowledge of the truth of the complaint’s allegations that there is “a special IRS policy in place regarding organizations in any way connected with Israel, and further that the applications of many such Israel-related organizations have been assigned to ‘a special unit in the D.C. office to determine whether the organization’s activities contradict the Administration’s public policies,’” I find these allegations hard to believe. I’ve been told that both the IRS Commissioner, Douglas Shulman, and the Director of Exempt Organizations, Lois Lerner, are Jewish and, even if not, I have too much respect for them to think that they would stand idly by while a “special unit” was put in place to administer an “Israel Special Policy,” as detailed in the Complaint. In view of the extreme sensitivity of these charges, it seems to me that the IRS must make a public response.

On Thursday, I said my job as an editor is to separate the wheat from the chaff. But what am I supposed to do if there is no wheat? TIGTA’s latest report, “Review of the Internal Revenue Service Criminal Investigation Division’s Non-Profit Fraud Referral Process,” (reprinted below) may have had some merit when it began, but it quickly became a road to nowhere. Even its intended recipient, CID, said thanks but no thanks. I’m reprinting the report on the wan hope that perhaps its statistics may be of interest to someone, or that someone can explain why this report should not be dismissed as make-work. Continue…

My job as an editor is to separate the wheat from the chaff. If you’re involved with section 527 political organizations, then you probably should read the following TIGTA report. If not, here’s all you need to know: First, as many as one out of every four Forms 8872 filed with the IRS have incomplete or missing contributor or recipient information. Second, the IRS is not following up on information it has requested from political organizations to verify compliance — even if the organization ignores the IRS request for information. You could say this is a truly voluntary compliance system.

TIGTA Report on Section 527 Compliance

Improvements Have Been Made, but Additional Actions Could Ensure That Section 527 Political Organizations More Fully Disclose Financial Information Continue…

Come Fall, we’ll have a number of interesting programs coming our way – to be reported on here if you are unable to attend in person. But first, it’s time to wrap up any loose ends from the first half of this year. Today I have our final transcript from the annual Georgetown Law EO program. I won’t say we have saved the best for last, lest I offend those who participated in other sessions, but I can say, for those who weren’t there, it’s been worth the wait, and the discussion is as timely as it was in April.

Current Trends in State Charity Regulation

What follows are the April 23 remarks of Eric Carriker, Massachusetts Office of the Attorney General, Cindy Lott, Columbia Law School, New York, and Mark Pacella, Pennsylvania Office of the Attorney General, to attendees at the annual Georgetown Law program on “Representing & Managing Tax-Exempt Organizations.” The moderator of the session is Celia Roady of Morgan Lewis & Bockius, Washington, D.C. Continue…