EO Tax Journal

For those who have had enough on the perils of (c)(4)s engaged in politicking, you can skip my reprint of the recent letter to the IRS from Democracy 21 and the Campaign Legal Center. For those who have had enough on the perils of Paul, you can skip my reprint of an article from the Baltimore Sun. Last week I reported on the rain and imminent flooding in my neighborhood. What I didn’t realize then is that a tornado came within a mile of my house. I’m always amused by local reporting, so the article follows. Tomorrow, barring rain and tornados, I expect to have the transcript of Lois, Phil, and Ruth in Toronto. That’ll make for good weekend reading while watching baseball and football.

National Weather Service Confirms Tornado near Pasadena

Downed Trees Reported in Lake Shore Neighborhood

By Jessica Anderson, The Baltimore Sun, October 1, 2010

The National Weather Service confirmed Friday that a tornado passed through the Lake Shore neighborhood east of Pasadena in Anne Arundel County during Thursday’s storm. Officials at the National Weather Service said the tornado reached maximum winds of 80 mph, with a path as wide as 200 yards and as wide as one mile long, passing within a half mile of Chesapeake High, Chesapeake Middle and Bodkin Elementary schools.

The tornado formed at about 9:46 p.m. over Cornfield Creek, knocking a sailboat on its side and then moving toward Milburn Circle in Lake Shore, where it knocked down several trees. The tornado left a trail of damage, running from southeast to northeast, and weakened, touching down a final time in the 8300 block of Dock Road at about 9:49 p.m. No injuries were reported as a result of the tornado.

Groups Seek IRS Investigation to Determine Whether “Crossroads GPS” Is Operating in Violation of Its 501(c)(4) Tax Status Continue…

Being President of the United States is no fun. It’s probably impossible to be a successful POTUS nowadays. And the criticism is never-ending. If I understand Connie Rosenberg’s views correctly, to run for President today means you must be insane, but that means you should not be President by reason of insanity!

I think another position where it is probably impossible to succeed is being Director of Exempt Organizations. While I’m not saying Lois Lerner is insane, she is in a no-win position. I have a certain amount of sympathy for Lois as I feel she has an impossible job. I sometimes feel that I’m also in a no-win situation, because if I criticize her, some readers say I am being mean and unfair. If I don’t criticize her, other readers say I’m being too easy on her. And then some readers go back and forth, first saying I am being mean, then saying I’m being too easy!

On Monday I noted my disappointment with Lois’ “I’m not going to talk about that” answer to a question at the NAAG/NASCO Conference. Later I heard from a reader who said I must have been sleeping through her presentation. He said Lois addressed the current problem of (c)(4)s, (c)(5)s, and (c)(6)s being involved in too much political activity by saying that organizations needed to be educated about what they can do in advocating their positions and candidates. My reader’s comment was that “education” is not what is needed. The (c)(4)s, (c)(5)s, and (c)(6)s currently in the news for their political involvement have sophisticated EO attorneys at their beck and call. While there is some confusion as to where advocating a position becomes advocating a candidate, the cases in the news are clearly in the political realm. According to my reader, what the IRS needs to do now is kick some butt, not “educate.” Continue…

The Congressional Research Service released a report titled “Tax-Exempt Organizations: Political Activity Restrictions and Disclosure Requirements,” which I’ve reprinted below. For those closely following these developments, there is nothing new. For folks who wish to be brought up to date, this report is a good synopsis of where we stand today.

Speaking of political activity, this morning I went to the ongoing NAAG/NASCO Conference to hear Lois Lerner and Ruth Madrigal speak. Not to my surprise, Lois and Ruth rehashed their recent ABA comments in Toronto, and I’ll have a transcript of those comments shortly. What did surprise me was Lois’ answer to this question by an attendee: “What about churches and preaching from the pulpit?” Lois emphatically answered: “I’m not going to talk about that.”

Normally I’d expect Lois to give the usual IRS gobbledygook answer, such as “We’re looking into that, but of course I can’t say anything about any particular church.” So what’s the difference in her saying, “I’m not going to talk about that.” Well, I’m not blaming Lois, since I’m sure she is merely reflecting the IRS’ say-nothing position, but the IRS should be talking about churches and politicking from the pulpit.

The Alliance Defense Fund is encouraging pulpit politicking. See Email Update 2010-137. I don’t see how the IRS can walk away from this challenge. Yet all we’ve heard from the IRS is, “I’m not going to talk about that.” Last week, Marc Owens may have said what Lois cannot say (see Email Update 2010-139). According to Marc, the IRS has “effectively abandoned the field” at a time of heightened political activity by all exempt organizations, including (c)(3)s. He added: “We seem to have a haphazard IRS enforcement system now breaking down completely.” Marc of course formerly held Lois’ job, so I don’t see how the IRS cannot respond to his comments, unless what he is saying is true, in which case there is no good response possible.

On a more cheery note, Ruth Madrigal’s predecessor, Emily Lam, has rejoined Skadden, Arps, Slate, Meagher & Flom LLP as Counsel in the Washington, D.C. office. Emily’s practice will focus on tax controversy and exempt organizations matters. Continue…

At the moment I feel like Noah, as I suspect most East Coast residents do. Instead of an Ark, I rely on my sump pumps to save me — and worry about losing the electricity that powers them. So far, so good, although at one point early this morning water was coming in through the walls faster than the sump pumps could expel it. Even the cats were getting nervous. Oh well, there’s always something to keep life interesting.

We can thank Victoria Bjorklund and her colleagues for some weekend reading, assuming your clientele includes foundations. The Form 990-PF does have a well-deserved reputation as the form from hell. Hopefully, improving the instructions as they suggest will make filling out the form easier.

ABA Seeks Changes to Instructions for the Form 990-PF to Increase Clarity for the Reporting Foundations and to Enhance Accountability to the Service and Transparency to the Public Continue…