EO Tax Journal

Year 2010 Report

This will be my last email update for 2010. I tell people these missives are weekly updates, but you know they come out more frequently than weekly. At the same time, I cannot call them daily updates, which would require putting something out on days when there is nothing to report, and I’m not a believer in what is called “filler” in the trade. Maybe I should call them almost every day updates?!

2010 has been a year of change for me in that I’m out of the print business after many years of loving to see the finished product of a paper journal. But, as many of you have said to me, it’s about time. My concern about some people being wedded to paper appears unfounded, based on what to date has been a smooth transition to an all-digital world. I’m told the Big Four accounting firms pretty much ban paper publications from their offices. There, your computer is, in effect, your library, and I suspect even law firms are moving to paperless libraries.

As 2010 closes, all EO Tax Journal subscribers should have a password to the new website, eotaxjournal.com. If not, please let me know. The website currently has all the 2010 email updates, which contain all the information that was published in paper form in 2010. You no longer need to save email updates, and our search function should allow you to find what you are looking for much faster. We will continue to improve and expand the website in 2011.

What I think makes the EO Tax Journal different is threefold. One, it has a lot of information available nowhere else. The major tax services are mostly content to report what is handed to them. I scour numerous sources for information. That’s how I was able to identify eight universities that are currently being audited by the IRS. I’m not aware of any other publication compiling a list of this sort.

Two, the EO Tax Journal has a continuing dialogue going on with folks on the Hill, Treasury, and the IRS. Over 200 people in the IRS’ EO function receive the email updates, and they frequently voice an opinion, of necessity mostly anonymously. Since I frequently report on problems of IRS administration, concerns raised in the email updates come almost immediately to the attention of the top managers.

Three, because I formerly worked in the EO Division and have remained in contact with many others who have also worked there, I am able to get information not available to other tax services. One IRS official has complained that it is almost like I’m sitting in on many of their meetings! However, my efforts are only as good as my sources, so I encourage all readers to email me with their reactions to developments. No one’s viewpoint is ever ignored and is published if I’m given permission.

My overall goal is to improve the workings of the EO sector. Since my area of expertise is the tax law applicable to tax-exempt organizations, that’s my focus. As you probably know, I believe we need better EO tax laws and better regulation by the IRS and the states. I also try to encourage practitioners to join me in this effort. Too often it seems to me that the intended beneficiaries of the sector are lost sight of while we have arcane discussions of what is and is not permitted under the tax law.

I realize that in law school one of the first words of advice is that it’s okay for lawyers to get serial killers off on technicalities, but I believe tax practitioners in the EO sector must serve not only their clients but also the sector as a whole. The problem, as I see it, is that the folks with the money are not always working for the best interests of those who are the recipients of their services or grants. I realize my views are not always well-received, but I challenge those who disagree to speak up in 2011. I thank those who have communicated, either their agreements or disagreements or sometimes both in the same missive, in 2010, and I hope they will continue to do so in 2011.

Happy New Year!

Paul Streckfus
________________________

Is this the EO horror case of the year? Or is it the Hershey School? I thought Bobby Thompson was the guy who was famous for his “Shot heard ‘round the World.”

Navy Vets Leader Made an Unchecked Rise into Elite Circles
By Jeff Testerman and John Martin, St. Petersburg Times Staff Writers, December 27, 2010 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…

1 – More Holiday Reading

2 – COF Continues EDIR Quest

In Treasury/IRS time, a year is at most a millisecond. Continue…

1 – Holiday Reading

1 – Holiday Reading

Roger Colinvaux, described to me by Dean Zerbe as one of the smartest guys to have ever worked on the Hill, has written an article on Citizens United and the section 501(c)(3) political activities prohibition. It’s available at http://ssrn.com/abstract=1726407. To whet your interest, here’s his conclusion:

“Citizens United makes a Supreme Court challenge to the political activities prohibition likely, and a reexamination of the political speech of charities necessary. This Article has argued that although the political activities prohibition has flaws, it has largely been a noncontroversial rule that serves important purposes. Most critically, the prohibition draws an important line that acts as one of the few limitations on the charitable purpose requirement. Because of the prohibition, charities are not allowed to get involved in politics, which gives the charitable purpose requirement clarity and keeps the ‘independent’ sector independent. Although the risks of loosening the prohibition may be overstated, the gains from doing so are not apparent. There is real, if intangible, benefit to a charitable sector that is noble in purpose and free of partisan rancor. Furthermore, there is no easy alternative to the political activities prohibition. Accordingly, this Article has argued that the political activities prohibition should be retained. Of course, retention of the prohibition would not be possible if it were unconstitutional. Although Citizens United presents a challenge to the constitutionality of the prohibition, close analysis of the case results in several meaningful and critical distinctions that could and should lead to the conclusion that the political activities prohibition is not, for constitutional purposes, a burden on speech. This is not to say that present law is perfect — it is not. But the prohibition represents the evolution of a century of wrestling with the subject of political activity and charity, and the wisdom that the two are not compatible. Such wisdom should not be contravened.” Continue…