EO Tax Journal

1 – Selected IRS Training Materials now on eotaxjournal.com

2 – Transcript of Evangelical Council for Financial Accountability’s Briefing of January 14, 2011
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1 – Selected IRS Training Materials now on eotaxjournal.com

As part of our efforts to make this website even more useful to subscribers, we recently moved to the website IRS EO training materials for 2008 and 2009 (click “IRS Training Materials” under “Topics”). Below I have listed the EO training materials by modules. These IRS training materials are not available on the IRS website and, short of a lengthy and expensive FOIA request, are not available to EO practitioners.

The items listed under “Examinations CPE Materials” are directed to new revenue agents and hence of limited interest to experienced EO practitioners. Much of the information in these training materials is taken from the Code, Regulations, and Internal Revenue Manual, which you can access on irs. gov. However, practitioners new to the EO field may find these materials more user friendly and helpful in developing an understanding of basic concepts..

Experienced EO practitioners should find of more interest materials listed under “Miscellaneous Topics.” For example, I think anyone with a college or university client currently undergoing or concerned about an IRS audit will find of interest the IRS materials under “Colleges and Universities” since it provides a roadmap of IRS concerns. Similarly if you are involved in a gaming audit.

EO Examinations CPE Materials

A-1   Introduction to EO Audit Techniques (24 pages)
A-2   Tools of the Trade (19 pages)
B-1   Exemption Requirements for § 501(c)(3) (29 pages)
B-2   Prohibitions to Exemption under § 501(c)(3) (42 pages)
C-1   Introduction to Unrelated Trade or Business § 511 (7 pages)
C-2   Unrelated Trade or Business § 513 (38 pages)
C-3   Unrelated Business Taxable Income § 512(a)(1) (54 pages)
C-4   Unrelated Business Taxable Income § 512(a)(3) (39 pages)
C-5   Unrelated Debt-Financed Income § 514 (34 pages)
D-1   Public Charities, Private Foundations, and Private Operating Foundations (15 pages)
D-2   Determining Private Foundation Status § 509(a)(1) and 509(a)(2) (25 pages)
D-3   Supporting Organizations § 509(a)(3) (18 pages)
D-4   Net Investment Income §4940 (16 pages)
D-5   Self-Dealing § 4941 (22 pages)
D-6   Taxes on Failure to Distribute Income § 4942 (13 pages)
D-7   Excess Business Holdings § 4943 (9 pages)
D-8   Investments Which Jeopardize Exempt Purposes § 4944 (7 pages)
D-9   Taxable Expenditures § 4945 (10 pages)
D-10  Intermediate Sanctions § 4958 (77 pages)
D-11  § 4955 Overview (14 pages)
E       Gaming (36 pages)
F-1   Introduction to Exemption Forms and Form 990 (35 pages)
F-2   Reading Form 990 (33 pages)
F-3   Interacting with Taxpayers, Representatives and Return Preparers (10 pages)
F-4   Examination Specialist Support (10 pages)
F-5   Pre-Examination Planning and Appointment Scheduling (17 pages)
G-1   Financial Auditing Techniques (49 pages)
H-1   Evidence (10 pages)
H-2   Touring the Facilities (10 pages)
H-3   Interview Techniques (56 pages)
H-4   Information Sources (31 pages)
H-5   Disclosure (6 pages)
I-3    Statute of Limitations (18 pages)
J-1    Fraud (11 pages)
J-2    Fraud Referral (26 pages)

Miscellaneous Topics

K      Colleges and Universities (112 pages)
L       Current Developments (15 pages)
M      Determination of Fair Market Measurements (39 pages)
N      Return Preparer Penalties (67 pages)
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2 – Transcript of Evangelical Council for Financial Accountability’s Briefing of January 14, 2011

For background information, go to “Grassley Releases Review of Tax Issues Raised by Media-based Ministries” at finance.senate.gov. For earlier email updates, see 2011-4 and 2011-10. The moderator of the briefing is ECFA’s President, Dan Busby. Continue…

This weekend’s reading focuses on hospitals, but with two very different items. One is a submission by the American Bar Association regarding the application of new requirements imposed on tax-exempt hospitals by section 501(r). Pretty standard stuff. The other item is an article in the Washington Post that discusses medical restrictions imposed by Catholic hospitals.

I’m not aware that anyone has addressed in a law review article whether Catholic hospitals that restrict certain medical practices are not entitled to tax-exempt status based on a public policy argument. While the Post article does not raise this issue, it seems to me to be a lurking issue.

Query: If a hospital wants to be recognized as exempt under sections 501(c)(3) and 170(b)(1)(A)(iii), must it follow accepted medical practices? In the case of Catholic hospitals, can they deny medical care based on religious beliefs and still be exempt? If religious beliefs trump medical considerations, should Catholic hospitals be eligible for Medicare payments and other government benefits, the argument being that they are not following standard medical practices and hence in opposition to public policy?

While I have no answer, I think the issue is one of more than academic interest: Should hospitals have to follow accepted medical practices and standards of care in order to be described as a hospital under section 170(b)(1)(A)(iii)? Should theologians be making medical decisions? Should a Christian Scientist “hospital” that forbids surgical procedures be entitled to exemption? Should a homeopathic hospital be exempt? Should medical care that is being subsidized by the government be subject to restrictions based on scriptural interpretations? If anyone has any answers, I’m all ears. Continue…

1 – Comments of Marc Owens on Yesterday’s Outline on EO Employment Tax Issues

1 – Comments of Marc Owens on Yesterday’s Outline on EO Employment Tax Issues

“Paul, it’s useful to put Michael Glass’ comments on the employment tax project in the larger context of the FY 2011 EO Workplan [available at www.irs.gov/eo]. On page 24 of the Workplan, the National Research Program project is described as involving 1500 randomly selected organizations, not returns, with 500 organizations to be examined in each of the three years of the project’s life. This is in contrast to the reporting of EO audit statistics in the IRS’ Databook, which reports numbers based on returns, not entities. Continue…

About a month ago I noted the upcoming January 21 meeting of the EO Committee of the ABA’s Tax Section. While in due course I’ll have transcripts of the six sessions, I’m printing today the outline prepared by one of the IRS speakers, Michael Glass, an EO Group Manager, for those who won’t be in Florida on Friday, and as a canape for those who will. 

Exempt Organizations & Employment Tax Issues Continue…

It’s a shame so much bad blood has developed over the running of the Hershey School. Clearly an independent investigation is needed, and it does not appear it can or will happen in Pennsylvania. Alumni of the School would like the IRS to get involved. I doubt if the EO function of the IRS is up to such a daunting task plus a Democratic Administration investigating what seems to involve mostly Republicans in Pennsylvania may lead to a counter-investigation by the House Ways and Means Committee. Now that Senator Grassley has handed off, at least for the time being, his investigation of media-based ministries, I think he would be the ideal person to look into and report on the situation at the Hershey School. His Republican credentials should shield him from charges of partisan bias, and his reputation for being a man of integrity should shield him from charges of a cover-up if he ends up siding with the current trustees of the school.

For earlier reporting, see Email Updates 2010-147, -149, -156, and -157. Continue…