EO Tax Journal

Today’s transcript of the second panel of the January 21 meeting of the EO Committee of the ABA’s Tax Section relives a battle we had in these missives last year. On May 18, 2010, the IRS extended the filing deadline for many small organizations that had, under the law, lost their tax-exempt status as of May 17, 2010 for failure to file the Form 990-N (e-Postcard). I referred to this as the “Oh, never mind” notice in honor of SNL’s Emily Litella in Email Update 2010-72. The IRS notice set off a flurry of commentary (see Email Updates 2010-73,  -74, and -75).

Turning to the recent panel discussion, I’m inclined to agree with Victoria Bjorklund that “exemption is a privilege and so if you’re going to get it, you should be able to do something as simple as the 990-N filing.” The way I see it, section 501(c)(3) exemption is the greatest gift the IRS can give anyone. Forgetting UBIT, you can set up an organization that is not subject to income tax nor lots of other taxes and you can give this organization tax-deductible contributions. What a deal!

On the other hand, I’ve recounted in these pages the story of the late Dorothy Day and her Catholic Worker Movement. For those coming in late, the IRS in the seventies went after her for not filing Form 990s. Her response: “I’m too busy helping the poor; I have no time for filling out government forms.” Well, the New York media took this story and ran with it, contrasting the saintly Dorothy Day with the heartless IRS. Not the kind of publicity the IRS needs.

So the battle continues today in the guise of whether small, do-good organizations should be expected to file even something as simple as a Form 990-N or whether we should just leave them alone. The ABA panel discussion, reprinted below, is only the latest iteration of this debate. Continue…

As promised yesterday, today I’ll start sending out transcripts of the recent meeting of the EO Committee of the ABA’s Tax Section. The first panel is always “News from the IRS and Treasury.” I find what the IRS and Treasury folks don’t say or what they imply is often more interesting than what they actually say.

Here’s what I got out of what they had to say:

One, health care is where the action is — and where recognition and promotions lie if you work at the IRS. Everything else is now taking a back seat to the Affordable Care Act.

Two, would the last person leaving please turn out the lights? In the TE/GE Commissioner’s office, Sarah Hall Ingram has gone to you know where and Joseph Grant, an EP man, is acting. Acting at the IRS usually means you do little or nothing, since you are mostly just a placeholder. In Chief Counsel, Cathy Livingston has also made the move to health care, leaving us with another EP person, Nan Marks. Meanwhile, Lois Lerner has a full staff with nothing much to do, except “collaborate.” Over at Treasury, Ruth Madrigal is discovering why Emily Lam left.

The resulting unhappy situation is that at the top leadership rungs of Treasury and IRS, there is no one with a forceful personality and the clout to push EO matters. The best example of total dereliction of duty is the failure to finalize the section 7611 regulations, which would take all of five minutes if there were any leadership. Incredibly, there was no mention of these regulations at the EO Committee meeting. I guess that train wreck is old business or best forgotten.

But who am I to say? Here’s the transcript of what transpired, so you can make up your own mind as to what they were really saying. Continue…