EO Tax Journal

1 – Washington Invasion

3 – Bruce Hopkins’ Current Developments (Part 4) Continue…

1 – Bruce Hopkins’ Current Developments (Part 3)

2 – Chairman of House Appropriations Committee Accused of Steering Federal Money to Nonprofits in Kentucky

3 – Excerpts from Testimony Prepared for Subcommittee on Oversight and Subcommittee on Health, Committee on Ways and Means of the United States House of Representatives, April 1, 2011 Continue…

Bruce Hopkins’ Current Developments (Part 2)

I have no idea how long my discussion of Bruce Hopkins’ Georgetown remarks will go on. At this point I am not even half through his remarks, but since Bruce is always so provocative, who’s counting?!

Bruce summarized a 2010 denial letter, PLR 201023058, by saying that “the organization was held to violate the private benefit doctrine because (1) it does not forbid compensation of directors and (2) related parties on its governing board might use its assets for private benefit.”

Bruce says this denial letter “troubles [him],” that “there’s nothing in the law that bars compensation of directors, as long as the compensation is reasonable, and there’s certainly nothing in the law that requires that charities put in their documents that directors will not be compensated, and the other reason was that the governing board might be engaged in acts of private benefit. That’s not the way the [private benefit] doctrine is supposed to work. It’s supposed to apply when there has been some form of private benefit rather than give the IRS the authority to sit back and speculate about what might happen and deny recognition of exemption on that basis.” Continue…

1 – Current Developments

I always enjoy listening to, and critiquing, Bruce Hopkins when he does his annual talk on “Current Developments” at the Georgetown program on “Representing & Managing Tax-Exempt Organizations.” This year was no exception, and today I will begin my review.

Bruce began by noting what he considered the “most important element of the EO workplan” — drum roll please — the Charitable Spending Initiative. In case you missed it, the CSI is, in the words of the IRS, “a study to learn more about sources and uses of funds in the charitable sector and their relationship to the accomplishment of charitable purposes.” Organizations selected for examination under this study include “those with high levels of fundraising expenses, organizations reporting unrelated trade or business activity with relatively low levels of program service expenditures, organizations with high ratios of officer compensation in comparison to program service expenditures, and organizations with low levels of program service expenditures in comparison to total revenue.” Continue…