Something for everyone today.
1 – Pablo Eisenberg Weighs In on Compensation Debate
2 – IRS Seeks Comments on New Section 501(r)
3 – TE/GE Advisory Committee to Meet on June 9
4 – Weekend “Religious” Reading
Month: May 2010
EO Tax Journal 2010-77
Interim Colleges & Universities Report Discussed at D.C. Bar Program
It could have been one of the most boring EO programs in history, but it wasn’t. Coach Colinvaux’s decision to have a tag team of five speakers helped — as soon as one speaker started getting boring, another one popped up. So, considering the subject matter, Nikole Flax, Chris Giosa, Judy Kindell, Theresa Pattara, and Morey Ward did a good job. In fact, rather than try to summarize their remarks, I hope to have a transcript in the near future.
EO Tax Journal 2010-76
1 – Georgia on My Mind (or at least the IRS’)
2 – Today’s D.C. Bar Program to Discuss C&U Interim Report
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EO Tax Journal 2010-75
1 – More on “Oh, never mind”
Constitutional crisis or tempest in a teapot? Folks seem split on Commissioner Shulman’s statement last week re late Form 990-N filings. One observer did say Jack Siegel (see his comments reprinted yesterday) was overstating his case in saying that:
“The IRS did not crack down on anybody. It did what Congress instructed it to do. It followed a law passed by Congress. If anyone cracked down on small charities, it was Senator Charles Grassley and his former aide, Dean Zerbe, who were the chief advocates for the provisions in the Pension Protection Act that affected charities.”
According to this observer, Grassley and Zerbe were simply responding to the IRS’ wish for a legislative blessing for such a “crackdown.”
EO Tax Journal 2010-74
1 – More on “Oh, never mind”
2 – A Real Life Mess — A Lawyer’s Dilemma?
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EO Tax Journal 2010-73
1 – More on “Oh, never mind”
Sparkle Plenty had this reaction to Commissioner Shulman’s statement that was reprinted here on Wednesday:
“Emily Litella, wow! I had the same thought … but minus theSNL reference. So: has the Commissioner decided that they will ‘find’ some authority by which his agency can accept LATE filings or is he going to wave a wand so that 990-N 2009 filings will now be subject to an automatic-automatic extension (automatic in that you don’t have to file and automatic in that they are all granted)? Since that would usurp Congress’ authority (wow, Bush and Cheney are back!), perhaps he (a Democrat) is just assuming that Congress will come late to the party and retroactively change the rules. Wow again.”
EO Tax Journal 2010-72
1 – “Oh, never mind” – Emily Litella
The following notice was posted by the IRS yesterday:
Statement of IRS Commissioner Doug Shulman on the Filing Deadline for Small Charities
EO Tax Journal 2010-71
1 – More on ACT Committee
2 – Intermediate Sanctions Update (Remarks of Doug Mancino and Marc Owens)
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EO Tax Journal 2010-70
ACT Committee
The IRS announced yesterday (IR-2010-61) the selection of two new EO members of the Advisory Committee on Tax Exempt and Government Entities (ACT): Karen A. Gries of LarsonAllen LLP, Minneapolis, Minnesota, and Celia Roady of Morgan Lewis & Bockius, LLP, Washington, D.C.
EO Tax Journal 2010-69
Yesterday I had critiques and comments from retired IRSers Bill Brockner and Conrad Rosenberg, who have almost 80 years of EO experience. Today another former IRSer, Milt Cerny, joins the fray. If you add Milt’s and my experience, we now have 160 years of EO experience focusing on a fraternity’s scholarships as described in Denial 201017067, which was printed out in Email Update 2010-66 (5/6/10).
Here’s what Milt has to say:
“I read with interest the comments that you, Connie and Bill made on the denial in 201017067 regarding the awarding of fraternity scholarships. I think the fraternity has a better argument than the IRS that the granting of these scholarships comes within Rev. Rul. 56-403, which has been the IRS position regarding fraternity scholarships at the national or local level as long as they are granted on an objective and nondiscriminatory basis and as long as the class is open and not limited to pre-selected individuals. I do not see the relevance of the Beta of Clovia case to this question or the other precedents cited for serving private interests.”
EO Tax Journal 2010-68
Today is devoted to critiques and comments from retired IRSers Bill Brockner and Conrad Rosenberg, who together have almost 80 years of EO experience.
EO Tax Journal 2010-67
Yesterday, I went to the meeting of the Exempt Organizations Committee of the ABA’s Tax Section. I didn’t learn much, but that’s good, because that means I have been covering most of what has been happening in these pages. The big news, which happened outside the meeting, was the release of the Interim Report on Nonprofit Colleges and Universities Compliance Project, which is now available on irs.gov. For those short of time, Lois Lerner recommended reading the executive summary, which I’m reprinting below. Much will no doubt be written about the interim report, but here are items I found of interest right off the bat from the report (my comments in CAPS).
“The overall response rate was high (97%) … Additional follow-up will be conducted in the case of the 13 organizations that did not respond at all to the questionnaire, as well as those organizations that did not respond completely.” SHOULD WE SEND DUNCE CAPS TO THE 13 ORGANIZATIONS THAT DID NOT RESPOND?
“Nearly half (48%) of small colleges and universities reported never filing a Form 990-T, compared with 29% for medium and 4% for large colleges and universities.” I SUSPECT MOST COLLEGES AND UNIVERSITIES DO HAVE SOME UBIT. SEEMS LIKE SOME TARGETED AUDITS ARE IN ORDER.
“Consistent target and actual spending rates of approximately 5% of endowment assets were reported across all size categories.” WASN’T IT ME WHO SAID ON THURSDAY THAT “A FIXED RATE BECOMES IN EFFECT A CEILING”? SEEMS LIKE COLLEGES AND UNIVERSITIES HAVE FOLLOWED THE RATE THAT APPLIES TO PRIVATE FOUNDATIONS (SECTION 4942) TO A TEE.”
“In the case of large organizations, the highest paid employee (other than an [officer, director, trustee, or key employee]) was most often a sports coach (43% of organizations).” DOES THIS SURPRISE ANYONE?
“More than half of the organizations in each size category reported using the rebuttable presumption procedure to establish executive compensation.” THIS SURPRISES ME. I WOULD HAVE EXPECTED ALMOST 100%.
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EO Tax Journal 2010-66
Tomorrow the ABA’s EO Committee meets for its annual Washington get-together, with invited IRS guests leading off the meeting. My friend Rielle, who works at the IRS, swears she overheard the following conversation between Lois Lerner and Judy Kindell.
Lerner: Judy, what do we say if someone asks us about the PACI report?
Kindell: We could say we lost it.
Lerner: That’s kind of lame.
Kindell: How about if we say it’s been classified.
Lerner: That kind of conflicts with my transparency speeches.
Kindell: I got it. Let’s say Jack has it.
Lerner: But Jack’s retired.
Kindell: Jack retired and he took it with him.
Lerner: That’s perfect: “Jack retired and he took it with him.”
On another topic, I’m not sure the IRS got it right in Denial 201017067, reprinted below, but there are some missing or not revealed facts. Clearly there is a private benefit to anyone who gets a scholarship from a section 501(c)(3) organization, but usually that is not fatal to exemption. What we don’t like are rigged or automatic scholarships, so to me the question in Denial 201017067 is whether we have such a situation.
EO Tax Journal 2010-65
I’m sending along two recent comment letters on the proposed supporting organizations regulations, one from the ABA’s Tax Section and one from Ruth Madrigal of Caplin & Drysdale. These letters join many others that have been submitted. What I notice — and correct me if I’m wrong — is that all the comment letters are from or on behalf of supporting organizations. It’s too bad supported organizations seem left out of the conversation. I suspect the National Committee for Responsive Philanthropy, for example, does not have the resources to hire an advocate to argue on behalf of supported organizations.
EO Tax Journal 2010-64
Today I have the April 22 remarks of Nan Downing, Director, EO Examinations. I believe this is her first major speech as director. Since many of you read these updates while traveling or commuting, I think you’ll find the headers helpful so you can read only what interests you. Next week I expect to have a transcript of the remarks of Doug Mancino and Marc Owens, who followed Nan’s session. They gave their perspective of IRS audit activities, not all favorable, so stay tuned.
EO Tax Journal 2010-63
1 – IRS Auditing $1.2 Million Salary Paid to Fired University President
I’m guessing the audit of the Kansas City University of Medicine and Biosciences (see article below) is part of the exams generated by the IRS’ college and university initiative. If so, the school joins Harvard University, Lamar University, Suffolk University (Boston), Texas A&M University, and the University of Texas on my list of identified school audits.
2 – Senator Grassley Comments on CBO Report on Collegiate Arbitrage
Are colleges and universities double-dipping when it comes to tax breaks?
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