Month: June 2010

Transcripts (ABA EO Committee)

EO Tax Journal 2010-93

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A number of folks at the May 7 meeting of the ABA’s EO Committee probably didn’t know what John Pomeranz’ “inside EO law joke” was, but for faithful readers of these missives, I’ve been joking about the three certainties — death, taxes, and a bar quip to begin the last panel of each EO Committee meeting. The first few times it was cute, but finally I said enough, that future references would draw an EOTJraspberry. Well, I see John Pomeranz has dodged the bullet, but I’m sure the bar quip will be back in time for September’s Toronto meeting.

Actually what I suggest for future meetings is that the last panel begin with recordings of Jimmy Buffett’s “Margaritaville” and Alan Jackson’s “It’s Five O’Clock Somewhere.” And if you’re like me at these meetings with an old Sprite bottle full of gin, you’ve been happy since noon.

Here are just a few of the quips from past meetings for whoever wants to carry on the tradition and earn a groan or two:

January 22, 2010 meeting: “I know it’s very hard to be on a panel that is followed by a cash bar….” (Elaine Waterhouse Wilson)

September 25, 2009 meeting: “We are now to our last panel of the day, the only panel standing between you and the cash bar.” (Fred Gerhart)

January 9, 2009 meeting: “Our last panel of the day and the last panel standing in the way of the cash bar is now approaching.” (Mike Clark)

May 9, 2008 meeting: “… hopefully we’ll hear from you either at the mike or, if it gets too close to five, out at the bar.” (Sarah Hall Ingram)

January 18, 2008 meeting: “We’re the last panel standing between you and the cocktail hour….” (Mike Clark)
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Affiliated Organizations — Avoiding Traps for the Unwary

What follows are the May 7 remarks of Eve Borenstein, Borenstein & McVeigh Law Office, Minneapolis, Anne Spielberg, Harmon Curran Spielberg & Eisenberg, Washington, and Douglas N. Varley, Caplin & Drysdale, Washington, as delivered to members of the EO Committee of the ABA’s Tax Section. The moderator of the panel is John Pomeranz, Harmon Curran Spielberg & Eisenberg, Washington.

State Bar Reports

EO Tax Journal 2010-92

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We conclude our week of California Dreamin’ with another California State Bar Association proposal (“Withholding and International Grantmaking: Proposed Revisions to the Targeted Grant Exception of Treasury Regulations 1.863-1(d)).

But first, I can’t resist nominating a former Chicago Bears’ player, Chris Zorich, for philanthropist of the year. Seems Chris forgot to distribute hundreds of thousands of dollars his foundation raised, and now the IRS and the Illinois Attorney General are after him. But not to worry. Zorich told theChicago Tribune he forgot about the $864,645 in assets the charity said it had when it last filed a tax return in 2002, and that he assumes the money is still in the bank but he can’t produce a bank statement to prove it. “I was kind of concentrating on other things, not necessarily that the foundation was up to par,” Zorich said. “To find out things weren’t in order is kind of shocking to me.” Lest we dismiss Chris as a football player who played too often without his helmet, he did graduate from Notre Dame Law School. I think Lloyd Mayer has some explaining to do. Or maybe we should ask Ellen Aprill if this has anything to do with grade inflation. (I can’t resist needling our beloved law professors.)

Focus on Courts

EO Tax Journal 2010-91

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Will the VSP litigation ever end? Probably not. As noted in the most recent installment of this long-running soap opera (see below), “this litigation has the look and feel of VSP trying to get a second chance at tax-exempt status.” Does anyone doubt that VSP will appeal its latest setback?

State Bar Reports

EO Tax Journal 2010-90

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1 – Old Business

In regard to Monday and Tuesday’s email updates that discussed a proposed revenue ruling on the treatment of the discharge of indebtedness under the unrelated business income rules, it has been pointed out to me that this topic was also covered in a Viewpoint article that appeared in Monday’s Tax Notes magazine. See “Cancellation of Indebtedness Income and Tax-Exempt Entities,” by Emily Cauble.

Former IRSer Conrad Rosenberg supports a section 170 analysis over a UBI analysis: “I think Dave Jones’ and Sarah Harlan’s analysis of the supposed UBI issue on forgiveness of debt to an EO is pretty clear and obvious. Besides, how is passively receiving forgiven debt either a business or regularly carried on? Is this really an ‘issue’?” But another former IRSer asks, “Where’s the intent to make a gift?” For that answer, I turn to the inestimable Bruce Hopkins.

Focus on Congress

EO Tax Journal 2010-89

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1 – Old Business

In regard to yesterday’s email update that included a proposed revenue ruling on the treatment of the discharge of indebtedness under the UBTI rules, CPA Sarah Harlan of Lake Oswego, Oregon, is of the opinion that unrelated business income is not an issue. According to Sarah, years ago she asked the IRS’ Dave Jones about how to treat discharge of indebtedness. Dave checked with his colleagues in Income Tax whose responsibilities included section 170, and they were of the opinion that the IRS would treat forgiveness of debt to a tax-exempt entity as a donation by any individual or corporate creditor. Hence, under this tax treatment, there would be no unrelated business income issues. Other comments?

State Bar Reports

EO Tax Journal 2010-88

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The folks in California have been busy — first a proposal to address the treatment of discharge of indebtedness under the UBTI rules and second a comment letter on the proposed 509(a)(3) regulations.

The first item includes a draft of a proposed revenue ruling. May I make a suggestion to Lois Lerner? Hire this guy! It’s been obvious for several years that drafting revenue rulings is a lost art at the IRS, but here’s a fellow who can actually do what is now considered well-nigh impossible in today’s EO Division.

Transcripts (ABA EO Committee)

EO Tax Journal 2010-84

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Today is the annual public meeting of the TE/GE Advisory Committee. I won’t be going because my doctor tells me I have the flu. (How anyone can get the flu in June is beyond me.) However, the report of most interest to exempt organizations, “Getting It Right: An Online Guide to Setting Executive Compensation for Charities,” should be up on the IRS website by early afternoon.

Maybe at today’s meeting Lois Lerner can tell us where we are with 990-N filings. In her ABA remarks, reprinted below, she was taking a hard but legally correct line on late filings. Eleven days later Commissioner Douglas Shulman issued what I have been referring to as his “Oh, never mind” statement, from which it appears late filers now have an indefinite period in which to make themselves right with the IRS.
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News from the IRS and Department of Treasury

What follows are the May 7 remarks of Emily Lam, attorney-advisor, Office of Tax Policy, Department of Treasury, Washington, and Lois Lerner, Director, Exempt Organizations, IRS, Washington, as delivered to members of the EO Committee of the ABA’s Tax Section. The moderator of the panel is Joe Lundy of Lundy & Flynn, Bala Cynwyd, Pennsylvania.

Current News and Developments

EO Tax Journal 2010-83

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1 – Comings and Goings

2 – The Rest of the Story
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1 – Comings and Goings

M. Ruth M. Madrigal will be replacing Emily M. Lam at Treasury this month. Ruth, a graduate of Harvard Law School, has been at Caplin & Drysdale, Washington, since 2004. Meanwhile, Emily has been a steadying force for the last few years as the IRS and Treasury have had to grapple with PPA changes, with a number of policy decisions intentionally or unintentionally dumped on them.

Transcripts (Other)

EO Tax Journal 2010-82

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Today I have Part 2 of a recent D.C. Bar discussion on the interim IRS report on colleges and universities; Part 2 is a transcript of the remarks of Carolyn O. (Morey) Ward. Hopefully, we will have Part 3 on Monday, but we are having some problems transcribing the remarks of Theresa Pattara, as she was the speaker farthest from my tape recorder and there were no microphones set up for the meeting. Yesterday I had the remarks of the three IRS speakers.

Current News and Developments

EO Tax Journal 2010-79

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On Friday I commented on the May 7 meeting of the Religious Subcommittee of the ABA’s Exempt Organizations Committee. Today I have an outline of the discussion at the May 7 meeting of the Health Care Subcommittee of the ABA’s Exempt Organizations Committee led by subcommittee chairs T.J. Sullivan and Rob Friz.