Paul Streckfus, Editor
Today’s objective is to gently move into the abbreviated work week after the long Memorial Day weekend.
1 – Battle of the Flags
2 – ACT II Committee
3 – Rob Wexler’s Self-Interview
4 – CREW’s Complaint
5 – Will IRS Go After 501(c)(4) Political Groups?
6 – Coming Fall Attractions
1 – Maybe “Homes Sweet Homes” will become “Home Sweet Home” Again
2 – UBIT Case Studies
3 – CBO Releases Report on Charitable Giving Tax Options
Weekend reading.
4 – Watchdog Group Seeks IRS Review of Organization’s 501(c)(4) Status
1 – More on “Bobby, Please Come Back”
2 – Current UBIT Issues Discussion
Even though I have been ignoring them, practitioner complaints keep rolling in about the IRS’s Charities & Non-Profits homepage. I have my first report today on these developments titled, “Bobby, Please Come Back.”
With a number of readers expressing interest in the Driscoll and Freedom from Religion Foundation cases, mentioned yesterday, I’m reprinting Deirdre Dessingue’s synopsis of these two cases, which she prepared in connection with her April 29 presentation at Georgetown Law’s Representing & Managing Tax-Exempt Organizations program.
I’ve been discussing the problems in becoming informed on EO litigation, especially pre-decisional developments. See email updates 2011-80 and 2011-83. Today I have the transcript of the recent D.C. Bar program titled “Litigation Developments for Exempt Organizations.” It’s a discussion of current EO cases that we rarely have from our friends in the IRS Office of Chief Counsel.
Well, Animal Kingdom didn’t win the Preakness on Saturday, but neither did the world come to an end — apocalypse deferred, I suppose. A couple of weeks ago I had an interview of Heidi Neff Christianson, who gave us a Minnesota EO perspective. Today readers get the New York perspective in the person of Dave Shevlin, whom I got to interview earlier this month at the Washington gathering of the ABA Tax Section.
Weekend reading while waiting to see if Animal Kingdom can win the Preakness (of course, if tomorrow is truly Judgment Day, we may not have a Preakness). The Viralam case, reprinted below, seems to have escaped notice for a number of reasons, but I think it makes for interesting reading.
1 – Six Senate Republicans Query IRS on Section 501(c)(4) Gift Tax Enforcement
The IRS has brought this potential brouhaha on itself by years of inaction.
2 – Accountable Care Organizations
Everything you always wanted to know about ACOs but were afraid to ask.
EO Litigation Developments – Part 2
Last week I mentioned in email update 2011-80 that I had gone to the D.C. Bar luncheon program on “Litigation Developments for Exempt Organizations.” I’m hoping to have a transcript of this program in the near future — as opposed to “soon.”
In the meantime, I’ve been doing my own research into what is going on at the Tax Court, egged on by the Tax Court’s efforts to keep us all in the dark. I’m sending along today information that I have collected on cases that are currently active. I expect to have additonal information as my requests for documents are fulfilled.
Recently-released PLR 201119036, reprinted below, deals with an organization planning on providing student housing. The IRS denial letter appears correct, but I find it interesting because it is the latest iteration of the IRS’s position regarding organizations providing student housing. And the IRS ruling position has, I believe, applicability beyond student housing and beyond universities, such as:
When is providing help to an exempt organization aiding its exempt mission and when is it a trade or business? When do you need a charitable class and when do you need to provide goods or services at below cost? When do you need control by a charitable organization, say, a university or hospital, and when can you be independent of such control? When does private benefit to vendors and service providers who are in control of an exempt organization outweigh the public benefit of their activities? Under what circumstances will a conflict of interest policy be ignored as a barrier to private benefit or inurement?
Obviously, we could have a daylong program on just these questions, and still not have any firm answers. That’s what makes EO tax law so fascinating and maddening. I’m also including my history of IRS pronouncements and case developments in this area. If anyone is aware of any other developments, please let me know.
Collegiate Housing Developments over the Years
Today’s transcript of the April 28 “Update from Treasury and IRS” that comes from remarks at the recent Georgetown program is not much different from the May 6 “Update from Treasury and IRS” that occurred at the EO Committee meeting of the ABA’s Tax Section, so I probably won’t run the latter.
1 – EO Litigation Developments
2 – ADF Report on Pulpit Sunday Efforts
3 – Amicus Brief Filed in Catholic Answers Case
News this week is that Treasury’s #1 tax guy, Michael Mundaca, the current assistant secretary for tax policy, is turning in his keys to the men’s room on Friday. The Wall Street Journal describes him as “unflappable.” As one wag has defined it, unflappable is when your wife is on line one, your girlfriend is on line two, and your mother is on line three.
Mundaca’s departure cannot be good for EO guidance. Emily McMahon, the deputy assistant secretary for tax policy, will move into the acting spot, but usually actors await a permanent replacement to sign off on regs projects. So, unless Mundaca signs off on the supporting organizations regs as he leaves on Friday, Ruth Madrigal’s promise of “soon” may have just become a little — or a lot — longer.
Today I’m sending along the remarks of Sarah Hall Ingram, the TE/GE Commissioner, whose jurisdiction includes the Exempt Organizations function. Sarah’s theme is on the Affordable Care Act, which is her current focus at the IRS.
ABA Tax Section Murmurings and More
1 – Washington Invasion (Part 2)
2 – Controversial Gift Tax Developments
3 – EOs with Tax-Exempt Bonds Need to Be Somewhat Wary
4 – D.C. Circuit Agrees with IRS — and Dismisses Appellant with a Snicker
5 – More on Madonna (Part 2)
6 – COF Continues to Seek Rev. Proc. 92-94 Update
1 – Washington Invasion
2 – Max Baucus on the Charitable Deduction
3 – Bruce Hopkins’ Current Developments (Part 4)
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
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.”
1 – Current Developments
2 – In the National News
_________________________
1 – Bruce Hopkins’ Current Developments (Part 1)
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.”