PLRs, TAMs, and Denial Letters

When Does Private Benefit Trump Public Benefit?

Is the IRS Abandoning Old Principles in PLR 201147035?

1 – More Commentary on NCPL’s Annual Conference

2 – IRS Releases Two Favorable Private Letter Rulings

I’m sure Seinfeld fans remember the episode where Susan agrees to marry no-good George, and after she excitedly tells George’s mother that she is marrying her son, George’s mother’s laconic response is, “May I ask why?” Such seems to be the appropriate response to recently-released PLRs 201133012 and 201133013. I’m indebted to Bill Brockner for sharing his analysis, but any errors that follow are mine. 

In regard to Monday’s discussion titled “IRS Denies 501(c)(4) Status to Three Organizations Primarily Benefiting a Political Party,” Beth Kingsley of Harmon, Curran, Spielberg & Eisenberg LLP, Washington, has brought to my attention a 2003 denial letter that I should have included on Monday, so I’m reprinting it today. According to Beth, the 2003 denial letter is consistent with the latest denial letters.

Some interesting PLRs were released by the IRS last week. Today I’ll note the ones I found of most interest.

1 – IRS Denies 501(c)(4) Status to Three Organizations Primarily Benefiting a Political Party

The IRS probably got it right in this private letter ruling (reprinted below), involving an ecumenical ministry that offers a broad range of social service programs to the poor and distressed or underprivileged, but lots of slippery slopes had to be scaled, at least in my opinion.

1 – More on Group Rulings

2 – PLR 201124024 — Right for All the Wrong Reasons?

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

1 – Old Business

4 – IRS’ Next Case?

1 – Old Business

As I expected, few huzzahs for my suggested legislative solutions to address the concerns of House Republicans about AARP. Most of my proposals have been made before by others (maybe not banning sponsoring NASCAR drivers). My intended point was that while House Republicans may not like what AARP is doing, AARP does not appear to be doing anything that is prohibited by current law. Rather than asking the IRS to investigate (see letter reprinted yesterday), the reality is that House Republicans should propose legislation if they are not happy with how AARP and similarly-situated organizations operate.

This week’s interesting private letter ruling is PLR 201108037, reprinted below. I find it interesting even though its outcome is so obvious that one has to wonder why the organization and its Power of Attorney representatives spent $10,000 to get the ruling. That’s one of my questions — why? And if I am correct that it is “so obvious,” why did it take the IRS over two years to rule? Or is that the time it now takes to get a PLR?