1 – IRS Needs a Reminder on Its Reminder
2 – Brief Filed in Appeal of Terrorist Financing Case
3 – Observations of the IRS’ Chief Counsel on EOs
4 – Group Seeks Investigation of Voter Guides/Legislative Scorecards
Current News and Developments
EO Tax Journal 2010-153
This morning I went to hear Gordon Clay, Sarah Hall Ingram, Cathy Livingston, Ruth Madrigal, and Theresa Pattara speak at the ALI-ABA program on Tax-Exempt Charitable Organizations.
Here’s my from the trenches report. Cathy Livingston was a no-show. Apparently, she was not rescued with the Chilean miners, so she remains underground. Rumors that she has run off to join the Church of Scientology have been denied by the IRS Office of Public Affairs. Another no-show was Theresa Pattara — perhaps she was out searching for Cathy or both of them may have run off to join the Church of Scientology.
Ruth Madrigal and Gordon Clay were there. Ruth gave a rehash of legislative and guidance developments, which have been reported on before in these missives, and Gordon gave a rehash of congressional developments, which is a bit of an oxymoron, and these lack of developments have also been reported on before in these missives, so I’m going to continue on to the star of the show…. DRUM ROLL
EO Tax Journal 2010-148
This has to be a frustrating time for Democrats. Faced with a possible landslide against them in a couple of weeks, they are complaining to the IRS about Republican groups improperly using section 501(c)(4) status, the latest complaint in a letter reprinted below by Senator Durbin. While these allegations may be correct, I’m not sure what difference it would make even if the IRS were “to quickly investigate the tax status of Crossroads GPS and other [(c)(4)] organizations that are directing millions of dollars into political advertising without disclosing their funding sources,” as Durbin seeks. Yesterday’s Washington Post has added to the fray, with two more articles reprinted below.
The IRS is caught in the middle. And the political consequences could be severe if the IRS were to go after Republican groups. The next Congress could be in Republican hands, with the Republicans controlling not only the tax-writing committees but also the appropriations committees. Best to lay low if you are the IRS.
On the other hand, I can understand the frustration of Democrats. Lack of disclosure is killing them, and adding a Republican Congress to a Republican Supreme Court is going to make it very lonely for the current occupant of the White House.
For the IRS’ EO function, Republican control of Congress may not be so bad. If Senator Grassley regains the chair of the Senate Finance Committee, he should be able to move on his EO initiatives and to demand that the IRS become more active in the EO area.
EO Tax Journal 2010-146
More perils of Paul today. Read only if you need a break in your workday. Also, more politicking developments, read only if you can stand it.
I got up at 5 a.m. today so I could hear the Chief Counsel of the IRS, Bill Wilkins, speak at 8 a.m. at the American Health Lawyers Association’s annual tax program in Arlington, Virginia. As I was waiting for Wilkins to arrive, I was chatting amiably (yes, I can do that) with a fellow whom I assumed was an attendee. Turns out it was Bill Wilkins. My chance to present my strong views on the 509 regs and on how to proceed on section 7611, even my comments yesterday about the Office of Chief Counsel posting litigation developments, gone — gone in my morning haze. It’s obvious I’ll never make a good lobbyist. I hope I didn’t get Susan Brown in trouble. I told Bill she has the remarkable ability of speaking in perfect paragraphs. I suspect the next time Susan briefs Bill, he’ll be deciding whether I was telling him the truth or not.
I also saw and spoke to Judy Kindell, but forgot to ask her my politicking question — again the morning haze. I’m sure the political intervention experts reading this can tell me whether political expenditures by a 100% controlled for-profit subsidiary can be attributed back to the (c)(3) parent. I assume the answer is no so long as organizational formalities are observed, but this seems like a big loophole, especially if you have overlapping boards. Anybody know for sure?
In his remarks, Bill Wilkins did say that Cathy Livingston is the new Health Care Counsel, leading a small group in his office to tackle projects connected with the Affordable Care Act. A number of us were concerned about Cathy because we had not seen her lately, fearing that she had been kidnapped by Tea Partiers who hate the IRS. According to an IRS spokesperson, Cathy’s new position is effective October 10 and her old position — Deputy Division Counsel/Deputy Associate Chief Counsel (EO/ET/GE) — will be posted. A lot of intriguing possibilities here, but I won’t speculate.
Following Bill Wilkins was a trio of IRSers, Steve Clarke, Garrett Gluth, and Peter Lorenzetti. I hope to have a summary of some of their remarks in the near future. While I am sure they were under orders to mention Form 990-N, if I hear one more reminder before Friday about the need for baby organizations to file, I will scream. Come Ocober 15, everyone at the IRS must promise never to mention the e-Postcard ever again. It’s really getting to be cruel and unusual punishment.
EO Tax Journal 2010-139
Two events occurred yesterday at about the same time. One was the release of a letter (reprinted below) by the Chairman of the Senate Finance Committee, Senator Max Baucus. The other was a panel discussion titled “Political Activities of Exempt Organizations This Election Cycle” sponsored by the D.C. Bar, from which I hope to have a transcript in the near future.
EO Tax Journal 2010-138
Sarah Hall Ingram, TE/GE Commissioner, was the featured guest at yesterday’s panel discussion on nonprofit hospitals sponsored by VHA Inc. The focus of the discussion was new section 501(r) and its requirements.
EO Tax Journal 2010-137
Pulpit Freedom Sunday
In case you missed it, last Sunday (September 26) was the third annual Pulpit Freedom Sunday. You may have missed it because mostly it was ignored by the news media. I am reprinting below an item from ABC News and yesterday’s Alliance Defense Fund’s news release.
EO Tax Journal 2010-100
Record Retention Requirements for Nonprofit Organizations, by Jay Rotz
Mr. Rotz was Assistant Director for the Exempt Organizations Division of the Internal Revenue Service before serving as Tax Manager for George Washington University.
EO Tax Journal 2010-83
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.
EO Tax Journal 2010-79
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.
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 2010-62
1 – Susan Brown to Cross Pennsylvania Avenue to Join IRS
Susan Brown of Morgan, Lewis & Bockius, Washington, will be joining the IRS as Special Counsel, Office of the Division Counsel/Associate Chief Counsel, Tax Exempt & Government Entities, in June. Prior to joining Morgan Lewis, Susan had served in Treasury’s Office of Tax Policy. For Susan, her new office is literally across the street, as she is going from 1111 Pennsylvania Avenue to 1111 Constitution Avenue.
EO Tax Journal 2010-61
I did go yesterday to the D.C. Bar program on “Health Care Reform Legislation: What Does It Mean for Exempt Organizations?” that featured Helen Morrison, Deputy Benefits Tax Counsel, Treasury Department, Tom Hyatt, Sonnenschein Nath & Rosenthal, Washington, and Kathleen Nilles, Holland & Knight, Washington.
The program was in effect two programs, a discussion by Helen Morrison of recent IRS releases, and a discussion by Tom Hyatt and Kathleen Nilles of new section 501(r) of the Code. Since the 501(r) discussion followed Kathleen’s outline closely, I’m reprinting her outline. Following the outline is information on which Helen’s presentation was based. Because the Small Business Health Care Tax Credit is refundable, she noted that it will benefit all qualifying exempt organizations. How EOs will claim the credit has not yet been determined but since it is already effective (2010), she said to expect guidance on this point soon.
EO Tax Journal 2010-60
1 – Off to the Land of Oz
2 – More on Nonprofit Pay
3 – Remarks of Commissioner Douglas Shulman to Council on Foundations
I don’t think I am being unfair in saying that this speech, reprinted below, is the kind of speech you give when you want to say nothing — certainly nothing new. It seems to me that this speech was a missed opportunity to say something meaningful to the foundation community.
4 – IRS Releases FAQ on Failure to File Revoctions
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EO Tax Journal 2010-58
Today’s report is from the front lines, so it will be just a few bullet points of what folks from the IRS said on Thursday at Georgetown’s 27th Annual “Representing & Managing Tax-Exempt Organizations” Conference. I hope to have transcripts of some of the more interesting discussions in the weeks and months to come.
EO Tax Journal 2010-57
Today I got to hear Diana Aviv, President, Independent Sector, Sarah Hall Ingram, Commissioner, TE/GE, and Jason Lilien, New York Office of the Attorney General, speak on nonprofit governance. The speakers were fine, but having sat through several sessions on nonprofit governance over the past few years, I’m familiar with most of the major points.
For those wishing that governance in the tax context would go away, Sarah Hall Ingram said the IRS emphasis on governance is here to stay, that the tax rules do interact with an EO’s corporate structure. According to Ingram, “It’s all about risk management.” She said a mission statement is important, as is an engaged and independent board. The organization needs to be transparent to both donors and the public.
EO Tax Journal 2010-54
Yesterday evening I attended a panel discussion on “Philanthropy in the 21st Century: Should All Charities Be Created Equal?” sponsored by Catholic University’s Columbus School of Law.
Panelists included Diana Aviv, President of Independent Sector, Richard Schmalbeck, Professor of Law, Duke University, Eugene Steuerle, Fellow at the Urban Institute, and Russell Sullivan, Staff Director, Committee on Finance, United States Senate. The moderator was Roger Colinvaux, Professor of Law, Catholic University.
EO Tax Journal 2010-28
1 – Old Business
In regard to Wednesday’s email update item on “Owens Protests Denial of Technical Advice,” Marc reported yesterday that he has received a favorable response to his February 15 letter to Diane Ryan, Chief, IRS Appeals, in which he sought technical advice over the objections of IRS case workers.
EO Tax Journal 201-23
Monday’s email update on excerpts from Sarah Hall Ingram’s Feb. 5 remarks has drawn comments.
Former EO Branch Chief Connie Rosenberg had this to say:
“I think Sarah’s answer to the question about Service failure to publish formal guidance was quite truthful, if you parse it out carefully. What she said, in effect, was: we can’t figure out how to get publications out because we, collectively, can’t figure out how to stop tripping over each other. As Winston Churchill once said (whenever I’m not sure who said something, I always cite Churchill, and I’m usually right): the way to begin is to begin. The way to stop tripping over each other is to stop tripping over each other. Set up a formal procedure for initiating and clearing a publication; follow that procedure; establish due dates for movement at each stage of the process; appoint a high-ranking management official to monitor the due dates and insist that they be met, and provide consequences for the bureaucrat who fails to meet them; be prepared to deal with the consequences of actually making a decision. Those things are the jobs of management. It ain’t rocket science now, any more than it was 25 years ago, but it does take some guts.”