Current News and Developments

If you have not read the complaint filed against Citizens for Responsibility and Ethics in Washington, reprinted below, please read first the following Mission Statement of a group I’m calling XYZ and decide whether XYZ is an organization that could qualify under section 501(c)(3). To me it is a close question whether an organization that investigates elected government officials can satisfy the requirement that it “does not participate in, or intervene in (including the publishing or distributing of statements), any political campaign on behalf of (or in opposition to) any candidate for public office.”

It’s hot everywhere, it’s the middle of July, news is supposed to be slow, so what do I have instead but one story after another to report. Whatever happened to the lazy days of summer?

1 – Mystery Solved

2 – IRS Alerted to Current 501(c)(4) Problems in 2002

6 – Cockroaches Remain, Facade Easements in Jeopardy

1 – The Iron Man of EO

2 – Is This the Camel’s Nose in the Tent?

5 – In D.C., Facade Easements Are as Ubiquitous as Cockroaches

1 – Form 990 Developments

4 – Gunderson to Leave Council on Foundations on September 1

1 – Have a Happy Fourth of July

3 – Nonprofit Corporate Restructuring
(continued from email update 2011-109)

This and That

In response to yesterday’s query, “What would she have gotten if she had succeeded?”, Penelope says 15 days. Penelope says she got 30 days because she botched the job.

Regarding Bill Brockner’s comments published yesterday, Odysseus takes issue with Bill’s implication that small organizations, which are “generally without the benefit of expensive CPA and/or Bar assistance,” will now be required to hire the same. Odysseus wonders if Bill knows how simple it is to complete an e-Postcard, since all that is required are eight simple entries.

1 – More On Kip Dellinger’s Observations

2 – Is the Form 990-N Part of a Federal Conspiracy against Nonprofits?

3 – Using Affiliated Entities for Advocacy and Politics

Today I’m sending along Bob Boisture’s article on the recent AARP hearing. His article was previously published by Tax Analysts, so you may have already seen it.

Bob is very concerned by what he views as the deeply flawed legal analysis presented in the report on AARP prepared by two House Republicans. He is also concerned that AARP has not presented a more rigorous and comprehensive statement of its legal position. In his opinion, AARP has by far the stronger side of the legal issues raised in the report, but he does not believe AARP’s various public statements have made this sufficiently clear, making it easier for House Republicans to justify continuing their investigation.

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

ABA Tax Section Murmurings and More

6 – COF Continues to Seek Rev. Proc. 92-94 Update

1 – Washington Invasion

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

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.”

Yesterday I attended Day One of the Georgetown program on “Representing & Managing Tax-Exempt Organizations.” TE/GE Commissioner Sarah Hall Ingram led off the conference with an excellent speech. We did hear a word — “soon” — that would be repeated by subsequent government speakers. Soon a revocation list will be posted of those organizations that failed the three-year filing requirement, and soon guidance will be published as to how those revoked organizations can get their exemption back. I suspect the IRS has in mind a streamlined procedure not requiring a full review of each application.

As I noted yesterday, today I would be going to the program on “Nonprofit Governance: Critical Risk Management Issues for Boards and CEOs,” sponsored by Georgetown CLE, Independent Sector, and the IRS.

As indicated in the title of the program, it was geared to board members and CEOs, and the attendance list indicated mostly representatives from nonprofit organizations and foundations. As a result, the program was not — and should not have been — geared to sophisticated EO tax practitioners, so I think it is fair to say that most of the tax discussion was pretty basic, so I will only give a very brief summary of the tax portion of the program.

1 – The EO Event of the Year

3 – AHA, HFMA, and VHA Critical of ‘Onerous and Redundant’ Schedule H

1 – Latest IRS EO Update (2011-7)

2 – Dean Zerbe Featured on Last Night’s CBS News Broadcast

3 – The Attorney General’s Mission & The Public’s Interest