Paul Streckfus, Editor
1 – Inauguration Activities Clarification
2 – New Hospital Requirements Discussed
3 – Madonna Says No Federal Investigation of Her Charities Under Way
4 – Two IRS EO Updates in One Week
5 – Latest Strange Hershey Development
6 – Post-Issuance Bond Compliance
1 – Latest IRS EO Update
2 – Alaska’s Sandy Deja’s EOMF Update
3 – Chuck v. Rahm
4 – More on AARP Hearing
5 – New York Times’ Articles
6 – Interesting PLRs Released Last Week
1 – No Surprise Here — Supreme Court Follows My Advice
Earlier this year, I wrote that if the justices of the Supreme Court are as smart as they think they are, they will deny cert in the case of Foundation of Human Understanding. Well, yesterday they did. Actually, that’s too bad, it would have been nice to have had a definition of a “church” from the High Court. For the denied cert petition, see Email Update 2011-7.
2 – Current Issues Affecting Private Foundations
I believe readers who work with private foundations will find information presented by Victoria Bjorklund of Simpson Thacher & Bartlett LLP, New York, at the recent 47th Annual Washington Nonprofit Legal & Tax Conference, to be of interest.
1 – Catch-up Day
2 – Update on IRS Audits of Colleges and Universities
1 – Valentine’s Day Greetings to the IRS
Lots of love coming out of Congress these days.
2 – Need for EOs in Egypt
Milt Cerny sees need to redo actions of 22 years ago.
3 – Clarification of Remarks
No whining intended.
4 – When is a Cult a Cult?
The boys go at it (again).
5 – More on the Milton Hershey School
I sincerely hope the IRS has opened an audit by now. If not, why not? And why no “60 Minutes” coverage? Instead, the venerable “60 Minutes” had a “revealing” interview of Lady Gaga last night. Welcome to 21st Century investigative journalism.
6 – Doings at Hershey School Nothing New
Fritz Mondale on the Sister Kenny Institute.
7 – Handout for EO Committee Panel on Executive Compensation and Intermediate Sanctions
I’ll have the transcript for the sixth and final panel of the January 21 meeting of the EO Committee of the ABA’s Tax Section tomorrow. The presentations tend to follow the handout, but the handout is more extensive in certain areas.
For some North Carolinians, the Super Bowl is tonight — UNC at Duke with even the New York Times taking notice. I’m sure Duke graduates Jim Hasson, Marc Owens, and Celia Roady will be glued to ESPN tonight, but I recently learned that Dick Gallagher’s daughter is at Chapel Hill and a fan. If the Tar Heels upset the Blue Devils, Dick will have two Super Bowl wins in one week! And, win or lose, maybe the Duke students can move out of their tents and even go back to class.
1 – Troubles Continue for One of the Grassley Six and New Focus on Scientology
Notably absent from Senator Grassley’s investigation of high profile churches was the Church of Scientology. Now Lawrence Wright’s 24,000 word article in the current issue of the New Yorker about the Scientologists is drawing attention (article available at www.newyorker.com). Somewhat surprising, at least to me, is that nowhere in the 24,000 words is there any mention of the church’s battles with the IRS or the eventual IRS capitulation.
One of Senator Grassley’s media ministers has also been in the news recently. In an item reprinted below, the current travails of Bishop Eddie Long are detailed. It seems to me that if the Evangelical Council for Financial Accountability’s Commission on Accountability and Policy for Religious Organizations is to be really successful, it needs to get all six media-based ministries investigated by Senator Grassley to join ECFA or otherwise show greater financial accountability. (For earlier coverage, see Email Updates 2011-4, -10, and -15.)
2 – Handouts for EO Committee Panel on Donor Fraud, Bankruptcy, Remorse or Mistake
I’ll have the transcript of the fifth panel of the January 21 meeting of the EO Committee of the ABA’s Tax Section tomorrow. Today, if you have the time and interest, look at the handouts, which are well-done and serve as the basis for the speakers’ remarks.
Today is catch-up day. Plus it’s the end of the month, time to clean off my desk. Could it be coincidental that there were no football games this past weekend? (The Pro Bowl — what one wag calls “the most pointless event in all of sports” — doesn’t count.) Tomorrow, unless we have another blast of snow, I’ll start sending out transcripts of the recent meeting of the EO Committee of the ABA’s Tax Section. I’ve already found the first two panels of interest — we even have a feisty Lois Lerner staring down the men. Stay tuned.
1 – Old Business
2 – More Old Business
3 – The Economist on Grassley and ECFA
4 – Another PACI Case?
5 – The Globalization of Philanthropy
6 – Potential Gift Tax Liability for Contributions to 501(c)(4)s
7 – IRS Denies Organization Seeking to Propagate the Genetic Integrity of Horses
On Friday, the Evangelical Council for Financial Accountability (ECFA) held a briefing on Senator Grassley’s Staff Report and its implications featuring Dan Busby, ECFA President, and Michael Batts, Chair of ECFA’s Commission on Accountability and Policy for Religious Organizations. For information on the Staff Report, see Email Update 2011-4. For information on ECFA and its Commission, see the ECFA website (www.ecfa.org).
The purpose of the briefing was to address issues contained in the Grassley Staff Report that will be considered by the Commission. Each issue was introduced by Busby for comment by Batts.
1 – Ron Schultz To Leave IRS
2 – ABA To Meet in Florida
If you loved Del Boca Vista (remember those Seinfeld episodes?), you’ll love Boca Raton, Florida, where the ABA Tax Section will be having its winter meeting. For those lucky enough to go, I have the program schedule of the EO Committee. My plan is to listen to the tapes while watching the Super Bowl, although sometimes it can get confusing. Did Lois Lerner just score a touchdown? Did Ruth Madrigal intercept a pass?
3 – Samuel P. King, Judge and Critic of Hawaiian Charity, Dies at 94
No one new to the EO area should not know of the Bishop Estate. I’ve been fascinated by it ever since the seventies when I was assigned a ruling request by the estate. When it was denied, the estate’s lawyer went straight to Russell Long, then Chairman of Senate Finance, and got a rifle shot provision overturning the negative ruling. Now that’s having clout!
I’ll begin the week by surveying the latest news for those of you who have been away traveling with President Obama.
1 – Not Another Cat Story
This story should give all cat lovers a warm feeling.
2 – The Chronicle of Higher Education’s Annual Salary Report
The New York Times and Washington Post — and I’m sure numerous other newspapers — weigh in on the The Chronicle of Higher Education’s latest salary report.
3 – Who Needs To Be a College President to Make Big Bucks?
The Baltimore Sun continues to do eye-opening exposes. Has anyone ever seen a Maryland state charity regulator? I haven’t, and I’ve lived in the state my entire life. The article notes that Maryland has a law that governs the composition of boards at nonprofits that receive public mental health funds, which says that no one can serve on the board of such an organization if an “immediate family member” works for that organization. I think that’s a great rule that should apply to all section 501(c)(3) public charities nationwide.
1 – Giants Win World Series
2 – Ellen Aprill on Section 501(c)(4) Organizations, the Gift Tax, and the Disclosure Rules
3 – Western Conference on Tax-Exempt Organizations Coming Up
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
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
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.
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.
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.
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.
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.
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.
1 – Comings and Goings
2 – The Rest of the Story
_______________________________
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.
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.
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.”
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.
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.