Friday, November 9, 2012

A Case Study in Private Inurement and Private Benefit?

Bloomberg New reported recently that public relations executive Rick Berman operates several tax-exempt nonprofit groups that appear to work primarily or exclusively on matters that benefit clients of his for-profit firm, Berman and Company.  The story grew out of a Humane Society of the United States complaint filed with the IRS, and Berman's firm has responded to it and similar accusations with a fact sheet about the groups.  According to the story, Berman serves as the Executive Director or President of five tax-exempt organizations that list his public relations firm's office as their address: the American Beverage Institute, the Center for Consumer Freedom, the Employment Policies Institute Foundation, the Center for Union Facts, and the Enterprise Freedom Action Committee.  Three of the groups are section 501(c)(3)s, while the American Beverage institute is a section 501(c)(6) trade association and the Enterprise Freedom Action Committee is a section 501(c)(4) social welfare organization (the article appears to identify the last group as a 501(c)(6), but according the IRS Exempt Organiation master file it is a 501(c)(4)). 

Speaking of the IRS EO master file, a quick search of that file for the District of Columbia actually reveals one more tax-exempt group associated with Richard Berman by name, the 501(c)(6) Firstjobs Institute, and another, the 501(c)(3) Human Society for Shelter Pets, with the same address as Berman's firm and the other tax-exempt groups.

Hat tip:  EO Tax Journal.


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