July 12, 2012
Has the Tax-exemption Rumble Started in Pennsylvania?
A while ago I posted about a recent Pennsylvania Supreme Court decision on tax exemption that I speculated might reopen the door to property exemption challenges. The President of the Pittsburgh City Council might have kicked that door open a bit recently. A story posted on Pittsburgh's public radio station web site notes that city council president Darlene Harris is "investigating whether the city could legally challenge the tax-exempt status of large nonprofits in Pittsburgh." Harris apparently specifically referred to the recent Pennsylvania Supreme Court decision as grounds for her investigation.
“What some call ‘nonprofit’ is not necessarily all nonprofit,” said Harris. “If you can pay for having commercials during Super Bowls, if you can pay for your name to be on the top of the highest buildings in the City of Pittsburgh… There are doctors that will not see poor people.”
It appears that the City Council is not exactly happy with the PILOT deal struck with a consortium of Pittsburgh nonprofits that we blogged about last week. The story quotes council budget director Bill Urbanic, who stated “If these were ‘taxable organizations,’ the amount of payroll tax we would receive would be somewhere around $22 million… Also, the real estate, with the new assessment, is probably somewhere between $35 to $50 million. So, you’re looking at somewhere around $60 to $70 million that we’re forgoing, and what we’re getting instead is $2.6 million annually.”
Has the rumble over property tax exemption started in Pennsylvania?
July 11, 2012
IRS Inspector General Report Faults EO Complaint Follow-Up
A recent report by the IRS Inspector General found that while the IRS is doing a better job of acknowledging receipt of complaints about EO violations, there are issues with internal controls and tracking of such complaints. For example, the report found that the IRS couldn't find records of about a quarter of the complaints (31 of 120 cases surveyed from October 1, 2009 through June 17, 2011) and wasn't keeping information updated in its tracking database in a number of other cases. The report recommended improving internal tracking and review procedures for complaints.
I hope the IRS updates its procedures soon - presidential election years are always high-volume complaint times, and in the wake of Citizens United, this one promises to be a doozy, with (c)(4)'s outspending PACs in the political arena, and some church officials trampling the rules regarding political campaign intervention (e.g., Bishop Jenky of Peoria).
July 10, 2012
Although the story has been blogged elsewhere, I thought it appropriate to note it here as well: the NYT posted a story yesterday about businesses (rather than individuals) donating to 501(c)(4) organizations (and sometimes 501(c)(6)'s, like the Chamber of Commerce) in order to shield their identity.
We've blogged about (c)(4)'s almost too many times to count (do a search if you want to pull these up). No need to recount the past debate here. Me, I'd probably just get rid of the (c)(4) designation entirely . . .
July 9, 2012
IRS Issues Proposed Regulations Implementing 501(r)
Part of the health care overhaul passed by Congress included a new subsection of Section 501, 501(r), that added new requirements for tax-exemption of nonprofit hospitals. These new requirements are mostly what I would call procedural in nature: requiring a health needs assessment and written charity care policies, as well as regulating the billing of indigent patients and debt collection actions. The legislation left most of the implementing details to the IRS. In July, 2011, the IRS issued Notice 2011-52, providing guidance with respect to the health needs assessment requirement. The IRS now has released proposed regulations addressing the remaining three areas (written charity care policies, billing, and debt collection). The agency is seeking public comment on the proposed regulations by September 24, 2012.