Friday, June 7, 2013

Mountanos v. Commissioner - Deduction Denied for Failure to Prove Conservation Easement Had Value

Mountanos3

In a June 3, 2013, memorandum opinion, Mountanos v. Commissioner, T.C. Memo. 2013-138, the Tax Court sustained the IRS’s disallowance of a $4.6 million deduction claimed for the 2005 donation of a conservation easement encumbering 882 acres of undeveloped land in Lake County, California. The land is almost completely surrounded by federal land and, at the time of the donation, was accessible only through neighboring properties (the Bureau of Land Management had granted the taxpayer limited access to the property for single-family use) and was subject to a Williamson Act contract under California law that limited the land’s use and development. In addition, a permit was required to divert water for private use from the creek flowing through the property.

The IRS disputed the value of the conservation easement and the court found that the taxpayer failed to show that the easement reduced the value of the land.

The Tax Court agreed with the taxpayer’s valuation experts that the highest and best use (HBU) of the land after the easement donation was for recreation. However, the Tax Court found that the taxpayer failed to show that the HBU of the land before the donation was, in part, a vineyard and, in part, either a 22-lot residential development or a subdivision for unspecified uses.

With regard to use as a vineyard, the taxpayer failed to show that there was the necessary legal access or water supply, that there was demand for vineyard-suitable property in the county, or that vineyard use was economically feasible.

With regard to use as a residential development or a subdivision (i) the taxpayer’s valuation experts failed to take into account the restrictions imposed by the Williamson Act, (ii) neither the taxpayer nor the IRS provided the court with the Williamson Act contract relating to the land or a description of the contract’s terms, and (iii) the taxpayer failed to provide any evidence that the Williamson contract was scheduled to terminate for non-renewal or that it could be cancelled. Accordingly, the court looked to the purpose of the Williamson Act, which is to preserve agricultural and open space land and discourage premature urban development, and the general terms of Williamson Act contracts, which limit land to agricultural and compatible uses for ten or more years and automatically renew each year absent notice of non-renewal. The court found that the taxpayer, who had the burden of proof, failed to establish that vineyard use, residential development, or unspecified subdivision were permitted or probable uses of the land at the time of the easement’s donation. Thus, the taxpayer failed to prove that the HBU of the land before and after the easement donation differed, and it followed that the taxpayer failed to show that the easement reduced the value of the land. The court also found that the taxpayer was liable for a gross valuation misstatement penalty.

It is not uncommon for property to be subject to temporary development and use restrictions under state law provisions similar to the Williamson Act at the time of the donation of a conservation easement (numerous states have similar temporary agricultural land protection programs). In situations where property is subject to such temporary restrictions, the estimate of the “before” value of the property for purposes of valuing the easement should take into account the remaining tenure of the restrictions and any penalties or other conditions imposed on termination of the restrictions. The best evidence of such before value would be the sales price of land subject to similar temporary restrictions. In some cases, the before value of the property, even considering the temporary restrictions, may exceed the after value, and the donor would be entitled to a deduction for the difference. In Mountanos, the taxpayer failed to provide any evidence of the Williamson contract terms, the remaining tenure of the restrictions, or the conditions or limitations imposed on termination of those restrictions. Moreover, even if such evidence had been provided, the limited acess and water supply issues may have prohibited or limited vineyard use, a 22-lot residential development, or subdivision in any event. 

NAMcL

June 7, 2013 | Permalink | Comments (0) | TrackBack (0)

Testimony of Washington’s Involvement in 501(c)(4) Scandal

As indicated by some of the stories appearing under titles posted in today’s TaxProf blog, which continues its broad coverage of the IRS scandal(s) (thank you, Paul Caron!), testimony is emerging from the congressional hearings that at least one IRS attorney in Washington was heavily involved in the process of targeting conservative groups applying for recognition of exemption under Internal Revenue Code section 501(c)(4).  One significant story appears here in ABC News.  Here are some of the more poignant excerpts of the coverage:

Gary Muthert, an IRS agent there [in the Cincinnati office], said his local supervisor told him in March 2010 to check the applications for tax-exempt status to see how many were from groups with "tea party" in their names. The supervisor's name was blacked out in the transcript.

"He told me that Washington, D.C., wanted some cases," Muthert said of his supervisor.

Muthert said he came up with fewer than 10 applications. But after checking some of the group's websites, he noticed similar groups with "patriots' or "9-12 project" in their names, so he started looking for applications that mentioned those terms too.

Over a two-month period, Muthert said he found about 40 applications that mentioned tea party, patriots or 9-12 project — the latter being groups which aspire to reinstill a post-9/11 spirit of unity in the country. …

Muthert said his supervisor told him that someone in Washington wanted to see seven of the applications, so Muthert prepared the files. …

Elizabeth Hofacre, also an agent in the Cincinnati office, told investigators she was in charge of processing applications from tea party groups — once they were selected by other agents — from April 2010 to October 2010. Hofacre said her supervisor in Cincinnati, whose name was blacked out in the transcript, told her to handle the applications.

But, she said, an IRS lawyer in Washington, Carter Hull, micromanaged her work and ultimately delayed the processing of applications by tea party groups.

Hull is a lawyer in the division that handles applications for tax-exempt status. But, Hofacre said, his interest in the cases was highly unusual.

"It was demeaning," she said. "One of the criteria is to work independently and do research and make decisions based on your experience and education, whereas on this case, I had no autonomy at all through the process."

This testimony comes from the very people with whom many tax professionals (inside and outside of government) empathize.  The IRS is underfunded.  The exempt organizations division is overburdened.  There are indeed limits on the political activities of section 501(c)(4) entities, and it is not only appropriate but also imperative for agents to engage in the difficult process of determining, in a politically neutral manner, whether entities that plan to engage in them – be they tinted red or blue – will satisfy the admittedly ambiguous criteria for exemption.  The determination agents' jobs are hard enough.  I believe that we would do these agents a real injustice by dismissing their testimony or failing to follow where it leads.

Although much commentary on the controversy has, in my opinion, from the beginning been tainted by partisanship and is becoming even more so (again, in my opinion), we must not ignore the facts.  The facts stand apart from the political and policy implications that we draw from them.  We do not yet know all of the facts, but we should continue to welcome them.  Once we have all of the facts, we can then decide what to make of them.  Opinions, of course, will vary.  Nonetheless, the real facts may cause us all to revise the stories we are telling ourselves about the nature and significance of the whole affair.     

JRB

June 7, 2013 | Permalink | Comments (0) | TrackBack (0)

Developments in Controversy Surrounding American Academy of Arts and Sciences Chief

Following up on two previous posts this week, I see that the Boston Globe reports that Leslie Berlowitz, President of the American Academy of Arts and Sciences, will be taking some time off by her own choosing (whether or not without pay is not publicly known) while the Boston law firm of Choate Hall & Stewart looks into her administration.  The story says that Massachusetts Attorney General Martha Coakley approves of this development:

The announcement was made a day after Massachusetts Attorney General Martha ­Coakley's office contacted the board to find out how it was handling questions about ­Berlowitz's ­resume, compensation, and other issues.

On Monday, the Globe ­reported that Berlowitz earned total compensation of more than $598,000 in fiscal 2012, four times the median salary for the directors of all US nonprofits that size, according to a GuideStar USA survey.

Coakley's office, which oversees charitable organizations in Massachusetts, also planned to ask whether the board fully disclosed Berlowitz's executive perks, such as first-class air travel, on its tax forms.

"We are pleased that the ­executive board has retained ­independent counsel to conduct a full investigation into the questions and concerns that have been raised," said Coakley spokesman Brad Puffer. "Our office will continue to actively monitor this investigation and further action by the board to ensure it carries out its fiduciary responsibility."  

The Globe appears to be using this story to air out more than just the facts raising questions about Berlowitz’s presentation of her credentials and her compensation.  The report also details rather bizarre accounts of how she allegedly has mistreated employees.  Those interested in the specifics can find them in the story.

JRB

June 7, 2013 | Permalink | Comments (0) | TrackBack (0)

Thursday, June 6, 2013

Pennsylvania Perspectives on Nonprofits’ Support of Local Governments

The Pittsburgh Post-Gazette features a story that presents a rather friendly spin on PILOTS and other financial contributions made by Pennsylvania nonprofits, ranging from donations derived from a local church’s vacation Bible school fundraiser for a police canine unit, to annual $30,000 PILOTS made by Seton Hill University.  Most of the story reflects a governmental perspective based on positive assessments of the contributions of nonprofits to the community, yet with expectations that nonprofits contribute financially to at least some functions provided by government. 

The article also floats another idea – that state law be modified “to assess a universal fee based on a building's square footage to offset some of a community's costs for fire, police, street repair and snow removal.”  Assessing nonprofits reasonable fees for certain government services, rather than either normal property taxes or case-by-case PILOTS, strikes me as an approach worth considering.     

JRB

June 6, 2013 | Permalink | Comments (0) | TrackBack (0)

Massachusetts AG to Question American Academy of Arts and Sciences

Yesterday, we blogged about a report that Leslie Berlowitz, President of the American Academy of Arts and Sciences, misrepresented that she held a doctoral degree on grant applications filed with the National Endowment for the Humanities, and that she has enjoyed a really generous compensation package.  Today, the Boston Globe reports that Massachusetts Attorney General Martha Coakley plans to contact the Academy’s board to determine how it is dealing with questions about Berlowitz's résumé and salary.  The Globe further reports that the AG intends to investigate whether the Academy fully disclosed Berlowitz's various job-related benefits on returns required to be filed under tax laws.   

JRB

June 6, 2013 | Permalink | Comments (0) | TrackBack (0)

Wednesday, June 5, 2013

43 Nonprofit Workers Sentenced to Prison in Egypt

The Washington Post reports that an Egyptian court has imposed prison sentences on 43 nonprofit workers, including 16 Americans (one of whom is the son of the United States Secretary of Transportation, Ray LaHood).   Only 11 (all of whom are Egyptian) received suspended sentences; the rest, including the Americans, were ordered to serve real jail time.  None of the American defendants are now in the country, although one stayed until the verdict was issued, according to the story.  The verdict, says the Post, “also ordered the closure of the offices and seizure of the assets in Egypt belonging to the U.S. nonprofit groups and a German organization for which many of the defendants worked.”  These nonprofits include the International Republican Institute, the National Democratic Institute, Freedom House, and Konrad Adenauer Foundation. 

What did these groups do that the Egyptian court found so objectionable?  The Post reports that the nonprofit groups were engaged in democracy training.  They were alleged to have fostered protests in 2011 against the military following Hosni Mubarak’s departure.  Secretary of State John Kerry and several U.S. Senators reportedly have denounced the verdict as politically motivated and inconsistent with Egypt’s movement towards democracy.

Concern over the treatment of nonprofits in Egypt is apparently very high.  The Post explains that President Mohamed Morsi “has proposed a controversial bill regulating NGOs, soon to be debated by the interim, Islamist-dominated parliament,” which “would allow the state to control nonprofits’ activities as well as their domestic and international funding,”  according to Human Rights Watch.  The story continues:

In a joint statement last week, 40 Egyptian rights groups accused Morsi’s Muslim Brotherhood and its political arm of seeking to curb the freedom of rights groups through legal restrictions. They said the proposed law potentially gives Egypt’s security apparatus the power to suppress rights group[s], drawing parallels to Egypt’s recent past under Mubarak’s 29-year rule.

These human rights organizations also are reported to have “expressed fears that foreign nonprofits would be treated with hostility and that vaguely worded legislation would hinder operations or the issuance of work permits.”

 JRB

June 5, 2013 | Permalink | Comments (0) | TrackBack (0)

American Academy of Arts and Sciences Chief under Scrutiny

The Boston Globe reports that Leslie Berlowitz, President of the American Academy of Arts and Sciences, misrepresented that she held a doctoral degree from NYU on at least two grant applications filed with the National Endowment for the Humanities.  The story also asserts that she misstated her work history at the school.  Purported copies of the grant applications were made available here.  The Globe further notes that “[i]ncluding false information in federal grant applications … could potentially violate two separate statutes.” 

In addition, the Globe reports that Berlowitz’s total compensation was almost $598,000 for the fiscal year ending March 2012, and that she “also frequently travels first class, dines on meals prepared by the academy’s caterer, and requires staff to chauffeur her between the office and her apartment building along the Charles River in Cambridge, according to former board members and employees.” Will disclosure of this information prompt a governmental inquiry?  It is too early to tell. The Globe continues:

[Massachusetts] Attorney General Martha Coakley, who is charged with overseeing charities in Massachusetts, declined to say Tuesday whether she planned to examine Berlowitz’s pay, which the Globe found to be higher than the salary of most college presidents.

For a presentation of the facts that is more favorable to Berlowitz’s actions, see this coverage in the New York Times.  The Times reports that Louis W. Cabot, chairman of the Academy’s executive board, describes Berlowitz as having the board’s “unqualified support.”  Further, according to both newspaper accounts, the Academy blames the misstatements on a staff error and states that Berlowitz’s résumé on file with her employer does not contain the inaccurate information. 

JRB

June 5, 2013 | Permalink | Comments (0) | TrackBack (0)

Tuesday, June 4, 2013

Will the 501(c)(4) Scandal Lead to Tax Reform?

The failings of the Internal Revenue Service in its processing of exemption applications, especially those filed by many tea party groups seeking recognition of exempt status under section 501(c)(4) of the Internal Revenue Code, are obviously commanding much attention, including daily posts on the TaxProf Blog (today’s post here).  Today the New York Times examines an interesting spin-off of the controversy: the hope of House of Representatives Ways & Means Committee Chair, Dave Camp, to use the fiasco as a catalyst for broad tax reform.  Quotes from congressional leaders appearing in the Times provide no clear signal that the strategy will work, however.  And quotes from witnesses at the House Ways & Means Committee hearings unsurprisingly suggest that they want the focus to remain specifically on the mishandling of their exemption applications.

Aside from the tax reform angle, embedded in the story is an interesting comment from Daniel Werfel, the Acting Commissioner of Internal Revenue.  Here is the relevant excerpt:

Mr. Werfel went much further than the acting commissioner he replaced, Steven Miller, saying he had reached the “inescapable conclusion” that organizations applying for tax-exempt status had been targeted according to political labels.

And he pledged to report to President Obama and Treasury Secretary Jacob J. Lew by the end of the month what efforts he had begun to deal with the management lapses, hold those responsible accountable and put in place new controls on spending for travel and training.

One wonders how far Acting Commissioner Werfel will go “to deal with the management lapses” and “hold those responsible accountable.”

JRB

June 4, 2013 | Permalink | Comments (0) | TrackBack (0)

Nonprofit Hospital Threatens to Stop Admitting Patients Until State Pays Up

Roseland Community Hospital, a 162-bed hospital serving a largely poor population from the South Side and south suburbs of Chicago, is threatening to take no more patients unless the State of Illinois pays the hospital what it claims is due from the government, reports the Chicago Tribune.  Hospital administrators reportedly assert that the state government owes $6 million for the hospital's adolescent behavioral health unit.  Roseland CEO and President Dian Powell is reported to have insisted that the hospital’s struggles are not explained by financial mismanagement.  She points to a reduction in the hospital's deficit from $9 million to $5 million during her 18-month tenure.  According to the story, Illinois Governor Pat Quinn's office maintains that the state has advanced all of the current year's payments due Roseland and has attempted to collaborate with Roseland “to create a plan to make better use of any future state funding.”  A spokesperson for the governor is further on the record stating that the government “is trying to explore ways to use available financial resources within the law to aid the hospital, but Roseland has not provided any information on how it would use potential money.”

 

JRB

June 4, 2013 | Permalink | Comments (0) | TrackBack (0)

Monday, June 3, 2013

Most Recent Nonprofit Advocacy Matters

The National Council of Nonprofits has issued its June 3 edition of Nonprofit Advocacy Matters.  Although several stories appearing in the issue are worthy of following, one especially caught my eye after the topic was suggested to me by fellow blogger, Lloyd Mayer.  The story reports that many nonprofits are opposing proposed regulatory changes to the Combined Federal Campaign (CFC) released by the U.S. Office of Personnel Management (OPM).  The CFC program facilitates workplace giving by federal employees to charitable nonprofits. Says the story,

One OPM proposal would shift the burden of the cost of the campaign by imposing an up-front flat application fee for participating charitable nonprofits rather than continuing the past practice of charging 10 percent of donations actually collected. The proposed changes would also restrict giving options to electronic means, and move administration of the program from local to regional or centralized offices, potentially creating a disconnect between local nonprofits and the federal employees making the donations. One letter signed by ten national nonprofits expressed concern that some of the proposals would reduce nonprofit participation in the CFC, which could “impact services to local communities, including federal workers, and their families, as charities have to cut back on service delivery.”

 The public can comment on the proposed changes until June 7, 2013.

 JRB

June 3, 2013 | Permalink | Comments (0) | TrackBack (0)

Ideas for Victim Compensation Funds

The outpouring of donations intended to help victims of recent tragedies caused by acts of human violence (for example, in Aurora, Colorado; in Newtown, Connecticut; and at the Boston Marathon), and the issues raised by the management and distribution of those donations, are the focus of recent articles in the New York Times and the Los Angeles Times.  One idea on the table is the creation of an organization, national in scope, formed specifically to receive donations and disburse them to victims of such human-induced tragedies whenever they occur.  The following excerpt from the N.Y. Times piece captures the essence of the proposal:

The National Compassion Fund, still in the planning stages, would be endorsed by a state or local official immediately after a tragedy occurs that is fatal or causes life-changing injuries to at least five people in a public place. … It would have tax-exempt status and money would be distributed within six months … with “every dime to go to the victims,” as a nontaxable gift.

For additional coverage, see Past Problems Prompt New Look at Managing Disaster Funds in The Chronicle of Philanthropy.

Readers should note that the proposal raises a number of legal issues, particularly if donations are intended to be deductible as charitable contributions.  Ensuring that “every dime” go to victims of particular disasters is not always consistent with (1) maintaining the donee organization’s federal income tax exemption under section 501(c)(3) of the Internal Revenue Code, and (2) qualifying donations as charitable contributions that are deductible under Code section 170(c).  Resolution of these issues is fact-intensive and requires an analysis of the law of charitable gifts and federal income tax law. 

Others and I have written about these issues in various contexts.   For example, see Johnny Rex Buckles, When Charitable Gifts Soar Above Twin Towers: A Federal Income Tax Solution to the Problem of Publicly Solicited Surplus Donations Raised for a Designated Charitable Purpose, 71 Fordham L. Rev. 1827 (2003); Robert A. Katz, A Pig in a Python: How the Charitable Response to September 11 Overwhelmed the Law of Disaster Relief, 36 Ind. L. Rev. 251 (2003). On the related topic of post-disaster relief legislation, see Ellen P. Aprill & Richard Schmalbeck, Post-Disaster Tax Legislation: A Series of Unfortunate Events, 56 Duke Law Journal 51 (2006).

JRB

June 3, 2013 | Permalink | Comments (0) | TrackBack (0)

Sunday, June 2, 2013

Mayer & Ganahl: Taxing Social Enterprise

Joseph Ganahl and I have posted Taxing Social Enterprise, 66 Stanford Law Review (forthcoming 2014).  Here is the abstract:

The fairly strict divide in the United States between for-profit and nonprofit forms presents a quandary for many entrepreneurs who want to combine doing good with doing well. On the one hand, for-profits offer great flexibility and access to capital and so attract entrepreneurs who would like to take advantage of the ability of for-profits to scale up rapidly to meet growing demand. At the same time, however, for-profit forms also limit entrepreneurs’ ability to engage in philanthropy, due to the fiduciary duties managers owe to the equity holders. On the other hand, nonprofits offer their founders the freedom to prioritize public benefit but limit both their access to capital, in large part due to the bar on equity financing for a nonprofit, and their flexibility in addressing changing societal needs as a result of constraints in the law designed to deter nonprofits from straying into activities unrelated to their narrow primary mission. Hybrids — low-profit limited liability companies, benefit corporations, and other related forms — have been touted as the “both-and” solution to this problem by marrying the capital and innovation that results from the ability to generate a profit for investors with the public benefit goals that characterize most nonprofits.

Since the first hybrid enabling law was passed in Vermont in 2008, the number of states offering hybrid forms has grown steadily, as has the number of entrepreneurs choosing statutory hybrids as a middle road between the for-profit and the nonprofit. Plaudits for and criticism of the hybrid form have also proliferated. Proponents have lauded their ability to facilitate socially conscious enterprise. Detractors have questioned the viability of the hybrid form and have suggested that they create more fiduciary conflicts than they resolve. To date, however, there has been no serious scholarly publication addressing the appropriate tax treatment of hybrid entities even though some supporters of hybrids have asserted that these forms deserve beneficial tax treatment. In this Article, we intend to close that gap by thoroughly examining the arguments for tax preference and the likely consequences that would flow from offering such preference.

We accept the fact that hybrid forms have gained a firm foothold in the legal landscape and expect that they will increase in prominence and influence. We contend, however, that offering nonprofit-like tax benefits to hybrid entities will likely have a deleterious effect, not only on the charitable sector and the public fisc, but possibly even on hybrids themselves. The Article concludes with some proposals for possible modifications to existing tax laws that would acknowledge hybrids’ virtues while not exacerbating their potential weaknesses.

LHM

June 2, 2013 in Publications – Articles | Permalink | Comments (0) | TrackBack (0)

Faulhaber: Charitable Giving, Tax Expenditures, and the Fiscal Future of the European Union

Lilian V. Faulhaber (Boston University) has posted Charitable Giving, Tax Expenditures, and the Fiscal Future of the European Union.  Here is the abstract:

This paper focuses on several cases decided by the Court of Justice of the European Union in recent years. In these cases, the CJEU struck down geographic limitations on tax expenditures for charitable giving, thereby leaving Member States with a choice. Member States that chose not to eliminate their tax expenditures entirely would have to extend them to beneficiaries across the European Union. Those that did not want to extend these benefits to the rest of the European Union, however, would have to eliminate their tax expenditures and perhaps replace them with direct subsidies.

The Court has thus effectively forced Member States into either subsidizing each other’s charitable sectors or no longer using their tax systems to encourage charitable giving. This paper shows that most Member States have chosen the first option, meaning that they are engaged in a web of horizontal subsidization. In the absence of any supranational taxing authority in the European Union, this horizontal subsidization represents a new model of fiscal federalism, where taxing and spending decisions are spread between Member States, rather than assigned vertically to a centralized government. This new model could arguably allow the Member States to retain the benefits of both centralization and decentralization, with Member States now paying for benefit spillovers yet still retaining the competition and representation of political preferences generally associated with decentralized systems.

However, horizontal subsidization should raise significant concerns because of the way that the Court reached its decisions in cases considering tax expenditures. In order to arrive at horizontal subsidization, the Court ignored both the economic equivalence of tax expenditures and direct expenditures and the fundamental regulatory and cultural differences between Member State charitable sectors. By prioritizing formalism over functionalism and overlooking the remaining differences between Member States, the Court distorted Member State policy choices, favored certain types of charitable organizations, and created incentives for Member States to increase barriers to entry to their charitable sectors. This paper suggests that the CJEU’s tax expenditure jurisprudence is thus more likely to be a cautionary tale than a model for future integration.

LHM

June 2, 2013 in International, Publications – Articles | Permalink | Comments (0) | TrackBack (0)

Colinvaux: Rationale and Changing the Charitable Deduction

ColinvauxRoger Colinvaux (Catholic) has posted Rationale and Changing the Charitable Deduction, 138 Tax Notes 1453 (2013).  Here is the abstract:

There are two principal rationales for the charitable deduction. Depending upon choice of rationale, some tax reform changes are suggested and others are not. A base measurement rationale suggests eliminating the deduction for unrealized appreciation, keeping the benefit as a deduction and not a credit, not adopting caps or a nonitemizer deduction, and protecting the tax base by narrowing the class of organizations eligible to receive deductible contributions. A subsidy rationale, depending upon which strand is emphasized, might favor a more equitable tax benefit in the form of a credit or through caps or a nonitemizer deduction, and could lead to preferring some organizations over others. Both rationales are consistent with placing a floor under the deduction, and narrowing its scope. Present law presents a confusing mix of policies and priorities. Tax reform presents an opportunity to reconsider the role of the charitable deduction in the tax system and to act accordingly.

LHM

June 2, 2013 in Publications – Articles | Permalink | Comments (0) | TrackBack (0)

Court Confirms Loss of 501(c)(6) Status by ABA Retirement Funds

The United States District Court for the Northern District of Illinois has ruled that the ABA Retirement Funds did not qualify as a tax-exempt section 501(c)(6) organization for tax years 2000 to 2002 because its performs services for individuals rather than for the industry as a whole and because it is engaged in a business normally carried on for profit, either of which characteristic would disqualify it for such status.  The court also found that the organization is not in the same general class a chamber of commerce or board of trade and was not an integral part of the ABA. 

While the ruling only addresses the specific tax years at issue, a Forbes article published when the ABA Retirement Funds initially filed its refund lawsuit states that the organization filed an application for exemption in 2004 but the IRS rejected that application in 2005.  According to this article, the exemption would have permitted the organization to avoid taxes on the marketing income its earns from promoting ABA-branded retirement plans.  The organization apparently outsources the actual management of its retirement plans to various third-party vendors that collect the fees related to those plans.

LHM

June 2, 2013 in Federal – Judicial, In the News | Permalink | Comments (0) | TrackBack (0)

New Zealand: Family First to Lose Charity Status Over Controversial Positions?

The New Zealand Herald reports that Family First NZ, which identifies itself as a pro-framily organization, has announced that it received a notice that the New Zealand Charities Commission plans to deregister the organization as a charity because it supports a view of the family that was not in the public interest.  Among its many positions, Family First opposes same-sex marriage and a law that apparently criminalizes any form of corporal punishment for children.  A later article indicates that the deregistration is based at least on part on the assertion that Family First's main purpose is political and therefore not charitable under New Zealand law.  The final resolution of the situation will be decided by the courts, as Family First has already filed a High Court appeal.

LHM

June 2, 2013 in In the News, International | Permalink | Comments (0) | TrackBack (0)