Tuesday, July 20, 2021

Recent Articles of Interest

Here are a few recent articles or writings of interest to the nonprofit world.

Ellen Aprill, Americans for Prosperity and the Future of Schedule B,  Letter to the Editor in Tax Notes

"Before the July 1 decision of the Supreme Court in Americans for Prosperity,1 the California Attorney General had for a number of years required all section 501(c)(3) organizations operating in the state to file with it a full copy of its federal Form 990, the annual information return for exempt organizations. The required filing included an unredacted Schedule B, listing the donations, with names and addresses, of substantial contributors. The Supreme Court held California’s requirement to be facially unconstitutional. The Court determined that the California requirement failed an exacting scrutiny standard of review under which, to avoid violating the First Amendment, any compelled disclosure to government must be “narrowly tailored” to an asserted and substantial government interest. The Court concluded that California’s asserted need for an unredacted Schedule B in order to investigate fraud did not meet this standard."

Jennifer Bird-Pollan, Taxing the Ivory Tower, Pepperdine Law Review

The Tax Cuts and Jobs Act of 2017 introduced the first ever excise tax imposed on the investment income of university endowments. While it is a relatively small tax, this new law is a first step towards the exploration of taxing non-profit entities on the vast sums of wealth they hold in their endowments. In this Essay I take the new tax as a starting place for investigating the justification for tax exemption for universities and thinking through the consequences of changing our approach, both in the form of the new excise tax and possible alternatives. There remain reasons to be skeptical both about the design of the current tax and its ability to withstand the political efforts of the powerful set of universities who will be subject to it. Nonetheless, this new tax opens the door to a discussion of whether it is time to treat universities’ endowments more like the private equity funds they increasingly resemble.

Beckett Cantley, Ground Zero: The IRS Attack on Syndicated Conservation Easements, William & Mary Law & Policy Review

On June 25, 2020, the Internal Revenue Service (“IRS”) announced a settlement initiative (“SI”) to certain taxpayers with pending docketed cases involving syndicated conservation easement (“SCE”) transactions. The SI is the current culmination of a long series of attacks by the IRS against SCE transactions. The IRS has recently found success in the Tax Court against SCEs, but the agency’s overall legal position may be over- stated. It is possible that the recent SI is merely an attempt to capitalize on leverage while the IRS has it. Regardless, the current state of the law surrounding SCEs is murky at best. Whether a taxpayer is contemplating the settlement offer, is currently involved in an unaudited SCE trans- action, or is considering involvement in an SCE transaction in the future, the road ahead is foggy and potentially treacherous.

This Article attempts to shed light on the obstacles that face SCE transactions. This Article: (1) provides an overview of SCE transactions and the main attacks against them; (2) analyzes each of the IRS’s main attacks and the relevant issues that arise; (3) illustrates the relevant pro-taxpayer and anti-taxpayer cases on each issue; (4) discusses the subsequent considerations that taxpayers need to take into account and the future outlook of SCE; and (5) concludes with a summary of the Article’s findings.

J. Haskell Murray, The History and Hope of Social Enterprise Forms, Tennessee Journal of Business Law

This Article sketches the history of social enterprise legal forms in the United States and provides suggestions regarding their continued evolution. Social enterprises—companies that blend profit and social purpose—have a long history in the United States, but not until 2008 did a state pass a social enterprise specific statute. In that year, Vermont passed a statute allowing for formation of L3Cs, low-profit limited liability companies. The L3C was aimed primarily at funding issues for social enterprises and attempted to unlock program related investments (PRIs) for that purpose. Following the L3C form were a number of variations on a corporation-based social enterprise: social purpose corporations, benefit corporations, and public benefit corporations. These forms evolved over the past decade to address the issues of corporate purpose and social accountability. Lastly, a small handful of states passed benefit limited liability company (BLLC) statutes for companies that desired a form similar to the benefit corporation but built on an LLC framework.


Philip Hackney



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