Bruce R. Hopkins' Nonprofit Counsel最新文献

As discussed in the December 2020 issue, the 2021 Annual Audit Plan of the Office of the Treasury Inspector General for Tax Administration includes a review of the TE/GE Division's efforts to identify and examine tax-exempt organizations with unreported or underreported unrelated business income tax. TIGTA's report on the topic is dated February 24.

The US District Court for the Northern District of California, by decision dated February 26, ruled in favor, on all counts, of the Fidelity Investments Charitable Gift Fund, in litigation against it, which asserted breaches of promises made to two donors who contributed stock to one of this sponsoring organization's donor-advised funds (Fairbairn v. Fidelity Investments Charitable Gift Fund).

A court battle is brewing between two New York organizations, which may lead to a judicial determination as to whether certain undertakings by one of these entities, a charitable (IRC § 501(c)(3)) organization, constitute prohibited political campaign activity and whether it filed false annual information returns with the IRS. The parties to this lawsuit are the Zionist Advocacy Center and the New Israel Fund. The ZAC is alleging that the NIF has directly engaged in political campaign activity, makes grants to organizations that engage in electioneering, falsely reports to the IRS that it does not conduct political campaign activity, and has violated the New York False Claims Act by submitting fraudulent federal returns to the New York government in support of its state tax exemption. On February 16, the US District Court for the Southern District of New York denied NIF's motion to dismiss the case (State of New York ex rel. TZAC, Inc. v. New Israel Fund).

The Tax Court of New Jersey, by decision dated March 4, held that an administrative office building owned by a religious and charitable corporation is entitled to real estate tax exemption because the office operations directly further the entity's exempt purposes (Ocean Grove Camp Meeting Association of the United Methodist Church v. Township of Neptune).

A memorandum from EO Rulings and Agreements, dated March 17, provides updated guidance in connection with the 27-month rule by which recognition of exemption applies retroactively (see the summary of this rule in the March 2021 issue).

The TE/GE Division, on February 8, issued a summary of its fiscal year 2020 accomplishments (Pub. 5329 (Rev. 1-2021)). During this period, the Division “continued to identify compliance work through [its] compliance strategy process.” The TE/GE Compliance Governance Board functioned to “identify, prioritize and allocate resources within the TE/GE filing population.” The Division's queries were “based on quantitative criteria, used to identify high risk areas of noncompliance and focus on issues with the greatest impact.” It continued to process referrals, engage in compliance checks, and issue educational letters.

The IRS approved a private foundation's set-aside program, reflecting the “tremendous impact the COVID 19 shutdown” in a state “has had on all current construction projects” (Priv. Ltr. Rul. 202053017). The purpose of the requested set-aside “is to ensure that these projects will be properly managed, monitored and brought to a satisfactory and quality conclusion in a successful and timely manner.” The foundation asserted it would not be prudent to pay the contractors the total amount prior to the completion of the entire job.” It observed that, due to the pandemic, the “timelines for when these projects will be completed is uncertain.” The final successful argument was that this set-aside approach will allow the foundation to “maximize control over the projects, with the goal of a achieving a better and successful result.”

The IRS approved a private foundation's request for a 60-month extension to pay out a set-aside amount that was approved in 2016 (Priv. Ltr. Rul. 202102014). The project involves relocating a museum from one country to another. Four factors have contributed to the delays. One, the foundation received a large contribution that doubled the museum's collection, and a suitable site for the new collection has not been located. Two, there have been dramatic increases in land values, costs of construction and the national sales tax. Three, there is going to be a shortage of manpower. Four, the global pandemic “has caused delays and has affected [the] economy of all areas” in the country involved, with tens of thousands of workers forced to remain home. [12.4(b)]

Note: The correlation of these rulings and the pandemic was reported in the EO Tax Journal on February 4.