Here are some of the highlights from 2 of the subcommittee meetings at the ABA Exempt Organizations Committee meeting held in San Diego on February 10, 2023 as part of the ABA 2023 Midyear Tax Meeting.

Private Foundations & Unrelated Business Income Taxes & International Philanthropy

• International:
  • See Treasury Implements Historic Humanitarian Sanctions Exceptions
    • “The general licenses released today reflect the United States’ commitment to ensuring that humanitarian assistance and related trade continues to reach at-risk populations through legitimate and transparent channels, while maintaining the effective use of targeted sanctions, which remain an essential foreign policy tool. The provision of humanitarian support to alleviate the suffering of vulnerable populations is central to our American values.”
  • UK: Foreign Influence Registration Scheme (FIRS): National Security Bill factsheet
  • Syria: Treasury Issues Syria General License 23 To Aid In Earthquake Disaster Relief Efforts
  • Canada: Registered charities making grants to non-qualified donees (draft); CRA Releases Draft Guidance on Charities Making Grants as Qualifying Distributions (Carters Charity & NFP Law Bulletin No. 518); Mazigh: Why is the Canadian government still targeting Muslim charities?
• Unrelated Business Income Tax:
  • Judge rules IRS owes $11.5 million to Mayo Clinic (re: educational)
  • OCC Memo: IRC 501(c)(6)1 Organizations Providing Pension and Health Benefits
  • Iowa church wages 4-year fight with IRS over hallucinogenic-drug ceremonies (Des Moines Register)
  • Query: Would a charity’s sale of carbon credits generate UBTI if the charity’s charitable purpose is related to climate change prevention? [Is it akin to the selling of products of the charity’s exemption functions – e.g., selling milk, but not ice cream, from a charity demonstration farm – which would be exempt?]
• Private Foundations:
  • [Minnesota] Attorney General’s Office prevails in Otto Bremer Trust appeal (private foundation self-dealing issue – Court says no de minimis defense to self-dealing as justification to find breach of duty of loyalty)
  • PLR 202249022: approval of a contingent set-aside

Political and Lobbying; Health Care Organizations; Audits, Appeals & Litigation

• PLR 202247012: suggests that 501(c)(4) political activity must be “insubstantial” and that perhaps a 20% standard is the one the IRS is now advocating (BBB applies to c3s and c4s)
• Difficult to reconcile that with the 60:40 safe harbor based on the IRS expedited option to groups that have had their applications pending for more than 120 days – IRS must send the letter (procedurally required) even if that’s not its position anymore (!)
• Keep an eye out on other things:
  • GOP-controlled House looking to cut IRS funding (see, e.g., House Republicans vote to strip IRS funding, following pledge to repeal nearly $80 billion approved by Congress, CNBC, 1/10/23)
  • FEC updated rule on Internet ad disclaimers and the meaning of “public communication”
  • Foreign Agents Registration Act – see FARA: A Guide for the Perplexed (Covington)
  • Internet ad disclaimers – draft Final Rule and Explanation and Justification for REG 2011-02
• Buckeye Institute v. IRS (Complaint) challenges the right of the IRS to collect donor information on Schedule B of the Form 990, asserting both the IRS’s failure to keep such information confidential and the Constitutional issues (chilling of association and assembly rights) – a completely expected outcome of the Supreme Court decision in Americans for Prosperity Foundation v. Bonta