Highlights of the 2008 Western Conference on Tax Exempt Organizations (Part Three)

More Highlights of the Conference:

  • Peter Karoff (Chairman, Founder of The Philanthropic Initiative), Catechism for a Great Foundation
  • Bruce Hopkins, Current Development Affecting Exempt Organizations (N.B. It's always a treat to hear Mr. Hopkins' rundown of current developments.)
    • Private benefit:
      • IRS ruled that a board of directors consisting of two related individuals automatically constitutes unwarranted private benefit (PLR 200736037)  
      • IRS ruled that lack of independent board is violation of private benefit doctrine because private benefit might occur (PLR 200830028)  
    • Denial/repeal of exemption:
      • Failure to satisfy commensurate test (little bingo revenue distributed for charitable purposes) (PLR 200825046
      • Violation of public policy doctrine (promotion of repeal of child porn and exploitation laws) (PLR 200826043)
    • Once tax-exempt status is recognized, IRS cannot retroactively revoke exemption where no material change in facts (Democratic Leadership Council, Inc. v. United States (D.D.C. 2008); on appeal)
    • IRS Complaint Process for Tax Exempt Organizations
    • U.S. v. Living Word Christian Center(U.S. district magistrate judge in Minneapolis recommended that the court refuse to enforce an IRS subpoena for financial documents issued to Living Word Christian Center because the subpoena for financial records was not approved by "an appropriate high-level Treasury official" as required by the church audit provisions in IRC Sec. 7611)
    • IRS ruled that rental income charity received from another charity (not a controlled entity) would not be treated as UBTI under the "substantially related use exception in IRC Sec. 514(b)(1)(A) (PLR 200843046)
    • Joint Committee on Taxation issued estimates of tax expenditures for fiscal years 2008-2012; charitable contribution deduction is 5th largest tax expenditure ($264B)