We are pleased to announce that Tax Analysts has published our very own Jack B. Siegel's article, The Wild, the Innocent, and the K Street Shuffle: The Tax System's Role in Policing Interactions Between Charities and Politicians, in the November 2006 edition of the Exempt Organization Tax Review. This article has already become a must read. It has been added to the Lexis/Nexis database (EOTR database in the Federal Tax Library) for those of you have access to Lexis/Nexis, but not the EOTR.
A lot has been written about the rules governing campaign interventions by various tax-exempt entities, particularly in light of highly publicized stories involving All Saints Church, the NAACP, and the Kansas Attorney General. The tax bar's attention most recently has been focused on using multiple entities to achieve intervention objectives within the bounds of the law. In this recent campaign season, lawyers have been advising Section 501(c)(3) organizations on how to expand their sphere of influence with (c)(4) and 527 entities.
Jack has identified an entirely different set of concerns and provided 57 recent examples of politicians who have engaged in patterns of activity that pose potential for abuses. He contends that Jack Abramoff's conduct, although illegal and deplorable, is a red herring. Jack identifies three categories of potential abuse (i) buying access; (ii) new patronage; and (iii) soft landings. The first category focuses on attempts to influence politicians. The second focuses on politicians' efforts to influence voters through earmarks and other benefits conferred through nonprofits that they control. The third category addresses efforts by politicians to line their pockets using tax-exempt entities as the funding mechanism.
Jack 's article details the tax law doctrines that might be used to combat the concerns he identifies. He focuses on private inurement, private benefit, the prohibition on campaign intervention, the intermediate sanctions, and limitations imposed by Section 162(e) on lobbying expenditures. Along the way, he has some interesting things to say about UBIT, corporate foundations, and criminal investigations that utilize the intermediate sanctions. Jack also discusses the role of the tax bar and the IRS in policing the abuses he identifies. Coming in at 44 pages and with over 500 footnotes, Jack's efforts provide a comprehensive look at a variety of issues, as well as a new framework for analysis.
Jack will present the article at a December 1, 2006 seminar on Emerging Issues in Philanthropy entitled Personal Use of Charities by Politicians. The Seminar is a joint project of the Urban Institute Center on Nonprofits and Philanthropy and Harvard University’s Hauser Center for Nonprofit Organizations. The Seminar is by invitation only, as are all Emerging Issues in Philanthropy seminars. The invitations were sent out some time ago.
He has also been asked to present the article to the May meeting of Exempt Organizations Committee of the American Bar Association's Tax Section.
