Monday (May 17) was the deadline.If you were a small charity that had otherwise been exempt
from filing a Form 990 or Form 990-EZ, you had to file an electronic postcard notifying the IRS that you still existed.Even then, there were exceptions for
churches and members of groups with group exemptions.Congress—NOT THE IRS—enacted this mechanism in 2006 as part
of the Pension Protection Act.Lawmakers
hoped the law would purge...
We called it the nonprofit scandal of the year. Last week the New York Times took notice with a lengthy article by Sam Dillon. New Jersey College is Beset by Accusations (December 21, 2009). Today, the Times posted an editorial about the lawsuit filed by the New Jersey Attorney General against Stevens Institute of Technology officials. Scandal of the year, you say? Well we don’t often see the Times editorial page posting editorials on nonprofit scandals. As is true for prior years, this year we have seen...
We wrote two days ago about Senator Grassley’s efforts to
use the cover of health care reform to avoid a debate over two provisions that
are unrelated to health care reform but that Senator Grassley is trying to insert into the Baucus proposal. One would authorize the IRS to ask governance-related
questions on the Form 990. The
other would eliminate the rebuttable presumption from the intermediate
sanctions.
We used strong language in our criticism. Rightfully so. Senator Grassley is obviously afraid
that a full airing of the issues surrounding his proposals might result in
their defeat. Both are bad ideas. By eliminating the rebuttable
presumption, Grassley will assure that thousands of large colleges, hospitals, other
charitable organizations, and their managements will be plunged into an abyss
of tax disputes with the IRS. Why? Because Grassley wants to substitute the business judgment of an IRS agent for that of a board of directors charged with setting executive compensation. Talk
about a waste of charitable resources.
What Senator Grassley really wants is wage controls for nonprofit executives, but he doesn’t have the guts to make that proposal. Senator Grassley is serving up a 21st century version of Robespierre's Law of Maximum, if not the ghost of Richard Nixon's wage and price controls.
We aren’t the only ones who are raising objections to
Senator Grassley’s “undercover of night” tactics. The American Society of Association Executives (ASAE) has
weighed in, voicing its opposition to Grassley’s efforts. ASAE is more diplomatic than we are,
but it nevertheless has written a strong letter in opposition to Grassley’s
efforts. We hope others in the
exempt organization community will voice their opposition to Senator Grassley’s efforts.
Internal Revenue Service - Circular 230 Disclosure: As provided for in Treasury regulations, any advice (but none is intended) relating to federal taxes that is contained in this communication is not intended or written to be used, and cannot be used, for the purpose of (1) avoiding penalties under the Internal Revenue Code or (2) promoting, marketing or recommending to another party any plan or arrangement addressed herein.
THE FOREGOING IS NOT AND SHOULD NOT BE TAKEN AS LEGAL ADVICE. IF LEGAL ADVICE IS REQUIRED, THE NONPROFIT OR OTHER PARTY IN QUESTION SHOULD SEEK THE ADVICE OF QUALIFIED LEGAL COUNSEL.
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There is a time and place for everything. Now is not the time or place for Senator Grassley’s crusade against what he claims to be excessive executive compensation in the nonprofit sector. Grassley has used his power and influence to submit two amendments to the health care reform bill currently working its way through the Senate Finance Committee.
Whether you are a Republican or Democrat, you have to acknowledge that our health care system is in need of reform, if for no other reason than ever escalating costs that continue to outstrip the overall rate of inflation. Unfortunately this August brought little light to what has become a typical ideological debate pitting the far Left against the far Right in a circus, with Glenn...
We disagree with Monday’s statement from Senator Max Baucus, the chairman of the Senate Finance Committee, regarding former Senator Tom Dashcle’s nomination to head the Department of Health and Human Services. Baucus threw his support behind the nomination despite Daschle’s tax problems. At least Baucus took a public position.
Senator Charles Grassley, the ranking member of the Senate Finance Committee, remained largely and mysteriously silent. Silence is uncharacteristic of Grassley, a well-known populist. But Grassley may have been holding all the cards….
We’ve been following former Senate Majority Leader Senator Daschle’s tax problems closely. We don’t want to be too pious, but we are sick and tired of the lax compliance effort undertaken by our public official wannabes. First there was Timothy Geitner and the employment taxes. Now it is Daschle, who is President Obama's nominee to head up the Department of Health and Human Services. Daschle failed to report $225,256 in income attributable to the use of a car and driver provided by a private-equity firm that Daschle apparently provided services to. What has been less publicized is Daschle's failure to report $83,333 in consulting services income. That one is...
Theresa Pattara, an aide to Senator Charles Grassley, told the Chronicle of Philanthropy that Section 4944, pertaining to jeopardy investments by private foundations, might be applicable to foundation managers who authorized the investment of foundation investments with Madoff. Ben Gose, Senate Aide Says IRS Could Question Board Members Over Madoff Investments (Jan. 14, 2009). The Senate Finance Committee is a bit late on this one. We raised this possibility on January 8, 2008, a week ago.
A word of warning to the directors of family foundations that invested with Madoff. A month ago, you were viewed as victims of a fraud. The tide may be changing. Here we have an influential staff member of the Senate Finance Committee raising the possibility of liability. Today, the New York Attorney General began poking around, issuing subpoenas to New York charities, among others. Connecticut’s attorney general also is conducting an investigation into investments by foundations.
Let this be a word of warning to those managing private foundations. Sloppy investment practices may get you into trouble in the future. You should be visiting with your counsel now. As for foundation managers (including directors) of foundations that lost money to Madoff, you should be in talking with your tax counsel about your potential exposure. Who knows where this is heading.
Dean Zerbe, a former top aide to Senator Charles Grassley, will be the featured guest in an Internet question and answer session scheduled for tomorrow (Tuesday, March 25 at 12 noon, eastern time) by the Chronicle of Philanthropy. Zerbe will discuss the regulatory horizon for charitable organizations and what he learned from his many investigations of charitable organizations as a Senate staffer.
Take advantage of this opportunity to ask all your pointed questions. Muster the courage. You may be shot down in the street, but what the heck. Isn't preserving your personhood worth the risk?
Last week we wrote an article about two $50 million gifts made by T. Boone Pickens to two institutions. Each gift carried the stipulation that the money could not be spent until the $50 million gift and the income thereon had grown to $500 million. Pickens clearly exhibited a preference to help future generations rather than the one that is currently alive.
Today, the Chicago Sun Times devoted a full page article to an anonymous University of Chicago alum's $100 million gift to the U of C. The article, by reporter Dave Newbart, is headlined "$100 Million Loan-Killer." The alum's gift can be viewed as the antithesis to T. Boone Pickens' gift. The Sun Times reports that the funds are to be used...
