IRS Creates Promoter Investigations Coordinator Position

Date01 May 2020
Published date01 May 2020
Bruce R. Hopkins’ Nonpr ofit Counsel DOI:10.10 02/n pc
the complaint, language that a reasonable trier of fact
could also find sufficiently definite,” although the court
did not explain why.
The court also stated that Fidelity Charitable has “not
proved that its alleged promise to allow the Fairbairns
to advise on a price limit is unenforceable as a matter
of law.” The court wrote that “[p]erformance on the
promise is objectively measurable — did Fidelity Charita-
ble ask the Fairbairns’ opinion on the sales price before
the trades were made?” The court added that Fidelity
Charitable’s “suggestion that damages for this specific
claim are too speculative is also unpersuasive,” although
again the court did not explain why.
The court concluded that, “[b]ased on the evidence
in the record, there is a genuine dispute as to whether
Fidelity Charitable would have followed the Fairbairns’
advice had it been sought.” [11.8(b)]
Commentary: In essence, this case, at this stage, is
not a donor-advised fund case. It is an example of the
difficulties in getting a trial court to decide a case on the
basis of summary judgment and an illustration of the
capacious discretion vested in a trial judge as to whether
summary judgment in a particular case is warranted.
To the extent this case can be said to have a bearing
on donor-advised fund law at this point, it pertains to
the court’s downplaying of the admissions by the Fair-
bairns in their responses to the requests for admissions.
The court makes much of the fact that the words legal
control were not defined in the requests. The court also
differentiates between alleged conditions placed by the
Fairbairns prior to or at the time of their contribution and
conditions imposed subsequent to the gift. The fact is,
however, that the donor-advised fund law requires that
the sponsoring organization have exclusive legal control
over the gift property. Thus, no matter how legal control
may be defined, and when the legal control may have
been put in place, donors to donor-advised funds cannot
(to have deductible gifts) have it.
The IRS will soon have a promoter investigations
coordinator, the agency announced on February 24 (IR-
2020-41). This official “will coordinate promoter activity
across the agency and will serve as the point person
for Commissioner Chuck Rettig and IRS leadership on
promoter investigations,” the IRS said. The coordinator
“will work with the IRS business units, the Office of
Professional Responsibility, Criminal Investigation, Chief
Counsel and other IRS offices to ensure coordination of
ongoing investigations and develop new approaches to
identify promoters of aggressive tax arrangements.” The
official “will also assist IRS business units in developing
and resolving cases both individually and with a view
toward strategic promoter enforcement.”
The individual selected for this position is Brendan
O’Dell, currently a senior advisor in the IRS Large Busi-
ness & International Division. He is to serve on a tempo-
rary basis, beginning in early April, until the position is
filled on a permanent basis.
“Brendan brings a strong set of skills and experience
from inside and outside the IRS, which will be an asset
in this important new position,” said Sunita Lough, IRS
deputy commissioner for services and enforcement. “He
will play a leading role coordinating promoter investiga-
tions, an emerging priority concern for the IRS to help
improve compliance and ensure fairness in the tax sys-
tem.” O’Dell will report directly to Lough’s office.
This development comes at a time of increasing entan-
glement between the law of tax-exempt organizations
and the law concerning abusive tax promotions, the most
recent illustration being promotion of syndicated conser-
vation easement plans. [28A.3(b) (2020 Cum. Supp.)]
The Treasury Inspector General for Tax Administration
audited the IRS to determine whether agency man-
agement has controls in place that provide reasonable
assurance that examiners consider whether abusive tax
shelter promoter penalties (IRC § 6700) are warranted
when performing examinations concerning tax-advan-
taged bonds. This penalty may be imposed on persons
who organize or participate in a bond transaction and
make false or fraudulent statements regarding the tax
benefit to potential investors.
TIGTA reviewed 127 closed bond-related exami-
nations conducted in FY 2017 and determined that
Tax Exempt & Government Entities examiners did not
always document whether this promoter penalty was
warranted. In addition, instances were identified in
which examiners failed to meet “minimum documen-
tation requirements,” workpapers were “incorrectly
completed,” and quality reviewers “did not identify
incomplete case documentation.” The TIGTA report,
dated March 6, is titled “Bond Promoter Misconduct
Procedures Should Be Improved” (2020-10-016).
TIGTA made five recommendations, including updat-
ing of guidance, by the TE/GE Division, to require
examiners to document their consideration of whether
promoter penalties are warranted in every examination.
It also recommended that the IRS ensure that quality
reviewers determine examiners’ consideration of pro-
moter penalties, develop a comprehensive training

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