IRS Issues Procedural Rules for 2017

• DOI: http://doi.org/10.1002/npc.30300
• Published date: 01 March 2017
• Date: 01 March 2017

Bruce R. Hopkins’ NONPROFIT COUNSEL

March 20178THE LAW OF TAX-EXEMPT ORGANIZATIONS MONTHLY

Bruce R. Hopkins’ Nonprofit Counsel DOI:10.1002/npc

IRS ISSUES PROCEDURAL

RULES FOR 2017

The IRS issued its annual compilation of many of the

procedural rules in the tax-exempt organizations and

larger law contexts, those for 2017, concerning the issu-

ance of private letter rulings and technical advice memo-

randa, nonruling areas, user fees, and more, including:

• revised procedures for obtaining private letter rul-

ings, information letters, and determination letters

on issues under the jurisdiction of the Associate Chief

Counsel for taxpayers generally (Rev. Proc. 2017-1);

• revised procedures explaining when and how an

Associate office provides technical advice, conveyed in

a technical advice memorandum, and explaining the

rights that a taxpayer has when a field office requests

a TAM regarding a tax matter (Rev. Proc. 2017-2);

• revised inventory of domestic issues on which the IRS

will not issue letter rulings or determination letters

(Rev. Proc. 2017-3);

• revised procedures for rulings, information letters,

and the like on matters under the jurisdiction of the

Tax Exempt and Government Entities Division (Rev.

Proc. 2017-4);

• procedures for issuance of determination letters as to

the exempt status of organizations, including those

based on the streamlined application (Form 1023-EZ)

(Rev. Proc. 2017-5);

• user fee schedule (generally effective as of Febru-

ary 1) for exempt organizations matters (Rev. Proc.

2017-8); and

• revised procedures for issuing determination letters

on foundation status, including operating founda-

tion status (Rev. Proc. 2017-10). ◆

OTHER DEVELOPMENTS

◆The IRS issues, on a regular basis, private letter rulings

revoking the tax-exempt status of charitable organizations

for inactivity. But it is rare for that topic to end up being

the subject of a court opinion. But that happened on

December 12, when the US Tax Court ruled that a chari-

table entity did not qualify for exemption, due to inactivity

(i.e., lack of satisfaction of operational test), and approved

retroactive revocation of its exemption to January 1, 2008

(Community Education Foundation v. Commissioner). The

court analyzed the inventory of proposed programs in this

entity’s application for recognition of exemption and con-

cluded that the organization “did not over time meaning-

fully organize or allocate resources” to these activities. The

organization’s defense was that it tried but failed. [4.5(a)]

◆The IRS, on December 13, issued the 2017 optional

standard mileage rates used to calculate the deductible

costs of operating an automobile for business, medical,

or moving purposes (Notice 2016-79). The rate for busi-

ness use of a vehicle in 2017 is 53.5 cents per mile. The

rate for miles driven in service of charitable organizations

remains at 14 cents per mile, being set by statute (IRC

§ 170(i)). [9.17]

◆The New York attorney general’s office, on December

22, released its annual “Pennies for Charity” report,

which focuses on the $1.1 billion contributed in that state

in 2015 as the result of 1,143 fundraising campaigns

conducted by professional fundraisers. An accompany-

ing press release states that the fundraisers “kept” 34.5

percent of the gift proceeds, or $379 million. The press

release contains these “other significant findings”: in 239

of the campaigns, the charities involved “retained” 70

percent or more of the funds raised; in 622 campaigns,

charities retained less than one-half of the funds raised;

and in 192 campaigns, fundraising expenses exceeded

revenue, for a loss of $16.7 million.

Quote of the Month: The IRS reported gross unrelated

business income for 2013 as $12.9 billion, with deduc-

tions totaling about $12 billion. Said Israel Tannenbaum,

a senior manager at Mazars USA LLP: “I would imagine

that the IRS is going to take notice of this because it’s

likely if they went in there and started poking around,

they’d probably disallow a significant amount of deduc-

tions” (quoted in the Bloomberg BNA Daily Tax Report,

January 11). ◆

Each article in the newsletter on a tax-exempt organizations law topic ends with a citation to the appropriate chapter(s) or

subchapter(s) in Hopkins, The Law of Tax-Exempt Organizations, Eleventh Edition (Wiley 2016, 2016 supp.). This is done to provide

ready access to additional and background information concerning these articles. For example, underlying information concerning

the sixth article in this issue is available in Chapter 24 § 4(a), and thus the citation is referenced as [24.4(a)]. Likewise, each article

in the newsletter on a charitable giving law topic ends with a citation to the appropriate chapter(s) or subchapter(s) in Hopkins,

The Tax Law of Charitable Giving, Fifth Edition (Wiley 2014, 2016 cumulative supplement). For example, underlying information

concerning the first article in this issue is available in Chapter 28 § 18(d), (e), and thus the citation is referenced as [28.18(d), (e)].

This newsletter is a stand-alone publication. An inventory of articles in the newsletter since its inception in 1983, and a subject

matter index, as well as an index of the court opinions, IRS revenue rulings and procedures, IRS technical advice memoranda,

and IRS private letter rulings discussed in the newsletter, are available at www.nonprofitlawcenter.com. For those who have the

books, the newsletter also provides monthly updates. Both books are annually supplemented. Questions concerning nonprofit law

developments in general may be sent to brucerhopkins@brucerhopkinslaw.com. Also, a comprehensive summary of nonprofit law

is available in the Bruce R. Hopkins Nonprofit Law Library, an e-book published by Wiley. Follow BRHopkins_NPLaw on Twitter.

The newsletter has a dedicated website. Please visit www.hopkinsnonprofitcounsel.com.