Other Developments

• Published date: 01 June 2017
• Date: 01 June 2017
• DOI: http://doi.org/10.1002/npc.30337

Bruce R. Hopkins’ NONPROFIT COUNSEL

June 20178THE LAW OF TAX-EXEMPT ORGANIZATIONS MONTHLY

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

OTHER DEVELOPMENTS

◆Bob Jones University became tax-exempt again, on

March 1. This exemption was lost in 1983, due to a

policy against interracial dating or marriage (Bob Jones

University v. United States); its restoration has been in

the works since 2014. This outcome was accomplished

by means of a reorganization, by which BJU, Inc.

(exempt) and the BJU Education Group, Inc. (taxable)

were created. [6.2(b)(i)]

◆Arguments were held on April 19 in a case concerning

the clash between a Missouri program to make school

playgrounds safer by utilizing recycled tires to resurface

them and a church school’s request to participate in the

program that was rejected by the state (Trinity Lutheran

Church v. Comer). This is a reflection of the inherent ten-

sion between the Establishment Clause and the Free Exer-

cise Clause. Yet the Supreme Court has often attempted

to accommodate both clauses, noting that “there is room

for play in the joints” between them (e.g., Locke v. Davey

(2004)). The Missouri Constitution prohibits the spend-

ing of public money “directly or indirectly, in aid of any

church.” An analysis of the arguments in this case in the

April 20 New York Times “suggests” the state’s position

will be rejected by the Court on free exercise and equal

protection grounds. [10.1(a)(i), (ii)]

◆An unexpected, and most welcome, development

is a by-product of focus on President Trump’s executive

orders about the regulatory freeze and the “two-for-one”

rule (see the April 2017 issue). As a result of the orders,

emphasis is being placed on the concept that Treasury

regulations and other guidance are exempt from orders

such as these, being merely interpretations of statutes.

The IRS commissioner said the IRS is having discussions

with Treasury and the Office of Management and Budget

about these types of “sub-regulatory guidance”—namely,

revenue rulings, revenue procedures, and notices. The

unanticipated outcome is the commissioner’s statement

that he thinks the IRS “will begin to issue some greater

guidance in those areas” (Bloomberg BNA, Daily Tax

Report, March 22). See the first article in this issue.

◆The Tax Section of the New York State Bar Associa-

tion, by letter dated March 29, sent comments to the

Treasury and IRS on the regulations that have been

proposed to accompany the fractions rule (summarized

in the February 2017 issue). This letter states that the

existing regulations under the rule are “complex and in

many respects unclear,” adding that practitioners gener-

ally agree that the current regulations are “overbroad

and, as a consequence, create obstacles for standard

commercial transactions on a routine basis.” The letter

contains 15 principal proposals for improving this regula-

tory package. [24.9(c)]

◆The efforts of Rep. Tom Reed (R-N.Y.) to force col-

leges and universities to pump more endowment dollars

into student scholarships have evolved into a new plan,

by which contributions from individuals targeted to

student scholarships would be deductible in an amount

equal to 150 percent of the gifts involved. Apparently,

restricted gifts for other purposes, in excess of $5,000,

would not be deductible at all! (Bloomberg BNA, Daily

Tax Report, April 18)

◆Confession of error: The March 2017 listing of the

IRS’s procedural rules for 2017 includes reference to

two revenue procedures that do not exist (the last two

items). In fact, the relevant portions of prior Rev. Proc.

2016-8 and Rev. Proc. 2016-10 have been merged into

Rev. Proc. 2017-5. Apologies.

Quote of the Month: The new executive order (see the

first article) is predicated on this policy: “The Federal tax

system should be simple, fair, efficient, and pro-growth.

The purposes of tax regulations should be to bring clar-

ity to the already complex Internal Revenue Code . . .

and to provide useful guidance to taxpayers. Contrary

to these purposes, numerous tax regulations issued over

the last several years have effectively increased tax bur-

dens, impeded economic growth, and saddled American

businesses with onerous fines, complicated forms, and

frustration. Immediate action is necessary to reduce the

burden existing tax regulations impose on American

taxpayers and thereby to provide tax relief and useful,

simplified tax guidance.” ◆

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 2017 cumulative supplement). This is done

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

concerning the second article in this issue is available in Chapter 27 § 7(c), and thus the citation is referenced as [27.7(c)]. 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 2017 cumulative supplement). For example, underlying information

concerning the third article in this issue is available in Chapter 12 § 3, and thus the citation is referenced as [12.3].

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.