Other Developments

• Published date: 01 October 2016
• DOI: http://doi.org/10.1002/npc.30253
• Date: 01 October 2016

Bruce R. Hopkins’ NONPROFIT COUNSEL

October 20168THE LAW OF TAX-EXEMPT ORGANIZATIONS MONTHLY

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

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 first article in this issue is available in Chapter 26 §§ 1(j), 15, and thus the citation is referenced as [26.1(j), 26.15]. 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 fourth article in this issue is available in Chapters 8 § 6(a) and 12 § 2(a), (b), and thus the citation is

referenced as [8.6(a), 12.2(a), (b)].

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.

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OTHER DEVELOPMENTS

◆In addition to the statistics noted above, the IRS

reported that excise taxes on lobbying expenditures by

charitable organizations (IRC § 4912) totaled $224,488

in 2015, while excise taxes on political campaign

expenditures on these organizations (IRC § 4955) were

$14,067 in that year (the latter being about a 98 percent

drop from 2014). [2.1, 22.4, 23.4]

◆July 29 brought proposed regulations changing the

requirements, imposed on colleges and universities,

for reporting qualified tuition and other expenses on

Form 1098-T (REG-131418-14). This proposal reflects

law changes that came into being on enactment of

the Protecting Americans from Tax Hikes Act of 2015

(summarized in the February 2016 issue). Institutions

of higher education, led by the National Association

of College and University Business Officers, worked for

(as discussed in the May 2016 issue) and obtained an

extension of time to comply with the new reporting obli-

gations (Ann. 2016-17, summarized in the June 2016

issue). A public hearing on these proposed regulations is

scheduled for November 30.

◆Judicial Watch, on July 28, released nearly 300 pages

of documents indicating that some at the IRS were

aware of the targeting of applications for recognition

of tax exemption filed by Tea Party and other organiza-

tions as early as 2011. This matter was made public in

2013 (Treasury Inspector General for Tax Administration

report summarized in the July 2013 issue), triggering

controversy that has significantly damaged and curtailed

initiatives of the Exempt Organizations Division. This dis-

closure will continue this brouhaha, will provide fodder

for those seeking the impeachment of the commissioner

of Internal Revenue, and may drag the FBI into review by

one or more House committees.

◆The New York Times, on August 24, reported that, on

August 23, the National Labor Relations Board ruled that

students working as teaching and research assistants at

private colleges and universities have the right under

federal law to unionize. The case started with a petition

filed by graduate students at Columbia University. One

of them is quoted as saying that this is a “question of

power and democracy in a space in the academy that’s

increasingly corporatized, hierarchical.”

◆A nice article in the August 18 issue of the Daily Tax

Report chronicles the efforts being made by Newman’s

Own Foundation to bring about enactment of legisla-

tion that would exempt the Foundation’s holdings in

Newman’s Own Inc. from the excess business holdings

(IRC § 4943) penalties. The company contributes all

of its after-tax profit to the Foundation for charitable

purposes. In 2013, the Foundation obtained a five-year

divestment extension. Legislation to aid the Foundation

was approved by the Senate Finance Committee in 2015

(summarized in the April 2015 issue). Remedial legisla-

tion, introduced in April, is the Charities Helping Ameri-

cans Regularly Throughout the Year (CHARITY) Act (S.

2750 § 7) (summarized in the June 2016 issue) and the

Philanthropic Enterprise Act (H.R. 5007). [12.4(c)]

◆A tax-exempt teaching hospital failed in its efforts to

obtain an overpayment refund of taxes, accompanied by

the higher rate of interest reserved for noncorporations,

with the US Court of Appeals for the Second Circuit

rejecting the notion that use of the word corporation

in the statute does not include nonprofit corporations

(Maimonides Medical Center v. United States (sum-

marized in the March 2016 issue)). Another exempt

hospital tried the same argument before the US Court

of Appeals for the Sixth Circuit and failed (United States

v. Detroit Medical Center, August 17). In its opinion,

the Sixth Circuit got tripped up in its own analysis, writ-

ing that “[n]onprofit corporations after all do not pay

income tax.”

Quote of the Month: “Think tanks, which position

themselves as ‘universities without students,’ have power

in government policy debates because they are seen as

researchers independent of moneyed interests. But in

the chase for funds, think tanks are pushing agendas

important to corporate donors, at times blurring the line

between researchers and lobbyists. And they are doing

so while reaping the benefits of their tax-exempt status,

sometimes without disclosing their connections to cor-

porate interests” (The New York Times, August 8). ◆