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Not For Profit/Exempt Organizations Blog

Jacob I. Friedman

Jacob I. Friedman Jacob I. Friedman is head of the Not-for-Profit/Exempt Organizations Group and former chair of the Tax Department. He has been a member of the Tax Department since 1975 and a Partner since 1983. Jay has been involved in various facets of federal and state tax and employee benefits laws. In recent years, his major areas of practice have been the structuring of alternative investments for pension trusts and other exempt organizations, and the rendering of fiduciary advice to trustees. Jay advises Proskauer’s philanthropic and other not-for-profit clients on fiduciary and tax exemption issues and their specialized tax problems, including unrelated business income tax ramifications of diverse investments, such as venture capital, hedge funds, futures, natural resources, buyout funds and corporate finance.

Posts by Jacob I. Friedman

IRS Issues Wake Up Call to Colleges and Universities — Congress to Hold Hearings

Posted in IRS Filings

The IRS released its Final Report on its five year study of the audit results of colleges and universities.  Lois G. Lerner, Director of the Exempt Organizations division of the IRS announced the “long awaited” posting of the report. In 2008, the IRS sent a 33 page questionnaire to 400 randomly selected colleges and universities.  In 2010,… Continue Reading

IRS Finally Confirms that Contributions to Single Member LLCs Owned by Charities Are Deductible

Posted in Charitable Giving, IRS Filings

On July 31, 2012, the IRS issued Notice 2012-52 (the “Notice”), providing long awaited confirmation that a charitable contribution to a limited liability company that is wholly owned by a charitable organization, and classified as a disregarded entity for U.S. federal income tax purposes (an “SMLLC”), will be treated as a contribution to a branch… Continue Reading

Recaps from Proskauer’s 16th Annual Trick or Treat Tax Exempt Seminar

Posted in Governance

Proskauer’s 16th Annual Trick or Treat Seminar was held on Monday, October 31, 2011. The Seminar discussed:
Corporate Governance for Not-for-Profit/Exempt Organizations
Maintaining Tax-Exempt Status During Election Season
Investment Management under UPMIFA: What’s Required, What’s Good Practice
Executive Compensation & Employee Benefits Developments

Treasury Releases its Priority Plan and the Form 990 Implementation Regulations

Posted in IRS Filings

Treasury just released the 2011–2012 Priority Guidance Plan. The Plan lists 317 projects that are priorities for Treasury resources through June 2012. Included in these projects are 13 projects directly related to Exempt Organizations. Many of the other projects such as the 66 employee benefits, executive compensation and employment taxes may affect Exempt Organizations.

Type II Supporting Organizations Must Have Readily Identifiable Beneficiaries

Posted in IRS Filings

In a tightly written plain English opinion, the D.C. Circuit Court of Appeals in Polm Family Foundation v. U.S. explained an important requirement of Type II supporting organizations. To be a Type II supporting organization, a charity must satisfy three tests:   1.                  the organizational test set forth in IRC Section 509(a)(3)(A), 2.                  the relationship test set forth in… Continue Reading

National Taxpayer Advocate Recommends Statute of Limitations on Revocation of Tax-Exempt Status

Posted in Charitable Giving

On the last day of 2010, the National Taxpayer Advocate, in its tenth annual report to Congress, recommended that Congress enact a statute of limitations on revocation of a charity’s tax-exempt status, to run concurrently with the current period of limitation on assessments. That period generally is (absent fraud, tax evasion or non-filing) either three or… Continue Reading

The New Tax Relief Law – What is in it for Charities?

Posted in Charitable Giving

On Friday, December 17, 2010, the President signed into law the unwieldy titled, “Tax Relief, Unemployment Insurance Reauthorization and Job Creation Act of 2010”.   In order to help explain the provisions in the new law, the Joint Committee on Taxation issued a Technical Explanation.  The Tax Relief Act has many provisions which affect charities, such as… Continue Reading

Proskauer Rose LLP to host its 15th Annual Trick or Treat Seminar on Friday October 29, 2010

Posted in Charitable Giving

The most successful exempt organizations are those that are well-positioned to run effectively and efficiently. This seminar highlights certain laws and best practices that are necessary for an exempt organization to succeed in this new regulatory landscape. This program will provide Exempt Organizations with information on:    Best Practices for Board Members The Effects of Health… Continue Reading

Treasury Issues Ramadan Alert

Posted in Charitable Giving

On August 11, 2010, the commencement of the observance of Ramadan, a charity alert was issued by the United States Treasury Department. Treasury acknowledged the importance of charitable giving during the month-long observance and used this opportunity to express concern about possible exploitation of all charities by terrorist organizations. The alert outlines steps for charities and donors to take in order to “guard against terrorist abuse.”

Will it Take a Constitutional Miracle to Save the Parsonage Exclusion?

Posted in Religious Organizations

When we last blogged about the “seemingly innocuous five line tax benefit” in Section 107 of the Internal Revenue Code, a District Court judge in California was reviewing a complaint filed by the Freedom From Religion Foundation, a nonprofit membership organization challenging this 90 year old provision.
Eight years after President Bush signed the new law on May 20, 2002, Judge Shubb of the Eastern District of California (on May 21, 2010) declined to dismiss the latest challenge to the parsonage exemption. A finding of unconstitutionality can cost clergy billions of dollars in tax over the next few years. This burden would likely be passed on to the religious institutions that employ clergy.

Applying for Tax Exemption? Toy with the IRS at Your Peril

Posted in Formation, Governance

The Tax Court recently delivered some sound advice – do not play “cat and mouse” with the IRS. In Ohio Disability Association v. Commissioner, a Tax Court Memo filed November 12, 2009, the Tax Court rejected the petitioner’s request for a declaratory judgment that it qualified as a public charity. The court’s rejection was based on its inability to conclude that the organization would operate exclusively for exempt purposes.

Parsonage: Are Clerics Employees or Self-Employed?

Posted in Articles, IRS Filings, Religious Organizations

Parsonage is a seemingly innocuous five line tax benefit in the Code.  This “innocent” provision of the Code, Section 107, appears to have befuddled many ministers and their professional advisors, however. About 90 years ago, Congress promulgated an exclusion from income for the rental value of the housing provided to a “minister of the gospel,”… Continue Reading