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 Proskauer 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; the rendering of fiduciary advice to ERISA trustees; and the implementation of employee benefit programs. 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. Among the clients who regularly seek Jay's advice are the Bell Atlantic Master Pension Trust; Verizon Investment Management Corporation; Cooper Union; American Lung Association; AJC; and various major tax-exempt trusts. Jay was instrumental in negotiating a successful resolution of a divisive conflict between two large not-for-profit institutions. His legal advice to the City of New York resulted in multiyear savings of large sums of money. He regularly is called upon to devise strategy in tax-exempt trust litigation and to handle complex administrative negotiations with the IRS. Jay has actively structured and negotiated numerous significant investments in the United States and abroad for multibillion-dollar tax-exempt entities. Jay has lectured at seminars sponsored by Proskauer, The New York Law Journal, New York University, The New York State Bar Association and the International Association of Financial Planners on areas such as real estate investment, tax credits, unrelated business taxable income, ERISA, and negotiating strategy with the IRS. He chairs Proskauer's annual "Trick or Treat Tax-Exempt Seminar," held at the end of every October. He is a co-author of the ERISA Fiduciary Answer Book published by Panel Publications and a contributing author to Complete Guide to Nonprofit Organizations published by Civic Research Institute. Jay is an honors graduate of New York Law School, where he was an Associate Editor of the Law Review, and holds an LL.M. degree in taxation from New York University School of Law. He is an Adjunct Professor of Law in New York Law School's graduate tax program. He is a member of the Bar Association of the City of New York, the American Bar Association and the New York State Bar Association, serving on various Tax and Exempt Organization committees. He is also a member of the board of Metropolitan Jewish Health System and a Fellow of the American College of Investment Counsel.
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
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
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
The IRS presents webinars on a variety of subjects. In August, the IRS presented a webinar conducted by two IRS representatives on the special rules affecting charities that make grants to foreign organizations or engage in activities in foreign countries.
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.
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… Continue Reading
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
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
The Link to Proskauer’s 2010 Trick or Treat Seminar is now available.
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
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.”
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.
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 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… Continue Reading
With the plethora of news articles about charitable endowment losses as a result of investments with Bernie Madoff, it is incumbent on fiduciaries to review some fundamental laws on endowment. These laws differ in each state. This article will briefly review the rules applicable to endowments in New York. An endowment fund is created when… Continue Reading