Photo of Rita N. Halabi

Rita Halabi is an associate in the Tax Department. She advises public, private and governmental entities on a variety of U.S. federal corporate, international and partnership tax matters, including mergers and acquisitions, cross-border private equity and investment fund transactions, preferred equity investments, structured finance and fund finance transactions, restructurings and bankruptcy-related transactions, capital markets transactions and tax controversy.

Rita is devoted to thought leadership on tax-related topics. She is a contributing author to “International Tax Disputes: Arbitration, Mediation, and Dispute Management”, an international tax treatise published by Edward Elgar Publishing. Rita was recently the keynote speaker at a New York State Bar Association Tax Section event and participated in a private funds panel at an American Bar Association Tax Section conference. She serves on the leadership team of the American Bar Association Tax Section’s Investment Management Committee. In addition, Rita regularly blogs about developments in U.S. federal tax law on the Proskauer Tax Talks blog.

On October 21, 2021, the Internal Revenue Service (the “IRS”) released Notice 2021-56 (the “Notice”), which sets forth the additional requirements a limited liability company (“LLC”) must satisfy to obtain a determination letter recognizing its tax-exempt status under sections 501(a) and 501(c)(3) of the Internal Revenue Code.[1]

The Notice also requests public comments by February 6, 2022 to assist the IRS and Department of the Treasury in determining whether further guidance is needed. Of particular interest are potential conflicts with state LLC statutes. For instance, the Notice requests comments on whether an LLC could be formed for exclusively charitable purposes in states that require LLCs to be profit-seeking, and whether other provisions of state LLC statutes could prevent an LLC from qualifying for federal tax exemption. In addition, the Notice asks whether an LLC seeking section 501(c)(3) status should be allowed to have members that are not themselves section 501(c)(3) organizations, governmental units, or wholly-owned instrumentalities of governmental units.