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Scott Harshbarger

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Scott Harshbarger is a senior counsel. His practice focuses on strategic counsel and litigation, corporate investigations and defense, corporate and not-for-profit governance and government regulation. Scott’s distinguished career has included major public office, not-for-profit executive management, numerous board directorships and private legal counsel.

Scott’s lengthy record in public service as a public defender, civil rights attorney, district attorney and Massachusetts Attorney General provides him with the experience to offer strategic counsel and legal advice to CEOs, general counsel, trustees, public officials and boards on such matters as fiduciary responsibilities, governmental inquiries and regulation, fraud investigations, compliance, ethics issues and crisis management.

The Advisory Committee on Tax Exempt and Government Entities (ACT) has released its annual report and recommendations to the IRS on selected issues concerning exempt organizations, employee benefit plans, tax-exempt financing, and state and local governmental entities. See our post about last year’s report here. The annual ACT report is always an important indicator and focus group of IRS trends. This year’s Exempt Organizations (EO) report, “Leveraging Limited IRS Resources in the Tax Administration of Small Tax-Exempt Organizations,” is particularly interesting.  The development of the Report and recommendations preceded the so-called “IRS TEGE scandal” involving alleged targeting of certain (c)(3) and (c)(4) applications for review, the exodus of Lois Lerner, and the consequent infusion of long-needed resources for eliminating or reducing EO application and review bureaucratic delays, due to pure and simple overload, and limited resources, exacerbated by the Sequester.

The Report also reflects a serious effort by all the players to figure out how to leverage limited administrative, educational and enforcement resources in the interest of providing more public information, transparency and accountability for the “small” and “very small” EOs (in part because the Attorney-General offices (AGOs) often see these EOs being an easy target for fraudsters at the local level, an arena AGOs are charged with policing and which they have far more incentives to monitor than the IRS), expanding the availability of education and technical assistance for these EOs through leveraging a range of private/public vehicles, plus the IRS website itself, and enhanced information sharing for all these purposes with state charity regulators.

On October 6, 2010, Massachusetts Attorney General Martha Coakley released a report related to the proposed transfer of the Caritas Christi Hospital System (“Caritas”) to Steward Health Care System LLC, an affiliate of Cerbeus Capital Management, L.P. The report (“The Statement”) contains the Attorney General’s analysis – under Massachusetts charitable law and the Attorney General’s role as public charities’ overseer — of its five month evaluation and assessment of the proposed sale of Caritas to Steward, a newly-created for-profit entity, controlled, owned and funded by Cerberus, a private equity fund. The Statement can serve as a very useful primer or guide to any charitable organization and its board, not just healthcare organizations.
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