Читать книгу The Law of Tax-Exempt Organizations, 2021 Cumulative Supplement - Bruce Hopkins R., Bruce R. Hopkins, David Middlebrook - Страница 15
ОглавлениеCHAPTER FOUR Organizational, Operational, and Related Tests and Doctrines
§ 4.1 Forms of Tax‐Exempt Organizations (a) General Rules
§ 4.9 Commerciality Doctrine (e) Other Applications of Doctrine (f) Elements of Commerciality (g) IRS Ruling Policy (h) Contemporary Perspective on Doctrine
§ 4.1 FORMS OF TAX‐EXEMPT ORGANIZATIONS
(a) General Rules
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Lloyd v. Comm'r, T.C. Memo. 2020‐92 (2020);.
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An example, however, of a nonentity qualifying as a tax‐exempt organization (a custodial individual retirement account) is in Lakeview Devel. Corp. v. UBS Financial Servs., Inc., 614 B.R. 603 (Bank. Ct. for D. Col. 2020)).
§ 4.7 COMMENSURATE TEST
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Shortly thereafter, the IRS recognized tax exemption for an organization that carried “on no operations other than to receive contributions and incidental investment income and to make distributions of income to such exempt organizations [charitable entities] at periodic intervals.” Rev. Rul. 67‐149, 1967‐1 C.B. 133.
§ 4.9 COMMERCIALITY DOCTRINE
(e) Other Applications of Doctrine
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An organization that was ruled to be charitable because it produced plays in a theater had its exemption revoked because it ceased educating the public in the theater arts and began hosting tribute band concerts, which the IRS not surprisingly found to be a commercial undertaking.330.1
(f) Elements of Commerciality
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Charitable organizations generally derive about 73 percent of their revenue from fee‐for‐service activities, while charitable contributions constitute approximately 13 percent of total revenue (e.g., § 2.1, text accompanied by note 66.2).
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340.1
The IRS attempted to retroactively revoke the tax‐exempt status of a charitable organization affiliated with a for‐profit company with more than 2,000 bakery‐café locations in the United States, principally on the ground that it provided food and drink to the public in affluent areas (Priv. Ltr. Rul. 201911010). This case was filed in the U.S. Tax Court on March 15, 2019 (Panera Bread Found., Inc. v. Comm'r, Docket No. 5198‐19X). The organization operated Panera Cares Cafes in five of these locations, providing food and drink to the poor and distressed, job training to high‐risk individuals and those with developmental disabilities, and information to the public regarding food insecurity. The cafes ceased operations, leading the court to, on March 24, 2020, issue a stipulated opinion enabling the organization to retain its exempt status.
(g) IRS Ruling Policy
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an organization that provides consulting and research services on a fee basis regarding climate change and green economies, connecting member entrepreneurs and companies with investment opportunities;359.1 an organization operating a farmers' market;359.2an organization that leases modified property to disabled individuals, for the purpose of advertising for businesses;359.3 and an organization managing funds for fees, seeking highest possible returns for its clients.359.4
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In an extraordinary application of the commerciality doctrine, a nonprofit organization formed to combat organized theft and fraud that supports opioid and heroin addiction, by utilizing innovative software in conjunction with retailers and law enforcement agencies, was denied recognition of exemption as a charitable entity, with the IRS invoking the doctrine by characterizing the organization as merely providing a “service for a fee to retail stores.”360.1 The better analysis would have been to recognize exemption as an entity promoting health360.2 and lessening the burdens of government,360.3 with services to retailers cast as a means to larger exempt ends.360.4
(h) Contemporary Perspective on Doctrine
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operating a tavern (Priv. Ltr. Rul. 202016019), and operating a used car dealership (Priv. Ltr. Rul. 202031010).
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In one instance, the IRS applied the commerciality doctrine, then also held that much of an organization's activities constituted unrelated business (Priv. Ltr. Rul. 201918019).
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For example, the IRS denied recognition as an exempt charitable entity to an organization that operated a banquet center available for fees to the public, on the ground that it was operating an unrelated business (Priv. Ltr. Rul. 201803009), as was the case where the primary activity of an organization was the sale and rental of durable medical equipment (Priv. Ltr. Rul. 201925015) and where an organization provided business development and marketing and consulting services for a fee to various types of nonprofit organizations (Priv. Ltr. Rul. 201925017). In other cases, the IRS revoked exempt status because the organization was engaging in substantially nonexempt activities (Priv. Ltr. Ruls. 201929021, 201926016). In one instance, the IRS applied the commerciality doctrine, where use of the private benefit doctrine would have been more appropriate (Priv. Ltr. Rul. 201941029).
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303 F. Supp. 3d 1065 (D. Colo. 2018).
