Law Commons^™

Unconscionable: Tax Delinquency Sales As A Form Of Dignity Taking, Andrew W. Kahrl

Chicago-Kent Law Review

No abstract provided.

Stategraft, Bernadette Atuahene, Timothy Hodge

All Faculty Scholarship

Although sometimes difficult to detect, governmental power abuses can have detrimental impacts. Property tax assessments provide an effective lens to examine this phenomenon because, given the complexity of calculating property tax assessments, it is difficult for citizens to know when local government has exceeded its legitimate taxing authority and crossed into the realm of illegal extraction. Michigan is an ideal case study because it protects property owners by making assessment-related power abuses more visible through a unique state constitutional provision: property tax assessments cannot exceed 50 percent of a property’s market value. Abuses have persisted nevertheless. Between 2011 and 2015, …

The 21st Century Fight Over Who Sets The Terms Of The Charity Property Tax Exemption, Evelyn Brody

All Faculty Scholarship

Turning from the substantive issue of defining charity, this article considers the “who” question by examining the roles of the courts, legislatures, municipalities, and charities in determining exemption and payments in lieu of taxes. The three covered topics – constitutional power, statutory interpretation, and the “intermediate sanctions” of user fees and PILOTs – braid together to form the procedural framework for the financial relationship between nonprofit property owners and the taxing jurisdictions that host them. Change the parameters of one, and you change the others. Staying off the rolls or minimizing the tax bite often results from compromise – whether …

Exile To Main Street: The I.R.S.'S Diminished Role In Overseeing Tax-Exempt Organizations, Evelyn Brody, Marcus Owens

Chicago-Kent Law Review

The Internal Revenue Service’s post-Citizens United approach to political activity by would-be tax-exempt organizations has threatened the financial health of the entire agency. Suffering from a siege mentality in the best of times, the IRS predictably and understandably responded to the asserted “scandal” by retreating into a shell of bureaucratic reshuffling, management mumbo-jumbo, and paper moving. A fresh cadre of senior management lacking relevant experience has overhauled the exempt-organization function and emphasized granting recognition of exemption now and (possibly) asking questions later. The new self-certification process of exemption for small charities could also be setting the agency up for the …

European Non-Profit Oversight: The Case For Regulating From The Outside In, Oonagh B. Breen

Chicago-Kent Law Review

When it comes to the regulation of non-profits, the European Commission experiences many of the same pressures and constraints faced by national charity regulators. It suffers, however, from an added disadvantage in that, arguably, it lacks jurisdictional competence to regulate non-profits qua non-profits. This article explores the consequences of the Commission’s unsuccessful attempt to secure the passage of its proposal for a European Foundation Statute (“EFS”). Notwithstanding the European Council’s inability to muster the necessary Member State unanimity required to pass the proposal and its subsequent demise, the Commission is still dogged by the problems it identified as giving rise …

Politics, Disclosure, And State Law Solutions For 501(C)(4) Organizations, Linda Sugin

Chicago-Kent Law Review

Since the Supreme Court’s 2010 decision in Citizens United v. FEC, there has been an explosion in section 501(c)(4) organizations active in politics. Unable to effectively process applications, the IRS mishandled organizations with conservative political ties, producing a scandal from which the agency has yet to recover. It proposed regulations that would have helped it more easily determine eligibility for 501(c)(4) exemption, but after massive public outcry, the regulations were withdrawn. No new regulations will be proposed before the 2016 presidential election.

Given the federal government’s inability to address the problem of dark money politicking by 501(c)(4) organizations through …

Fragmented Oversight Of Nonprofits In The United States: Does It Work? Can It Work?, Lloyd Hitoshi Mayer

Chicago-Kent Law Review

The United States is well known for its distinctive, although not unique, division of political authority between the federal government and the various states. This division is particularly evident when it comes to oversight of nonprofit organizations. The historical focus of federal government oversight has been limited primarily to qualification for tax exemption and other tax benefits, with more plenary power resting with state authorities. Over time, however, the federal government’s role has come to overlap significantly with that of the states, and many nonprofits have become subject to regulation by multiple states as their operations and donor bases expand …

The Charity Commission For England And Wales: A Fine Example Or Another Fine Mess?, Debra Morris

Chicago-Kent Law Review

The ability of the Charity Commission for England and Wales to regulate the charitable sector effectively has been repeatedly called into question in recent years. At the same time, public sector funding cuts have led to its budget being almost halved in real terms since 2007/08. Numerous official reviews and inquiries into its effectiveness have highlighted its weaknesses and raised concerns about it failing to take sufficient action to prevent abuses of charitable status. In response to the Commission’s claims that it lacks sufficient legal powers to deal with such abuse, new legislation has been passed which will fill some …

Australia – Two Political Narratives And One Charity Regulator Caught In The Middle, Myles Mcgregor-Lowndes

Chicago-Kent Law Review

After two decades of debate about the regulation of the nonprofit sector, Australia established a national charity regulator in December 2012. The creation of the Australian Charities and Not-for-profits Commission (“ACNC”) had as one of its objectives to reduce red tape, and to increase clarity by enacting a statutory definition of charity. Less than two years later, a new government proposed to abolish the ACNC, also in the name of reducing red tape. There appears to be a paradox—or at least diametrically opposed views about red tape reduction and how it can be achieved. With the government nearly two-thirds through …

Reforming The Regulation Of Political Advocacy By Charities: From Charity Under Siege To Charity Under Rescue?, Adam Parachin

Chicago-Kent Law Review

A newly elected liberal federal government in Canada has pledged to reform the legal distinction between charity and politics. This paper provides context to this reform initiative, linking it to a controversial political activities audit program funded by the former conservative federal government. It identifies three distorting ideas about charity—that charity can be understood as a tax expenditure, economic or neutral concept—that should be eschewed in the reform process. It also identifies three characteristics of charity—the capacity of charities for thought leadership, the pervasiveness of messaging in charitable programming and the distinctiveness of charity and government—that should guide reformers.

The Legal Quagmire Of Irc § 501(C)(4) Organizations And The Consequential Rise Of Dark Money In Elections, Daniel C. Kirby

Chicago-Kent Law Review

Section 501(c)(4) organizations have recently become a hot topic with respect to campaign finance. Following the 2010 Supreme Court case, Citizens United v. Federal Election Commission, the number of IRC § 501(c)(4) organizations ballooned in number, and the amount of money flowing through § 501(c)(4) groups increased 2390 percent from the 2008 election cycle to the 2012 election cycle. This essay explores the dangers to the campaign finance system of the substantial increase in spending by IRC § 501(c)(4) organizations. The foundational claim of this essay is that IRC § 501(c) is in need of a statutory and regulatory overhaul …

How Public Is Private Philanthropy? Separating Reality From Myth (Philanthropy Roundtable, 2d Ed. 2012) (With J. Tyler), Evelyn Brody

All Faculty Scholarship

No abstract provided.

All Charities Are Property-Tax Exempt, But Some Charities Are More Exempt Than Others, Evelyn Brody

All Faculty Scholarship

Attention from the media notwithstanding, the nonprofit sector continues to achieve remarkable success in state supreme courts and statehouses in defending property-tax exemptions. But budget pressures remain. While the intermediate use of “payments in lieu of taxes” has not yet become a systematic compromise solution, PILOTs are attracting growing interest from local taxing jurisdictions. This Article highlights three issues— who decides the parameters of exemption, legislatures or courts; what are the specific factors and vulnerable subsectors; and how exemption is granted or withheld in practice—and concludes with several PILOT case studies. The Appendix sets forth a fifty-one-jurisdiction review of state …

Respecting Foundation And Charity Autonomy: How Public Is Private Philanthropy? (Symposium) (With J. Tyler), Evelyn Brody

All Faculty Scholarship

Recent years have seen a disturbing increase in legal proposals by the public and government officials to interfere with the governance, missions, strategies, and decision-making of foundations and other charities. Underlying much of these debates is the premise – stated or merely presumed – that foundation and charity assets are “public money” and that such entities therefore are subject to various public mandates or standards about their structure, operations, and policies. The authors’ experiences and research reveal three “myths” that, singly or collectively, underlie claims that charitable assets are public money. The first myth conceives of charities as shadow governments …

All Charities Are Property-Tax Exempt, But Some Charities Are More Exempt Than Others, Evelyn Brody

Evelyn Brody

Attention from the media notwithstanding, the nonprofit sector continues to achieve remarkable success in state supreme courts and statehouses in defending property-tax exemptions. But budget pressures remain. While the intermediate use of “payments in lieu of taxes” has not yet become a systematic compromise solution, PILOTs are attracting growing interest from local taxing jurisdictions. This Article highlights three issues— who decides the parameters of exemption, legislatures or courts; what are the specific factors and vulnerable subsectors; and how exemption is granted or withheld in practice—and concludes with several PILOT case studies. The Appendix sets forth a fifty-one-jurisdiction review of state …

A Taxing Time For The Bishop Estate: What Is The I.R.S. Role In Charity Governance?, Evelyn Brody

All Faculty Scholarship

This piece, included in the University of Hawaii Law Review's symposium issue on the Bishop Estate, explores the relationship between the new intermediate sanctions law and the IRS's power to revoke tax exemption under § 501(c)(3). Inspired by the storied setting, I indulge in a fantasy: This article pretends that the IRS revoked the Estate's exemption, and takes the form of the Tax Court declaratory judgment opinion. I reluctantly 'rule' that exemption was not appropriate, because State enforcement action against the trustees was proceeding. (However, this forum allows me to hedge my argument by producing two concurring and one dissenting …

My First Grade Teacher, Jeffrey G. Sherman

All Faculty Scholarship

No abstract provided.

A Taxing Time For The Bishop Estate: What Is The I.R.S. Role In Charity Governance?, Evelyn Brody

Evelyn Brody

This piece, included in the University of Hawaii Law Review's symposium issue on the Bishop Estate, explores the relationship between the new intermediate sanctions law and the IRS's power to revoke tax exemption under § 501(c)(3). Inspired by the storied setting, I indulge in a fantasy: This article pretends that the IRS revoked the Estate's exemption, and takes the form of the Tax Court declaratory judgment opinion. I reluctantly 'rule' that exemption was not appropriate, because State enforcement action against the trustees was proceeding. (However, this forum allows me to hedge my argument by producing two concurring and one dissenting …

A Taxing Time For The Bishop Estate: What Is The I.R.S. Role In Charity Governance? (Symposium), Evelyn Brody

All Faculty Scholarship

No abstract provided.

Charities In Tax Reform: Threats To Subsidies Overt And Covert, Evelyn Brody

All Faculty Scholarship

Fundamental tax reform would do far more damage to charities than the obvious repeal of the deduction for charitable contributions. Over the decades, charities have quietly garnered billions of dollars worth of indirect benefits. For example, the largest tax expenditure - the exclusion from workers' income of employer-provided health insurance - has fattened nonprofit hospitals, and the new tuition tax credits promise to spur tuition inflation. Tax reform presents an opportunity to eliminate tax subsidies and enact any desired direct expenditures for specific public goods and activities. However, converting tax expenditures to direct outlays would likely take the form of …

A Taxing Time For The Bishop Estate: What Is The I.R.S. Role In Charity Governance? (Symposium), Evelyn Brody

Evelyn Brody

No abstract provided.

Charities In Tax Reform: Threats To Subsidies Overt And Covert, Evelyn Brody

Evelyn Brody

Fundamental tax reform would do far more damage to charities than the obvious repeal of the deduction for charitable contributions. Over the decades, charities have quietly garnered billions of dollars worth of indirect benefits. For example, the largest tax expenditure - the exclusion from workers' income of employer-provided health insurance - has fattened nonprofit hospitals, and the new tuition tax credits promise to spur tuition inflation. Tax reform presents an opportunity to eliminate tax subsidies and enact any desired direct expenditures for specific public goods and activities. However, converting tax expenditures to direct outlays would likely take the form of …

Hocking The Halo: Implications Of The Charities' Winning Briefs In Camps Newfound/Owatonna, Inc., Evelyn Brody

All Faculty Scholarship

In Camps Newfound/Owatonna, the petitioner charity – with important assistance from friends-of-the-court charities – persuaded the Supreme Court to overturn a Maine statute that granted property tax exemption only to those charities primarily serving state residents. Camps Newfound/Owatonna, Inc. v. Town of Harrison, 117 S. Ct. 1590 (1997). Given this statute's facial discrimination, why was victory a 5-4 squeaker? The charities naturally reasoned that coming within the Commerce Clause requires proving that charities engage in commerce (particularly interstate commerce). In their focus on the financial impact of the discriminatory statute, however, the charities never offered a positive construct of property-tax …

Of Sovereignty And Subsidy: Conceptualizing The Charity Tax Exemption (Symposium), Evelyn Brody

All Faculty Scholarship

No abstract provided.

Of Sovereignty And Subsidy: Conceptualizing The Charity Tax Exemption, Evelyn Brody

All Faculty Scholarship

This piece explores the broad financial relationship between the public and the charitable sectors. Tax exemption operates as a peculiar subsidy - offering the greatest benefits to charities carrying on the most profitable activities and owning the most valuable property. Perhaps, then, the property tax and income tax exemption of charities can be explained by a 'sovereign' view of the charitable sector. Resembling the federal tax treatment of state and local governments, exemption for charities respects the independence of the nonprofit sector, and minimizes the involvement of charities in the political process. Unfortunately, the long history of Anglo American philanthropy …

All You Really Need To Know About Subchapter J You Learned From This Article, Jeffrey G. Sherman

All Faculty Scholarship

No abstract provided.

Of Sovereignty And Subsidy: Conceptualizing The Charity Tax Exemption, Evelyn Brody

Evelyn Brody

This piece explores the broad financial relationship between the public and the charitable sectors. Tax exemption operates as a peculiar subsidy - offering the greatest benefits to charities carrying on the most profitable activities and owning the most valuable property. Perhaps, then, the property tax and income tax exemption of charities can be explained by a 'sovereign' view of the charitable sector. Resembling the federal tax treatment of state and local governments, exemption for charities respects the independence of the nonprofit sector, and minimizes the involvement of charities in the political process. Unfortunately, the long history of Anglo American philanthropy …

Of Sovereignty And Subsidy: Conceptualizing The Charity Tax Exemption (Symposium), Evelyn Brody

Evelyn Brody

No abstract provided.

Charitable Endowments And The Democratization Of Dynasty, Evelyn Brody

All Faculty Scholarship

Charitable endowments and other passive investments exceed $425 billion. Why do many donors require that the principal of their contribution must be held in perpetuity, and that only the income may be used for charitable purposes? Why do most charity managers voluntarily accumulate operating surpluses, and reinvest a portion of real endowment income? This Article suggests that rather than looking at how charities use their endowment income, we should focus on what happens to the endowment principal. It appears that the taste for perpetual charitable endowments persists as the happy co-incidence of donors' desire for immortality for themselves and their …

Hocking The Halo: Implications Of The Charities' Winning Briefs In Camps Newfound/Owatonna, Inc. (Symposium), Evelyn Brody

All Faculty Scholarship

No abstract provided.