Tax-Exempt and Nonprofit Organizations

    Whether you wish to create a charity, reorganize one, make charitable contributions, or are involved in a nonprofit entity facing audits on tax or corporate governance concerns, we have the experience to address your nonprofit needs. We have a comprehensive understanding of the unique tax and corporate legal issues associated with private foundations, public charities, support organizations, educational institutions, religious organizations, trade associations and other tax-exempt organizations. We also have experience with the corporate governance and conflict of interest rules that sometimes beset such entities.

    We regularly represent nonprofit organizations seeking to qualify for tax-exempt status, and we have significant experience in dealing with initial organization and tax-exemption qualification applications under a broad range of circumstances. We frequently counsel clients wishing to establish new charitable organizations (or wishing to convert a nonprofit entity to a tax-exempt entity) on the choice of exempt organization that might be most appropriate for attaining their goals. We are skilled in drafting the necessary documents to bring these goals to fruition.

    We also counsel tax-exempt organizations on issues dealing with maintaining their tax-exempt status, fund-raising, private inurement and private benefit matters, applicable public support tests, permissible lobbying activities, political activities, investment of endowment funds, ways to minimize the application of the UBIT, and other matters unique to exempt organizations. We are particularly well-equipped to advise tax-exempt organizations on issues relating to mergers, acquisitions, joint ventures with for-profit entities, reinstatement of tax exempt status, and complex fund-raising matters.

    With respect to private foundations, we counsel private foundations from formation to termination, typically dealing with such issues as self-dealing, qualifying distributions, excess business holdings, jeopardizing investments, and all aspects of grantmaking, and expenditure responsibility requirements.

    Our ultimate goal in counseling tax-exempt organizations (and their officers, directors and/or members) is to further their organizational goals while minimizing the risk of non-compliance. We strive to achieve this through: carefully documenting and reviewing the applicable policies and procedures; avoiding and/or earmarking potential and actual conflicts of interest; monitoring relationships with outside professional advisors; planning mergers, acquisitions and divestitures; examining compensation agreements and board composition.

    Representations include:

    • Defeated a $10 million IRS assessment against a nonprofit public University for Social Securities taxes to many classes of employees.

    • Advised a nonprofit public University on the applicability of Social Securities taxes to many classes of employees.

    • Advised a private foundation on the creation and implementation of an individual grant and scholarship program.

    • Advised an exempt social club on its unrelated business income tax liabilities, the possible reformation of such entity as another type of exempt organization.

    • Negotiated and closed the merger of two nonprofit organizations, including all state and federal filings and Attorney General review.

    • Advised a large tax-exempt entity and its Board of Directors on the use and disposition (as permitted under state and federal tax law, state nonprofit corporate law, and federal ERISA guidelines) of the organization's surplus membership revenues.

    • Formed and obtained tax qualified status for several captive foreign insurance or reinsurance companies.

    • Advised (on both tax and corporate matters) a large charitable remainder trust on board matters, Attorney General's office disclosure and filings, acquisitions and dispositions of business interests.

    • Successfully represented a tax-exempt organization in an audit and asserted disqualification by the IRS, thus securing the continued (and retroactive) tax qualified status of our client.

    • Formed and advised a number of tax-exempt organizations, including obtaining exemption determinations from state and federal taxing authorities.

    • Represented an educational foundation in an IRS audit concerning employment tax issues.

    References available on request.