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tax-exempt

No, not that man upstairs. I mean Seth P. Waxman, a partner at Wilmer Cutler Pickering Hale and Dorr.

Waxman’s firm has agreed to represent the United Church of Christ on a pro bono basis during the IRS investigation of the church’s tax-exempt status. The entire denomination’s status is at risk due to the IRS inquiry following Obama’s address at the UCC annual convention.

Legal fees were expected to reach six figures during the investigation (ouch!). The church has now ceased its attempts to collect money for legal fees; it had collected $59,564 to pay for the expected legal costs.

UCC minister and president Rev. John H. Thomas thanked the firm for its participation, saying, “While we know there will be other significant expenses associated with our defense, we are profoundly grateful to WilmerHale for offering its attorney time without the customary hourly fee.” Referring to the money collected to date, he continued, “Thanks to the immediate and generous outpouring from our members and supporters, we now believe we will have sufficient resources to cover other related legal costs.”

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Elections are supposed to be about candidates. And candidates want endorsements. But not every organization is allowed to make a public endorsement of a political candidate. Specifically, organizations that are tax-exempt – including churches, schools and purely public charities – may not endorse candidates, raise funds for candidates or distribute statements for or against candidates.

The IRS has, in prior years, warned tax-exempt organizations about the kinds of activities which are acceptable – and those that are not. In 2006, the Service was particularly proactive following a slew of complaints stemming from the 2004 presidential elections.

And yet, for the 2008 elections, there continues to be public support for candidates by leaders of tax-exempt organizations (most commonly, churches) on both sides of the aisle.

Last year, liveprayer.com found itself in the spotlight when it touted that “a vote for Mitt Romney is a vote for Satan.” This mattered because LivePrayer is under the umbrella of Bill Keller Ministries, a fully tax-exempt, 501(c)(3) organization.

And now, First Baptist Church of Buena Park pastor Wiley S. Drake is under fire for endorsing Mike Huckabee for president. Drake made a public statement in August 2007, released on church letterhead, exhorting his followers to likewise vote for Huckabee:

After very serious prayer and consideration, I announce that I am going to personally endorse Mike Huckabee. I ask all of my Southern Baptist brothers and sisters to consider getting behind Mike and helping him all you can. First of all pray and then ask God, what should I do to put feet to my prayers.

Do what God tells you to do. I believe God has chosen Mike for such an hour, and I believe of all those running Mike Huckabee will listen to God.

In response, the Americans United for Separation of Church and State filed a complaint with the IRS, citing the prohibition against publicly endorsing a candidate.

What’s a “good” Christian to do? Pray that bad things happen to other people.

Oh yeah.

Pastor Drake issued a “Media Advisory” which urged:

In light of the recent attack from the enemies of God I ask the children of God to go into action with Imprecatory Prayer. Especially against Americans United for Separation of Church and State. I made an attempt to go to them via Matt 18:15 but they refused to talk to me. Specifically target Joe Conn or Jeremy Learing. They are those who lead the attack.

And it didn’t stop there. Last week, Pastor Drake was made aware that the IRS is now investigating the political activities of the church in response to his endorsement of Huckabee. He issued, via email , a second call for Imprecatory Prayer against the Americans United for Separation of Church and State and the American Civil Liberties Union.
In both emails, Drake quoted Psalm 109. Here is the text of Psalm 109:2-20:

O God, whom I praise, do not be silent, for wicked and treacherous mouths attack me. They speak against me with lying tongues; with hateful words they surround me, attacking me without cause. In return for my love they slander me, even though I prayed for them. They repay me evil for good, hatred for my love. My enemies say of me: “Find a lying witness, an accuser to stand by his right hand, That he may be judged and found guilty, that his plea may be in vain. May his days be few; may another take his office. May his children be fatherless, his wife, a widow. May his children be vagrant beggars, driven from their hovels. May the usurer snare all he owns, strangers plunder all he earns. May no one treat him kindly or pity his fatherless children. May his posterity be destroyed, his name cease in the next generation. May the LORD remember his fathers’ guilt; his mother’s sin not be canceled. May their guilt be always before the LORD, till their memory is banished from the earth, For he did not remember to show kindness, but hounded the wretched poor and brought death to the brokenhearted. He loved cursing; may it come upon him; he hated blessing; may none come to him. May cursing clothe him like a robe; may it enter his belly like water, seep into his bones like oil. May it be near as the clothes he wears, as the belt always around him.”

May the LORD bring all this upon my accusers, upon those who speak evil against me.

On a professional level, it is distressing that any organization – religious or otherwise – would respond to complaints against its business practices by “calling out” the opposition. An appropriate response would be to fight the allegations in a rational, thoughtful manner. But apparently, Pastor Drake is neither.

On a personal level, it cheapens religion to turn a criticism into a call for intolerance. I don’t care what your religious or political beliefs are. Just stay within the law when you’re touting them.

For the record, I believe in God and I was raised Southern Baptist – I think that’s an important context for my post. I don’t believe in attacking religion for the sake of attacking religion any more than I believe in attacking individuals in the name of spite.

You can say what you want about our political candidates – be it Obama, Clinton, Huckabee or McCain. I don’t happen to believe that God has a favorite in mind, no matter what Pastor Drake says. But if I did, I could say it here on the blog if I wanted. If I did, I might be criticized, but I wouldn’t be breaking the rules.

(Hat Tip: TaxProf blog)

And if you like this post, you can digg it:
digg_url = ‘http://digg.com/2008_us_elections/If_You_Don_t_Like_What_I_Have_To_Say_About_Huckabee’;

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Got Bluetooth?

February 15, 2008 · 0 comments

A US District Court has granted the federal government’s motion for summary judgment that Bluetooth Association is not a tax exempt (section 501(c)(6)) business league (cite: Bluetooth SIG, Inc. v. United States, No. C05-1778).

Bluetooth Association was founded in 1998 and was actually incorporated in 2000 as a Delaware non-profit corporation.

In early 2002, Bluetooth Association filed paperwork with the IRS claiming an exemption from federal income tax as a “business league” under Code Section 501(c)(6). In 2004, the IRS issued a ruling stating that Bluetooth Association did not qualify for the exemption. As a result, Bluetooth Association paid nearly $1 million in federal corporate income tax for prior years and filed an action in court seeking full relief from the income tax or a refund of penalties, additions to tax and interest.

Under section 501(c)(6), the IRS Code offers exemptions for:

Business leagues, chambers of commerce, real-estate boards, boards of trade, or professional football leagues (whether or not administering a pension fund for football players), not organized for profit and no part of the net earnings of which inures to the benefit of any private shareholder or individual.

The court found that Bluetooth Association performs “particular services for individual persons” and did not, then, demonstrate it is a “business league.” The court went on to say that “even assuming that Bluetooth Association’s activities do not place a thumb on the scale in favor of a particular brand or manufacturer within an industry, they most certainly inhere to the exclusive benefit of its members.” In other words, no exemption.

Despite the tax crunch, my gut is that the association will be okay. According to their web site, they recently added their 10,000th member. Membership classes range in size and fees with associate members being the only class that pays an annual fee, ranging from $7,500 to $35,000. Yowza.

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Taking a page from Pennsylvania’s play book (resulting in JoePa’s salary making headlines), I wonder:

Should universities (as tax exempt entities) be required to disclose the salaries of all of their employees? If not, should there be a dollar amount over which salaries should be disclosed? Would such disclosure influence your desire to donate?

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