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Abstract:
Religious organizations occupy an enviable legal stature in American society, receiving over 200 exemptions and other regulatory breaks in federal legislation over the last 18 years alone. Religious organizations enjoy numerous federal as well as state and local tax exemptions representing hundreds of billions of dollars in foregone revenue. The propriety of these lucrative tax exemptions must be questioned when religious organizations engage in discrimination against members of society. As illustrated in real-life occurrences contained in pages 3 and 4 of the article, ostensibly widespread discrimination by such organizations exists not only with respect to employment, but more importantly in providing services or engaging in activities for which the organization was originally granted tax-exempt status (e.g., education). The primary bases for such discrimination are currently sexual orientation and marital status.

In a prior article published in the WISCONSIN LAW REVIEW, I proposed a solution to the problem of discrimination by charitable organizations (a term commonly interpreted to include religious organizations) - enact a broad and well-defined nondiscrimination condition on tax exemption under Section 501(c)(3) of the Internal Revenue Code. Inherent in that proposal is the notion that discrimination by charitable organizations is intrinsically incompatible with such organizations' purpose and mission. Although my prior article briefly addressed the constitutional and other difficulties inherent in applying a nondiscrimination requirement to religious organizations, it acknowledged the necessity of additional and more thorough discussion on the issue - thus, the focus of this Article. Accordingly, this Article examines the propriety and constitutionality of subjecting religious organizations to a nondiscrimination requirement and crafting a more narrow church exception to that requirement. It proposes statutory and regulatory amendments to prevent certain church-affiliated organizations from avoiding the nondiscrimination requirement.

taxation, religious organizations, tax exempt, discrimination, constitutional law

Abstract:
With federal subsidies to charitable organizations exceeding $232 billion for fiscal years 2007 to 2011, the public benefit conferred by such organizations is an increasingly hot topic for Congress, the Internal Revenue Service and the entire nonprofit sector. Despite the national debate over nonprofit versus for-profit hospitals and excessive executive compensation, and the call for stricter governance and regulation, one recurring activity of charities appears to fly under the radar of reformers - discrimination. As illustrated in real-life occurrences contained in pages 3 and 4 of the article, seemingly widespread discrimination by charities exists not only with respect to employment, but more importantly in providing services or engaging in activities for which the organization was originally granted tax-exempt status (e.g., education). The primary bases for such discrimination are currently sexual orientation and marital status.

This article contends that these instances of discrimination are intrinsically incompatible with such organizations' "charitable" purpose and mission, and with society's notion of what constitutes a charity. This article contends that such organizations should not continue to enjoy the benefits of tax-exempt status if they engage in discriminatory practices or maintain discriminatory policies. To combat such discrimination, this article proposes the inclusion of an expansive nondiscrimination requirement within Section 501(c)(3). Such a requirement ensures that the stream of tax-deductible dollars (generated by the charitable contributions deduction) received by charities is not used to discriminate against any member or segment of society. The proposal transforms Section 501(c)(3) into the "gold standard" for all tax-exempt organizations, ensuring that their beneficiaries are as diverse and all encompassing as the taxpaying public from whom such organizations draw their support.

charitable organizations, taxation, tax exemption, discrimination, charities

Abstract:
In the midst of a national health care crisis involving over 43 million uninsured Americans and another 50 million underinsured, a national debate is waging over the creation of a national health insurance program and the provision of health care services in this country. In a sea of uninsured and underinsured patients along with constantly increasing costs for providing health care services, tax-exempt hospitals are compelled to look for alternative revenue sources to remain afloat. In the last two decades, these hospitals and other tax-exempt organizations have found an alternative revenue source - participation in joint ventures with for-profit entities. Yet participation in such ventures has been made more difficult because of a control standard currently imposed by the Internal Revenue Service on the tax-exempt participant.

This article contends that with respect to "ancillary" joint ventures (i.e., joint ventures where the exempt organization only contributes an insignificant portion of its assets) the control standard is overly intrusive and unrealistic in light of the current marketplace. This article attempts to provide a more tenable alternative to that standard. Specifically, it offers a two-prong approach to properly address a tax-exempt organization's participation in an ancillary joint venture, asserting that the Internal Revenue Service need only use existing resources, with certain suggested modifications, in a more effective manner. In light of current Congressional inquiry into the compensation practices of tax-exempt organizations, this article specifically advocates for greater use of the intermediate sanctions rules to ensure that such ventures do not confer too much financial benefit to their for-profit participants.

tax exempt organizations, joint ventures, taxation, hospitals