In Uncategorized on 12/20/2017 at 18:53

Means Paying the Tax

Unrelated Business Income Tax levels the playing field between the exempts and the regulars. And Judge Lauber has the steamroller rolling along in New Jersey Council of Teaching Hospitals, 149 T. C. 22, filed 12/20/17.

It’s a bad day for the Garden Staters, as The Jersey Boys lost a big one, and the Counciler’s alliances with a debt collector and credit-card processor, and a group marketer, render the Counciler’s seven-figure fees taxable at corporate rates.

Neither debt collector nor group marketer paid to use the trademarks, trade dress, regalia, or service marks of the Councilers. Though a link on the Counciler’s website led their members to said collector and marketer, the Councilers have no record what their members (all 501(c)(3)s like themselves) saved or how their members’ charitable ends were thereby served.

Although the Councilers gave the debt collector the contact info for their members’ high commands, that info was available on the public portion of the Counciler’s website to anyone with Google and  a smartphone.

No use of IP, so no 512(b)(2) “royalty” out. Draft those outside-provider agreements carefully, exempt counsel. Make sure they’re paying to use your marks and brands.

Also not “primarily for convenience of members.” Section 513(a)(2) doesn’t help, again because no records, and members could use the marketer on their own, without going through the Counciler’s website or even telling the Councilers that they were going it alone. The magic word “primarily” for benefit of members therefore doesn’t apply.

Raising money for charitable purposes, though necessary, doesn’t exempt every means of doing so from tax.

Leave a Reply

Please log in using one of these methods to post your comment: Logo

You are commenting using your account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

This site uses Akismet to reduce spam. Learn how your comment data is processed.

%d bloggers like this: