When may corporate counsel not represent corporation?
When the corporation is the nominal plaintiff in a derivative action and the counsel has a sense of loyalty to the officers and directors who are charged with wrongdoing.
Court rejects IRS definition of “educational institution”
A federal District Court in Minnesota has rejected the IRS definition of an “educational institution” and allowed the Mayo Clinic to recover more than $11.5 million in unrelated business income tax. It has held that the IRS definition is too narrow and is not authorized by the Tax Code.
The IRS assessed taxes in 2009 for unrelated business income received by Mayo from certain activities conducted through partnerships. Mayo paid the taxes and sued for a refund.
The Lawyer on the Board: Playing a Dual Role
Both parties should understand the ethical limitations on the attorney’s conduct when wearing two hats in board deliberations.
None of these situations is insurmountable so long as both the lawyer and the other members of the board understand the issues. The key is acknowledging the issues before they arise, so that nobody will be surprised and neither the lawyer nor the organization will be put at risk.
A lawyer serving on the board of a nonprofit should have a serious discussion with the other members of the board about their mutual expectations for service. The lawyer may face ethical issues which could come as a surprise to everyone if not faced in advance. The lawyer and the organization should consider whether the benefits outweigh the risks of dual service.
Federal Court Blocks IRS Effort To Suspend Requirement for Schedule B
Says action cannot be taken without following rulemaking provisions of Administrative Procedure Act
A federal District Court in Montana has put at least a temporary hold on the Internal Revenue Service’s effort to suspend the requirement for tax-exempt organizations to file a list of their significant donors on Schedule B to the Form 990 tax information return. The Administration had eliminated the requirement for all exempt organizations except 501(c)(3) public charities by publishing a new Revenue Procedure in 2018. (Rev. Proc.
Initial board has power to act even without annual meetings
The initial board of directors of a nonprofit condominium association has authority to act on behalf of the association even though it has failed for more than 13 years to hold an annual meeting for election of new board members as required by its bylaws, an appellate court in Michigan has held. It has reversed a trial court’s acceptance of a claim by a unit owner that the association lacked the authority to take the action.
Does Potential Beneficiary Have Standing To Contest Administration of Trust?
Australian “branch church” of Christian Science denied standing to contest administration of Mary Baker Eddy’s testamentary trust
The Supreme Court of New Hampshire has denied standing to a “branch church” of Christian Science to contest the administration of an original testamentary trust of Mary Baker Eddy, founder of the Church of Christian Science, when it is only a “potential” beneficiary of the trust. It has weighed five specific criteria for determining whether a potential beneficiary has a “special interest” that would justify standing and found the branch church lacking.