ABATax: Comments on Use of Internet by Exempt Organizations

Section of Taxation
Submission to the IRS

Comments on IRS Announcement 2000-84 on the Need for Guidance
Clarifying the Application of Internal Revenue Code Provisions
to Use of the Internet by Exempt Organizations

Summary of Issues Addressed

The following comments and recommendations express the individual views of the members of the Section of Taxation who prepared them and do not represent the position of the American Bar Association or the Section of Taxation.

These comments and recommendations were prepared by members of the Committee on Exempt Organizations. Primary responsibility was taken by Internet Task Force members Christina L. Nooney, Amy R. Segal, Carolyn O. Ward, Robert A. Wexler, and LaVerne Woods, Chair; Robert H.M. Ferguson, Chair of the Committee on Exempt Organizations and Victoria B. Bjorklund, Vice Chair of the Committee on Exempt Organizations. These comments were reviewed by James K. Hasson of the Section’s Committee on Government Submissions, and Douglas M. Mancino, Council Director for the Committee on Exempt Organizations. Portions were also reviewed by Gregory L. Colvin, Co-Chair of the Subcommittee on Political and Lobbying Organizations and Activities, by Rosemary E. Fei of that Subcommittee, and by Laura Kalick and Adelbert L. Spitzer, Co-Chairs of the Subcommittee on Unrelated Business and Competition Issues.

Many members of the Section of Taxation who participated in preparing these comments and recommendations have clients who would be affected by the federal tax principles addressed, or have advised clients on the application of such principles. With one exception, no such member (or the firm or organization to which such member belongs) has been engaged by a client to make a governmental submission with respect to, or otherwise influence the development or outcome of, the specific subject matter of these comments. The exception referred to in the immediately preceding sentence involves a member of the task force whose law firm was recently retained to review, and may be asked to draft a portion of, a similar submission in response to Notice 2000-84. That member ceased to participate or have anything whatsoever to do with the attached submission from and after the time at which her law firm was so retained.

Contact:

Robert H.M. Ferguson
Patterson, Belknap, Webb & Tyler LLP
1133 Avenue of the Americas
New York, New York 10036
(212) 336-2830
fergub@ix.netcom.com

Date: February 2001

Issues Addressed

I.	Overview
II.	Broad Principles
	A.	General Issues
	B.	Political and Lobbying Activities
	C.	Advertising and Other Business Activities
III.	General Issues
	A.	Does a website constitute a single publication or communication? If not, how should it be separated into distinct publications or communications?
	B.	When allocating expenses for a website, what methodology is appropriate? For example, should allocations be based on webpages (which, unlike print publications, may not be of equal size)?
	C.	Unlike other publications of an exempt organization, a website may be modified on a daily basis. To what extent and by what means should an exempt organization maintain the information from prior versions of the organization’s website?
	D.	To what extent are statements made by subscribers to a forum, such as a list serve or news group, attributable to an exempt organization that maintains the forum? Does attribution vary depending on a level of participation of the exempt organization in maintaining the forum (e.g., if the organization moderates discussion, acts as editor, etc.)?
IV.	Political and Lobbying Activities
	A.	What facts and circumstances are relevant in determining whether information on a charitable organization’s website about candidates for public office constitutes intervention in a political campaign by the charitable organization or is permissible charitable activity consistent with the principles set forth in Revenue Ruling 78-248, 1978-1 C.B. 154, and Revenue Ruling 86-95, 1986-2 C.B. 73 (dealing with voter guides and candidate debates)?
	B.	Does providing a hyperlink on a charitable organization’s website to another organization that engages in political campaign intervention result in per se prohibited political intervention? What facts and circumstances are relevant in determining whether the hyperlink constitutes a political campaign intervention by the charitable organization?
	C.	For charitable organizations that have not made the election under Section 501(h), what facts and circumstances are relevant in determining whether lobbying communications made on the Internet are a substantial part of the organization’s activities? For example, are location of the communication on the website (main page or subsidiary page) or number of hits relevant?
	D.	To what extent are statements made by subscribers to a forum, such as a list serve or news group, attributable to an exempt organization that maintains the forum? Does attribution vary depending on a level of participation of the exempt organization in maintaining the forum (e.g., if the organization moderates discussion, acts as editor, etc.)?
	E.	Does a website constitute a single publication or communication? If not, how should it be separated into distinct publications or communications?
	F.	When allocating expenses for a website, what methodology is appropriate? For example, should allocations be based on webpages (which, unlike print publications, may not be of equal size)?
	G.	Unlike other publications of an exempt organization, a website may be modified on a daily basis. To what extent and by what means should an exempt organization maintain the information from prior versions of the organization’s website?
V.	Advertising and Other Business Activities
	A.	General Internet Questions
	B.	To what extent are business activities conducted on the Internet regularly carried on under Section 512? What facts and circumstances are relevant in determining whether these activities on the Internet are regularly carried on?
	C.	Are there any circumstances under which the payment of a percentage of sales from customers referred by the exempt organization to another website would be substantially related under Section 513?
	D.	Are there any circumstances under which an on-line “virtual trade show” qualifies as an activity of a kind “traditionally conducted” at trade shows under Section 513(d)?
VI.	Solicitation of Contributions
	A.	Are solicitations for contributions made on the Internet (either on an organization’s website or by email) in “written or printed form” for purposes of Section 6113? If so, what facts and circumstances are relevant in determining whether a disclosure is in a “conspicuous and easily recognizable format”?
	B.	Does an organization meet the requirements of Section 6115 for “quid pro quo” contributions with a webpage confirmation that may be printed out by the contributor or by sending a confirmation email to the donor?
	C.	Does a donor satisfy the requirement under Section 170(f)(8) for a written acknowledgment of a contribution of $250 or more with a printed page confirmation or copy of a confirmation email from the donee organization?