Tax issues are critical in the nonprofit world. Arent Fox tax attorneys obtain tax-exempt status for new organizations, represent organizations before the Internal Revenue Service and other taxing authorities, and negotiate arrangements with for-profit and nonprofit entities addressing the unique tax considerations applicable in the arena. In addition to offering advice on achieving public charity status, our attorneys have experience forming private foundations and other Section 501(c) entities. We represent and have represented a number of entities classified as churches for income tax purposes (including synagogues) and have advised them on such matters unique to churches as the parsonage allowance, the neighborhood land rule as applied to churches, obtaining recognition and both opting in and out of group letter recognition. On the local law front, we have represented churches and church related entities in obtaining real property tax exemption, tax exempt bonds and in dealing with local government in matters affected by the constitutional separation of church and state doctrine.

Our professionals also advise tax-exempt clients on how to avoid the imposition of intermediate sanctions and the unrelated business taxable income (“UBTI”) tax when entering into transactions with private individuals and other taxable entities; structure joint venture, royalty, affinity and sponsorship agreements, and scholarship programs; offer experience in the use of tax-exempt bond financing; IRS audit strategies; corporate reorganization of tax-exempt organizations; and on cost sharing agreements among exempt and non-exempt organizations and among organizations exempt under different Code provisions. Our attorneys regularly advise tax-exempt clients on campaign finance laws and statutes regulating political and lobbying activity of nonprofits; and on the estate planning side, planned giving techniques, the use and registration of charitable annuities and the establishment of testamentary charitable trusts and gifts.

Representative Transactions

• Catholic Charities USA: Arent Fox was retained as client’s outside counsel on all matters, ranging from legislative and government relations advice to tax-exempt tax issues, state regulatory issues, governance and Board issues, real estate, employment law, and government contracts.
• So Others Might Eat: Arent Fox represented client in complex $36,000,000 financing with a combination of tax-exempt bonds and low income housing tax credits for the acquisition and rehabilitation of multifamily sites in Washington, D.C.
• Wesley Theological Seminary: Arent Fox represented client in obtaining tax-exempt status as a church.  After being included in The United Methodist Church Group Tax Exemption since 1974, Wesley decided to apply for its own tax-exempt status in 2009.  Arent Fox drafted a successful analysis to the Internal Revenue Service explaining that Wesley should be classified as a church rather than a school and why it should no longer be under the Group Letter which had applied to it since its formation.
• World Wildlife Fund, Inc.: Arent Fox represented client in an approximately $35,000,000 tax-exempt bond financing, which will refinance tax-exempt bonds used to finance the acquisition and development of a portion of its headquarters in Washington, DC. Arent Fox represented this client in the prior tax-exempt financing as well as a taxable financing and refinancing of the remaining portion of the headquarters facility and represents WWF in various other areas including trademark disputes.
• Among the Firm’s major church clients are The National Cathedral (Episcopal), The Wesley Theological Seminary (Methodist), and the Washington Hebrew Congregation (Jewish).

Tax is an integral part of any business acquisition or disposition. Arent Fox tax attorneys work routinely with practitioners from our real estate, corporate, estate planning and other practice groups to structure business acquisitions, dispositions, mergers, joint ventures, asset and stock sales/purchases, and business successions. The Arent Fox tax group helps clients understand and manage the tax risks and opportunities revealed during due diligence and coordinates technical expertise with business knowledge to create optimal solutions for our clients.

Arent Fox is well versed in both tax-free and taxable acquisition and disposition planning. For example, Arent Fox has executed like-kind exchanges, partnership and corporate mergers, and property acquisitions for clients. Similarly, Arent Fox has structured “cash out” and taxable acquisitions and dispositions for its clients. Arent Fox has extensive experience with public and private offerings of tax-sensitive securities and the preparation of offering materials.