Tax-exempt organizations—from health systems to universities to private foundations—have a unique set of legal needs and concerns. As one of the most experienced tax-exempt and nonprofit practices in the United States, McDermott provides a wide range of legal services to organizations across the sector.
Whether you’re dealing with the issues that arise in mergers and acquisitions, conversions and sales, joint ventures, physician practice acquisitions, academic medical center relationships with physicians, or captive insurance arrangements, our breadth of experience and diverse client base make us ideally qualified to represent tax-exempt organizations in specialized industries. In the health care sector, for example, we routinely address both tax-exemption issues and non-tax health care regulatory considerations involved in strategic transactions. And through our history of assisting nonprofit clients through major business changes, we’ve built long-standing credibility with state attorneys general across the United States.
Tax Planning and Compliance
Tax-exempt organizations face numerous and complex tax issues. From limiting liability through efficient planning, to navigating private foundation or intermediate sanctions rules – we help organizations build and maintain international philanthropic programs. Our work encompasses capital raising in tax-exempt bond financings, analyzing and advising on the impact of operational changes, and navigating the complex terrain of joint ventures for Section 501(c)(3) organizations. We help large for-profit entities structure and operate corporate social responsibility programs in order to maximize impact and minimize liability. Thanks to our premier health care law practice, our team has a wealth of experience partnering with hospitals and health systems on community benefit compliance and disclosures.
Nonprofit Executive Compensation
In the wake of tax reform, the Internal Revenue Service (IRS) is emphasizing board review of compensation, board members’ degree of independence, proper reporting of compensation and benefits on Form 990, and the impact of new excise taxes on executive compensation, amongst other items, when conducting an audit. We work to mitigate potential roadblocks, as we design and deploy virtually all forms of qualified and non-qualified retirement and welfare benefit plans, as well as taxable and non-taxable fringe benefit programs.
During federal or state tax audits and examinations, we can offer strategies for developing a strong defense, working with examining agents, obtaining technical advice from the IRS, and navigating the administrative appellate process. We leverage our decades of experience to help nonprofit organizations facing proposed revocations of tax-exempt status; terminations or changes of public charity status; and issues regarding employment taxes, Section 501(r) compliance and unrelated business income tax.
To best counsel nonprofit hospitals and health systems in inquiries and litigation concerning charity care and community benefit, we use an integrated, multidisciplinary team of tax, trial and health care lawyers. We’ve been involved in some of the most prominent nonprofit law litigation, including the representation of teaching hospitals pursuing refund claims for employment tax (FICA) paid for medical residents, and have extensive litigation experience in federal courts across the United States.
Nonprofit Corporate Governance
With the largest, most comprehensive and sophisticated nonprofit corporate governance practice among US law firms, we offer our deep knowledge and counsel regarding board composition, structure, policies and practices; exercise of fiduciary duty; board and executive compensation; corporate compliance programs; internal investigations; executive leadership succession planning and implementation; governance effectiveness assessments; and implementation of comprehensive conflict of interest programs and other internal controls and procedures. Because matters of governing board composition, structure and conduct are significantly affected by tax exemption laws and regulations, we take a holistic approach, advising clients not only about governance best practices but also implications under federal tax law and state nonprofit law.
We help clients make critical decisions that affect important personal, business, tax, civic and charitable concerns, and our estate planning lawyers work hand-in-hand with exempt organization lawyers to help philanthropists structure their gifts and run effective charities to create a lasting impact. With extensive experience providing creative, customized solutions to clients’ most sensitive needs and philanthropic goals, our private client and wealth management practice is one of the most highly regarded internationally.