Congress and the Internal Revenue Service (IRS) are concerned about international tax havens, blocker organizations, and the operation of American Friends organizations abroad. This area was highlighted as a focus in the IRS work plan for 2011 released in December 2010. In its 2011 work plan, the IRS said that international tax enforcement is a priority for it. Taxpayers with international activities, transactions and accounts will be a primary focus.
The IRS’ concern in this area is whether charitable assets of tax-exempt organizations are being diverted for non-charitable purposes, and it will closely review:
- Foreign entities that have received IRS recognition of tax-exempt status.
- Information referred from the Joint International Tax Shelter Information Center.
- Charities that participate in “gifts in kind” programs where valuation issues surface from non-cash items donations to foreign entities.
- Large private foundations with international operations.
“The Globalization of Philanthropy; International Charitable Giving in the Twenty-First Century,” by McGuireWoods attorneys Milton Cerny and Michele A.W. McKinnon, published in the Real Property, Trust and Estate Law Journal of the American Bar Association, discusses these and other issues that confront charitable organizations and individuals in the planning and managing of their international operations.
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This article was highlighted in the EO Tax Journal Email Update on January 31, 2011.