In our prior AMC Institute Legal Alert, we reported that one favorable aspect of the draft revised Form 990 is that it does not include objectionable provisions regarding the reporting of compensation of AMC personnel, including attribution of any part of the management fee to an AMC representative.

Since that Alert, however, we have learned that at least two comments have been submitted to the IRS that malign the management company model, suggest that it is used primarily for improper purposes, and call for intrusive questions on the Form 990, perhaps even a return to the objectionable language that was imposed back in 2000. Attached is the link where you can find the comments that have been posted to date on the IRS website: http://www.irs.gov/charities/article/0,,id=173106,00.html. The two comments of concern are included in the June 14-28 set and are from individuals named Caracci and Rosenfeld (the comments can be arranged alphabetically)

We are hopeful, of course, that the IRS will dismiss these comments as ill-informed, but we cannot assume this will be the case. It is for this reason that we are urging our members to submit comments to the IRS on this issue in particular. The number of comments submitted on one side of an issue can influence an agency, and this is too important a matter to leave to chance.  

The AMC Institute Legislative and Regulatory Affairs Task Force would like to make this task as easy as possible.  They have worked with Hugh Webster to outline the following steps to write your letter to IRS.  Step # 3, 4, 5 include some "talking points" to help you craft the message.  It is important that you customize the intro and closing paragraphs, even if you use similar language to the talking points.  Form letters are not effective, since the IRS may not place as much weight on a letter if they receive the same one from several different people.

Suggestions For Comments to the IRS

Step 1:             Send an email concerning the redesigned form and instructions mailed to the IRS at Form990Revision@irs.gov; or mail a letter to Form 990 Redesign, ATTN: SE:T:EO, 1111 Constitution Ave., N.W., Washington, DC 20224. Comments are due no later than September 14, 2007.

REMEMBER:  Use a tone in your letter that is respectful and civil, not hostile or sarcastic.

Step 2:             In the first paragraph offer include a brief history of your company and the services you provide to clients.  Include a description of the kinds of associations and other nonprofits that you represent. Show the IRS that AMC’s are legitimate, independent business entities that serve a valuable function, and not a device used by in-house nonprofit executives to hide their compensation (which is the tired, but now-resurrected accusation).

Step 3:             Applaud the IRS’ efforts to overhaul the Form 990 and to increase transparency.

Step 4:             State that you are pleased that the new 990 does not confuse the fees paid to management companies with the compensation paid by AMC’s to their employees, and, in particular, that the statement in the current Form 990 instructions regarding listing the management fee as the compensation of the AMC representative who works for the association, has been dropped altogether.

Step 5:             Point out that Part II, Section B of the revised 990 (questions 5a, 5e, and 5f) clearly and adequately addresses and ensures disclosure of the fact that an officer, director, or other “insider” of the association also serves in a leadership or ownership position with a third party doing business with the association, including a management company.

Step 6:             Urge the IRS not to make any further changes that might compel the disclosure of an AMC employee’s personal salary on the Form 990, which is of course public, or attributes any part of the management fee to the AMC employee.  

Step 7:             Be sure to either blind copy or separately send a copy of your IRS communication to abower@amcinstitute.org.

During the last round of Form 990 changes were implemented in 2000, we had over 30 members write to IRS with their concerns.  If you have received these requests to send a letter to the IRS in the past and failed to act, we’re asking that today is the day you decide to act!  We’re looking to have at least 50% of our members send this important message to the IRS expressing their concerns.  The deadline for your IRS communication is September 14!