Tax Exempt Organizations

Tax-exempt organizations – including public charities, social welfare organizations, religious institutions, and private foundations – face complex business, tax, and regulatory challenges, particularly during tumultuous times. As critical service providers, these organizations need counsel with a robust understanding of their business as well as comprehensive knowledge of tax and business law. Whether working to obtain tax-exempt status or determining how to protect and maintain it, we help clients resolve tough legal issues so they can focus on achieving their mission.

Lewis Roca brings to bear more than 50 years of experience working with tax-exempt organizations. Our corporate and tax teams have earned recognition from Chambers USA, U.S. News – Best Lawyers®, Super Lawyers®, and Martindale-Hubbell, among others. We regularly contribute to industry groups, legal and regulatory associations, and legal publications to ensure we remain up to date with the latest developments that affect our clients’ business.

Services

Our lawyers represent nonprofit organizations with local, national, and international operations. We provide the full spectrum of transactional and governance advice for our clients’ day-to-day operations and tax issues, from unrelated business taxable income to intermediate sanctions, excess private benefit, use in tax-exempt finance, and private foundation rules. Our services include: 

• Compensation and benefits
• Federal tax rules, regulations, and compliance
• Financing
• Giving programs, securities, and trusts
• Governance, management, and structural issues
• Government relations and advocacy
• Intellectual property management and defense
• International business
• Joint ventures with exempt and non-exempt organizations
• Labor and employment
• Real estate and construction

  

Our Experience

• Nonprofit Retail Chain. Retained by an Arizona-based nonprofit retail chain to conduct legal work in a number of high-visibility areas after a competitive search process. In the first matter, a former employee filed a charge of discrimination with the Equal Employment Opportunity Commission (EEOC) and the Arizona Civil Rights Division alleging discrimination based on his race (African American) as well as retaliation for engaging in protected activity. Specifically, the employee alleged that he was subjected to a hostile work environment by a co-worker who made comments about the manners and linguistics of African Americans, and further alleged that his supervisor retaliated against him when he reported the harassment by requiring him to work alone and “doubling” his workload. Additionally, the employee alleged that non-African American employees were unfairly promoted over him. We filed a detailed statement – including 17 exhibits – and demonstrated that the employee had voluntarily quit his job after noted performance problems and poor attendance. While the charge is still pending, we are confident that it will be dismissed.
• Arts Center. Successfully defended an arts center against a contentious discrimination charge brought by its former employee, an African American male, with the Arizona Civil Rights Division (ACRD) and EEOC. As a nonprofit organization that provides arts and culture opportunities for all through education, programming, and advocacy, our client accordingly prides itself on having a diverse, inclusive, and equitable workplace. Furthermore, given past recognition for its diversity efforts, our client was concerned about the impact any public litigation would have on its reputation. The ACRD actively investigated the matter, including scheduling several interviews with witnesses. After we submitted a detailed position statement, and the center CEO was interviewed, the ACRD issued a letter declining to take further action. We subsequently helped the center reach a favorable settlement with the former employee and avoid any damage to its reputation.
• Rehabilitation Hospital. Represented acute-care rehabilitation hospital – which provides high-quality inpatient and outpatient rehabilitation services involving stroke, brain and spinal cord injuries, complex orthopedics, chronic pain, and physical and cognitive issues – in a high-profile case involving complaints of harassment and assault by the hospital’s former chief medical officer (CMO). After complaints were filed against the CMO for alleged sexual harassment and sexual assault, he filed a lawsuit in the United States District Court for the District of Hawaii, seeking injunctive and declaratory relief arising from our client’s summary suspension of his medical staff privileges and the anticipated reporting of his misconduct to the National Practitioner Data Bank. The CMO claimed that the hospital and its Medical Executive Committee (MEC) were violating federal and state laws, including his constitutional due process rights, as well as the hospital bylaws. Our employment and health care teams joined forces to defend the lawsuit and handle the administrative hearing required under the bylaws. Ultimately, the court issued a strongly worded 23-page order denying the CMO’s motion for preliminary injunction. Since prevailing on this matter, our firm continues to work with the relevant Hawaii agencies responsible for investigating similar misconduct by licensed professionals, including the Department of Commerce and Consumer Affairs (DCCA) and the Regulatory Industries Complaints Office (RICO).
• Medical Nonprofit Organization. Defended an organ procurement organization against a donor’s family that alleged dozens of causes of action – specifically, that their son’s corneas had been wrongfully recovered. After successfully obtaining dismissal of all but one tort claim at the motion to dismiss stage, we won summary judgment on the remaining claim. Because offers of judgment were made in the case, the client was entitled to expert fees and costs. The family ultimately appealed the decision to the Arizona Court of Appeals. Both the trial court and court of appeals applied Arizona’s Uniform Anatomical Gift Act and reaffirmed that organ procurement organizations cannot be found liable for good faith actions taken in the organ procurement context. The decision was later affirmed in all respects, and our client was awarded its costs on appeal. Ultimately, this case served to affirm and establish the protection against liability for organ procurement organizations who perform life-changing, life-saving work. Our client continues to retain us to handle all of its labor and employment matters.
• Nonprofit Conservancy Organization. Retained by a not-for-profit conservancy organization working to conserve the lands and waters in more than 70 countries to assist in the $500,000 adjudication of the conservancy’s surface water rights in the Arizona General Stream Adjudication.