OCLC-like Nonprofits Come Under Congressional Scrutiny
Posted on 23. Mar, 2011 by Carl Whitaker in Uncategorized
The SkyRiver/OCLC lawsuit has come to the attention of the U.S.Congress. According to an in-depth story in the March 14th issue of “Daily Report for Executives”, a BNA publication serving policymakers and tax practitioners, Senator Charles Grassley (R-Iowa) is calling on Congress to calculate the cost of the non-profit tax exemption, with special attention to be paid to the so-called “fee-for-service” segment, which includes hospitals, universities, software companies (like OCLC), and consulting firms. Grassley spoke during a March 1 hearing on tax reform.
The “Daily Report for Executives” story includes an extensive analysis of the charges leveled against OCLC by SkyRiver, including SkyRiver’s position that OCLC has misused its non-profit status to acquire for-profit companies and monopolize the market for library services. While Senator Grassley does not single out OCLC or any other organization in his remarks, it’s clear from the article that the Senator’s staff is aware of the lawsuit.
SkyRiver’s lawyer, Arthur Shartsis, is quoted in the article as saying that an IRS examination of OCLC’s activities, based even on current law, would be likely to conclude that OCLC does not meet charitable requirements and is operating like a for-profit business.
Experts quoted in the article say that the issue of tax-exemptions for “fee-for-service” nonprofits like OCLC is likely to remain on Congressional radar. We’ll keep you posted when there are new developments.
Source: Daily Report for Executives, 3/14/11, “Exempt Organizations: Grassley Seeks Estimate of Nonprofit Tax Exemption, Putting Organizations on Edge.” Since DRE is a subscription-only service we are not able to link to the article here.