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On Thursday, Oct. 4, 2001 Adversity.Net met with IRS officials to discuss IRS's rejection
of Adversity.Net's nonprofit application. I feel it was a productive meeting. Chairman Tim Fay and his wife attended the meeting in person, while Treasurer Dave Diersen participated by conference phone. On Dec. 21, 2000 IRS originally rejected our non-profit application based in part on their narrow ruling that our web site "attempted to intervene in a political campaign" by posting news and opinion that was either critical or supportive of several candidates for elected office in the 2000 election cycle, including George W. Bush, Al Gore, and Congresswoman Maxine Waters (D-California). Under IRS rules it doesn't matter that we did not specifically advocate voting for or against any of these candidates. During our meeting I vociferously disagreed with IRS on this point, but I also clearly stated to IRS that we were willing to change our web site to conform with IRS's rulings in this regard. IRS also based its rejection of our application in part upon their judgment that Adversity.Net failed to publish sufficient facts so that the average person could draw their own conclusion on the issues. While I also disagreed with IRS's interpretation on this point, I also readily agreed to change the way in which we post our news summaries in the future -- IRS restrictions in this regard are not too bad, if I correctly understand what they said to me during our conference today. See below. |
IRS
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At today's conference I believe IRS gave me clear signals that, from a regulatory standpoint, IRS believes that Adversity.Net CAN fulfill a bona fide educational mission (tax exempt mission) within the meaning of IRS's arcane and arguably unconstitutionally vague rules in this regard IF we agree to avoid any appearance of endorsing or criticizing any candidate for political office regarding racial issues or affirmative action and IF we post "sufficient facts so that the average reader can reach his or her own conclusion on the issues." I believe that these strictures will be easy enough to meet.
It is also my interpretation that today IRS indicated that the "old material" on the Adversity.Net web site to which they originally objected in 2000 (re: Bush, Gore, Maxine Waters, etc.) doesn't need to be deleted because it no longer pertains to an active political campaign and because Adversity.Net was not a non-profit organization at the time the "offending" items were posted and that therefore those items are not subject to IRS rules. (If that logic doesn't bend your head, nothing will!)
Also, and by the way, news postings on Adversity.Net about the reverse discrimination policies of NON-elected officials, and of private companies (eg., the Big 3 Automakers, or anti-white employment policies of the GAO, or the race-based, discriminatory "gifts" of the Small Business Administration) remain FAIR GAME and have no restrictions ... as long as (1) We avoid criticizing or endorsing any declared political candidates who may have had a hand in those policies; and (2) We "post sufficient facts that the average reader could draw their own conclusions" (see below).
IRS raised a concern about the way in which we post news stories:
| (a) | The relevant IRS test regarding non-profit publications (or web sites) is whether a reader can access all the facts and make their own determination. This is known as "the independent judgment test". |
| (b) | A great number of Adversity.Net's excerpted news stories feature news links which expire rapidly (within 2 weeks). |
| (c) | In order to avoid violating copyright by posting too much of the original story, we often summarize or paraphrase the stories in our own words. (IRS made it clear to us they are not encouraging us to violate copyright law). |
| (d) | Sometimes our summaries and paraphrasing of the original news postings have implicitly or explicitly expressed an opinion which is not otherwise supported by the "facts" from the original news story. This can cause us to "flunk" the independent judgment test. |
| (e) | When an Adversity.Net reader clicks on an expired link (a dead link) they cannot access all the facts and therefore cannot make an independent determination of the facts -- unless they are willing to pay the "archive fee" of the news source (Washington Post, NY Times, et al). |
| (f) | IRS told
us today we can largely avoid this problem by sticking to direct quotes from the news
story, rather than interjecting our analysis, opinion, interpretation, or personal
summary. Today IRS told us that sticking to direct quotes from news stories, however
selective our quotes might be, will generally be sufficient to meet their
"independent judgment test". I discussed the issue of "selective quotes" at some length with IRS, and I believe that IRS was quite clear today on that point: As long as the quotes are directly from the original news source, it does not matter that our selection of which quotes to publish may support our own point of view. |
| (g) | It is also my interpretation that IRS indicated at today's conference that all currently posted material (old material) on Adversity.Net is exempted from this rule since the material was posted at a time when we were NOT an exempt organization (even though IRS used some of this old material to reject our application in 2000 since an election cycle was underway. Go figure!) But anyway, it appears we don't have to delete dozens of pages of "old material". |
We may not be home free, ladies and gentlemen, but after today's (Oct. 4, 2001) meeting with IRS I believe we may be well on our way to becoming a bona fide tax exempt, educational organization! That status will greatly enhance our ability to raise funds for our educational mission! We will see what the next steps outlined by IRS today bring for us!
WHAT COMES NEXT:
Following today's Oct. 4, 2001 conference with IRS, they have outlined to us the following next steps:
| (1) | In 3 to 6
weeks (approximately Oct. 25 thru Nov. 15, 2001) IRS will send Adversity.Net what they
called a "Post Conference Development Letter" in which IRS will pose questions
of the form "Will you agree to refrain from publishing the positions of declared
candidates for political office regarding racial issues, affirmative action, and so on?
Will you agree to post sufficient facts that the average reader can make an
independent conclusion?" (At this juncture, I asked IRS if, in their "Post Conference Development Letter" they would agree to stick to the issues raised in today's conference, and in their Dec. 21, 2000 rejection letter, and they said they would.) |
| (2) | Following receipt of the "Post Conference Development Letter" Adversity.Net will then respond by letter to IRS indicating in detail our agreement to meet their stated requirements. |
| (3) | Subsequently IRS will review our response (from (2) above) and, if we have answered their questions correctly, IRS will grant Adversity.Net what I believe IRS calls a "Prospective Exemption". |
| (4) | As I
understand it today, a "Prospective Exemption" ruling from IRS is kind of like a
5 year probationary period. If granted by IRS, Adversity.Net would be able to
function as any 501(c)(3) tax exempt organization, including accepting on a tax-deductible
basis contributions to fund our mission. If, at the end of the "Prospective
Exemption" period (probationary period) Adversity.Net has not violated any of IRS's
rules, we would then be granted a regular 501(c)(3) status. Don't ask me what the difference is, because I am not a lawyer versed in non-profit law, but this all sounds VERY promising to me. |
Sincerely, Tim Fay Email: editor@adversity.net |
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