The Law of Tax-Exempt Organizations, 2026 Supplement, 13th Edition

CHAPTER ONEDefinition of and Rationales for Tax-Exempt Organizations

• § 1.2 Definition of Tax-Exempt Organization
• § 1.4 Political Philosophy Rationale

 

§ 1.2 DEFINITION OF TAX-EXEMPT ORGANIZATION

p. 5, note 23, second sentence. Delete and insert:

Nor can an organization premise its right to an exemption by showing that the IRS has treated similarly situated organizations more generously, leniently, or erroneously (Easter House v. United States, 12 Cl. Ct. 476, 490 (1987); also, City of Galveston, Texas v. United States, 33 Fed. Cl. 685, 707–08 (1995); Mira Vista Homeowners Ass'n Inc. v. Comm'r, T.C. Memo. 2025-102). Currently, the IRS is contending with (and rejecting) claims of disparate treatment from organizations that develop paid name, image, and likeness opportunities for student athletes (e.g., Priv. Ltr. Rul. 202504020). The IRS previously recognized as tax-exempt certain of these organizations but has since changed its position; it is now denying tax-exempt status on the grounds that these NIL collective organizations are operating for the substantial nonexempt purpose of serving the private interests of student athletes (see § 20.13(b), text accompanied by notes 393–394).

§ 1.4 POLITICAL PHILOSOPHY RATIONALE

p. 13, note 75. Delete text and insert:

The staff of the Joint Committee on Taxation and the Treasury Department measure the economic value (revenue “losses”) of various tax preferences, such as tax deductions, credits, and exclusions (termed tax expenditures). ...