Charity Watchdog Asks for IRS, FTB Investigations of
California Advocates for Nursing Home Reform
Public Interest Watch Accuses CANHR of Operating Illegal Lawyer Referral Service
California Advocates for Nursing Home Reform (CANHR), a San Francisco-based charity, was accused in complaints filed today with the IRS and Franchise Tax Board (FTB) of violating its charitable tax-exempt status by operating a lawyer referral service and other programs aimed principally at benefiting lawyers rather than the public. Under federal and state tax laws, charitable organizations must be operated exclusively for charitable purposes.
Under existing IRS regulations and a prior ruling involving a lawyer referral service, such services may not be operated under the auspices of a charitable organization. In 2000, CANHR's lawyer referral service generated over $2.5 million in fees for lawyers to whom cases were referred.
In the complaints filed today, Public Interest Watch (PIW) charged: "CANHR, a charitable organization, openly dedicates itself to a range of activities benefiting private attorneys, from referring them new clients to training them in legal techniques. Yet under the law, such activities may not be conducted using charitable resources, regardless of whether these activities provide any indirect benefit to the prospective clients of these attorneys."
The complaints cite the operation of a lawyer referral service by CANHR as an especially egregious violation. In asking for investigations of CANHR by the IRS and FTB, PIW cited the involvement of attorneys in this case, stating "That attorneys would participate in so brazen a scheme to use public, charitable resources for private, pecuniary purposes is alarming."
Public Interest Watch, which filed the complaints, is a Washington, D.C. and California-based group established last year to focus attention on the growing abuse of tax-exemption laws by outfits established as, and enjoying the tax benefits of, charitable organizations.
To see a copy of the complaint, go to publicinterestwatch.org.
###
1425 P Street, NW Suite 706
Washington, DC 20005
How to Contribute
