From: M Petrelis Date: Sat, 18 Apr 1998 16:23:50 EDT Subject: WBlade: IRS withholds tax exemption from lesbian group IRS withholds again Agent tells Lesbian cancer support group it has to serve `all women' by Peter Freiberg, Washington Blade, April 17, 1998 phone #: 1-202-797-7000 In the second known Gay-related incident since 1996, the Internal Revenue Service (IRS) is demanding that a support group for Lesbians with cancer agree to help "any women ... with cancer" in order to gain tax-exempt status. The IRS ordered Kathys' Group, a Rhode Island organization that provides support services for Lesbians with cancer and their families, to make "only" one change to receive tax-exempt status - the organization must alter its purpose to extend services to "any women who have been diagnosed with cancer." The demand brought an outraged response from Lambda Legal Defense and Education Fund, a national Gay group representing Kathys' Group. Lambda wrote the IRS this week insisting that the IRS withdraw the demand and immediately grant Kathys' Group tax-exempt status. Lambda staff attorney David Buckel, noting that the Lesbian support group incident follows a controversy in which the IRS initially rejected the tax-exempt application of a support group for Gay youth, said in an interview: "The evidence is building that the IRS is infected with anti-Gay bias. ... We're not saying there's anti-Gay bigotry as a matter of policy, but we're saying ... that the IRS needs some kind of policy directive or internal education of its agents to make sure there isn't this kind of anti-Gay discrimination." Lambda is concerned, Buckel said, "that there are a lot of [Gay] groups out there that either give in to these anti-Gay requests or give up [seeking tax-exempt status] altogether." The IRS, citing applicants' right to privacy, said it could not discuss any pending request for tax-exempt status. "I can't comment on how any specific agent acts ... or handles a specific case," said IRS spokesperson Jodi Patterson. Asked about Buckel's charge of anti-Gay bias in the agency, Patterson said: "If you look at the number of Gay and Lesbian groups that are tax-exempt, I think you'll see that that is not a factor [in the approval process]." In the case of Kathys' Group, the IRS demanded in February that the organization alter its purpose. Kathys' Group then sought help from Lambda, which on Tuesday made the incident public with a press release and a letter to IRS officials. "There is no authority," wrote Buckel, "for the IRS to deny tax exemption on the grounds that a group seeks to address the needs of Lesbians. Nor can the IRS force applicants to change their missions based on the viewpoints of the IRS agent. The appropriate inquiry for tax-exempt status turns on whether the group meets the criteria for charitable/educational organizations." In his letter to IRS, Buckel said an IRS exempt organizations specialist, Brenda Ivery-Rivers, had told Kathys' Group in a telephone conversation that the group's mission had to be changed to better serve the "public good." "The IRS needs some kind of policy directive or internal education of its agents," said Lambda's David Buckel. Buckel said that Ivery-Rivers, who subsequently faxed the group her demand for a change, apparently felt that "focusing on the needs of Lesbians was insufficient to serve the `public good' or that a Gay-focused group was inappropriate or unworthy." "[A]gency judgments about the need for this group are not relevant to the IRS's inquiry and actions," Buckel wrote. "However, we wish to emphasize that the need is indeed profound. This underscores the importance of timely action by the IRS to correct for the obstacle and delay it has imposed on Kathys' Group." In an interview, Buckel noted that many organizations target specific groups. The American Association of Retired Persons, he notes, focuses on the needs of senior citizens and the NAACP focuses on the needs of African Americans. Most nonprofit groups consider tax-exempt status essential for expansion because it encourages contributions from individuals who will then receive tax deductions as well as from foundations. Until 1977, the IRS frequently rejected Gay groups' applications for tax-exempt status. But that year, the IRS said Gay groups were entitled to tax exemption as long as they met other requirements. In the last two decades, numerous Gay groups have routinely been granted tax-exempt status by the IRS, which is why activists and tax experts were shocked last year when a case involving a support group for Gay youth came to light. In 1996, the IRS refused to approve tax-exempt status for Gay and Lesbian Adolescent Support System of Greensboro, N.C., unless the group proved it would not "encourage or facilitate homosexual practices ... attitudes and propensities by minor individuals." Feeling intimidated, the group debated for months whether to drop its application. But after it sought Lambda's help, Lambda publicized the case and protested to the IRS last summer. The tax agency quickly reversed itself and granted tax-exempt status to the youth support group, winning praise from Buckel for "swiftly [dealing] with internal discrimination against a Gay ... group." Kathys' Group was started back in 1995 when one member of a longtime Lesbian couple - both of whom are named Kathy - developed breast cancer. Although they are New Yorkers, they spend summers in Rhode Island, where their friends searched in vain for a support group for Lesbians with cancer. Lorraine Galvin and Dorrie McCaffrey, a Lesbian couple who are friends of the Kathys, decided to start a support group for Lesbians with cancer in Rhode Island - and name it after the two Kathys. (Galvin says the two Kathys are away and she does not know if they want their last names disclosed.) "We got some people on a board," says Galvin, now president of Kathys' Group, which is based in Wakefield, R.I. "We talked to a therapist, who agreed to meet with women who have cancer." Services are provided free to Lesbians, their partners, and "whoever the Lesbian feels is a family member." So far, 31 women have received services from Kathys' Group, about half of them Lesbians with cancer and the other half members of their families. Support groups meet twice a month, with between 12 and 14 women regularly attending. Kathys' Group decided last year to apply for tax-exempt status, with an eye toward expanding services by stepped-up fundraising. When IRS agent Ivery-Rivers told the organization earlier this year that its mission statement would have to be changed, "we were outraged," says Galvin. "We felt this, in fact, would change the whole tenor of what we wanted to do," says Galvin. "There are many other groups that get their nonprofit status. Why were we being singled out for not receiving it? Was it because we were a Gay group? ... We didn't feel that was appropriate." Ivery-Rivers, who works out of the Richmond, Va. office, could not be reached for comment; a recording at the office told callers that because of the April 15 tax deadline, no agents could be contacted personally. IRS spokesperson Patterson said Marcus Owens, director of IRS's exempt organizations division, who spoke to the Blade last summer about the agency's general policies on tax-exemption, was out of the office and unavailable for comment. Last summer, Owens said the IRS did not treat applications from Gay groups any differently from non-Gay groups. When any applicant believes it is being treated with bias, Owens said, "for whatever reason - religion, politics, their sexual orientation, whatever it is - our procedures are to reassign the case to someone else." Patricia Cain, an openly Lesbian associate dean and professor of law at the University of Iowa and a tax specialist, said IRS rules do not permit the agency to order Kathys' Group to change its mission statement. "It sounds," said Cain, "like this person working for the IRS has made a determination that [Kathys' Group is] not going to be tax-exempt if it benefits only Lesbians, and I think that's wrong." Cain said that, under the tax law, race is the only classification that a nonprofit group is barred from restricting from membership. Kathy's Group, Cain said, is "not discriminatory in the way the tax law cares about." "The only other test is whether there's a sufficient public benefit," said Cain. "If I set up a support group for the 10 Lesbians in my neighborhood who are my friends," said Cain, "that wouldn't be a public enough purpose to get charitable donations. But if I set it up for all the Lesbians in the state who have cancer, that's certainly a public enough purpose." Galvin of Kathys' Group says the Lesbian community in Rhode Island "needs to have a place to go where they're comfortable. It's not the same as when you go into a straight ... environment. There are issues that are not the same." "There are several women in the [support] group," says Galvin, "who have told us the only reason they are in a support group is because it's a Lesbian support group. They tried going to some of the straight support programs and found it was not a place where they felt comfortable talking about their partner, their circumstances, their sexuality." Bev Baker, executive director of Washington's Mary Helen Mautner Project for Lesbians with Cancer, said she was surprised when Lambda told her about the Rhode Island group's difficulties with the IRS. Baker said Mautner has a mission statement very similar to that of Kathys' Group. When Mautner sought tax-exempt status eight years ago, Baker said, "To my knowledge, there was never a concern voiced by the IRS." Baker said she was also unaware of any problems with the IRS encountered by other members of the National Coalition of Feminist and Lesbian Cancer Projects, which includes at least three dozen organizations. It is ironic, Baker said, that while the IRS questions the public benefit of a group devoted to Lesbians with cancer, the U.S. Centers for Disease Control and Prevention is giving federal funds for cancer screening for Lesbians - including a $235,000 grant to Mautner this year. Like Galvin, Baker stressed the importance of support groups where Lesbians with cancer feel at ease. "If you have to go to a support group where you can't be who you are," said Baker, "where you can't talk about your partner or your life, that can be very stressful. And additional stress when you're already dealing with the stress of fighting cancer is not [what you need]." In his letter to the IRS, Lambda's Buckel renewed his request - first made last year following the problems encountered by the support group for Gay youth - that "the IRS take agency-wide action to educate its staff and prevent further difficulties for Gay-related applications for tax-exempt status." "We suggest a policy statement from the Commissioner," Buckel said, "and full agency trainings, or other similar steps, to ensure that charitable or educational organizations that serve Gay people do not face discriminatory obstacles in gaining tax-exempt status in the future." Since last year, the prominent Washington law firm of Arnold and Porter has been assisting Lambda in a Freedom of Information Act request for IRS records in an effort to help determine the scope of anti-Gay bias at the tax agency. >end<