Subject: WBlade: IRS withholds tax exemption from lesbian group
From: M Petrelis <[email-masked]>
Date: Sat, 18 Apr 1998 16:23:50 EDT

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.
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