Beginning last month, Legal Current launched the first in a highlight series of Thomson Reuters key authors of the month. This month, we highlight professor Marilyn E. Phelan, Paul Whitfield Horn professor of Law, a professor of Museum Science at Texas Tech University School of Law, and the author of Nonprofit Organizations: Law and Taxation and Representing Nonprofit Organizations. In addition to her law degree, she has a masters degree and Ph.D with an emphasis in accounting and tax law. Senior Attorney Editor Elizabeth Yockel interviewed Professor Phelan about her area of law and her experience as an author.

Elizabeth Yockel: What led you to focus on nonprofit and taxation?

Marilyn Phelan: The combination of courses in my undergraduate studies led me to focus on our federal taxation system, both in its taxation of individuals and organizations and in its exemption from taxation of certain tax code defined nonprofit organizations. A continued interest in accounting and taxation, following passage of the bar exam, led me to seek a tax practice and later to accept a position as a professor in the tax field. My research in the tax field logically progressed to an interest in exploring the tax laws relating to tax exempt organizations.

Marilyn Phelan

Professor Marilyn E. Phelan

EY: How has the area of tax law changed since you first became acquainted with it?

MP: The tax laws have changed considerably since I first began practicing. Tax laws have always been complicated, inequities have always existed and unfairness has prevailed in many instances. However, the tax system was much less complicated when I first began practicing and then later teaching in the tax field. Initially, high taxes were the rule. The highest tax bracket was 70 percent, but it was dropped to 50 percent in 1981. Tax brackets fell again in 1986 to a highest bracket of only 28 percent but then were increased to a highest bracket of 39.6 percent in 1993. The changing tax rates are only one example of congressional manipulation of the tax laws. As politicians constantly make changes in the tax law a major part of their political campaigns, allegedly to eliminate the inequities and make the system fairer, the tax laws have become very complicated. Inequities and unfairness now characterize a tax system that is incomprehensible to most people. Nonprofit organizations are no exception; complicated tax rules confront and often needlessly burden  tax exempt organizations.

EY: What motivated you to write Nonprofit Organizations: Law and Taxation and Representing Nonprofit Organizations? 

MP: I began my law practice as a tax attorney but soon discovered that the knowledge of the tax laws relating to individuals and for-profit entities I gained in school did not suffice to permit me to represent tax exempt organizations. I also discovered there were no books or other written materials that provided the needed guidance for adequate representation of these entities. I began a thorough investigation of relevant tax code sections and treasury regulations and summarized these provisions in order to represent nonprofit organizations adequately. I realized other attorneys and accountants would also benefit from my research and took on the task of writing a comprehensive treatise on the subject. In my first book, Nonprofit Organizations: Law and Taxation, I included not only a summary of the tax laws but other laws of relevance to the many and varied nonprofits as well. I later recognized that a more concise summary of the tax laws and the requirements to obtain and maintain nonprofit status would be more beneficial in some respects, especially to those persons who only occasionally find a need to provide guidance for nonprofit organizations. To meet this need I prepared the workbook, Representing Nonprofit Organizations, to provide a more succinct summary of procedures in both forming and operating a nonprofit organization and in obtaining and maintaining tax exempt status. My books, which are updated annually, provide a concise and simple (insofar as tax laws and regulations can be simplified) discussion of laws applicable to nonprofit organizations.

EY: As an author, what goals do you have for your titles?

MP: According to IRS statistics, nonprofit organizations had over $1.6 trillion in assets in 2000. Given the extensive and continuing growth of the nonprofit sector, representation of nonprofit organizations has become, and will continue to be, an increasingly important area of legal practice. My titles provide a hornbook of laws relating to nonprofit organizations that is beneficial both for persons who have expertise in the area of nonprofit law and for first-time practitioners. The three volume treatise, Nonprofit Organizations–Law and Taxation, provides a modern history of the tax code and sets out the requirements for nonprofit organizations to obtain and maintain tax exempt status. It also includes chapters that address legal issues specific to some types of nonprofit organization, such as religious organizations, schools, hospitals, museums, political organizations, social clubs, labor organizations, trade and professional organization, homeowners’ associations, and even cooperatives. The tax practice book, Representing Nonprofit Organizations, is designed to provide more specific information needed to meet routine problems facing directors and counsel for nonprofit organizations. The goal of this title is to provide needed expertise not only for the sophisticated advisor but also for the practitioner who only occasionally delves into issues relating to tax exempt organizations.

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