New Revenue Procedure Aimed at Private Schools (Rev. Proc. 2019-22)

1534756401-copyOn May 7, 2019, the IRS released Revenue Procedure 2019-22 relating to a private school’s publication of its racially nondiscriminatory policy.  By way of background, the IRS has long required that to qualify as tax-exempt, a private school must have and follow a racially nondiscriminatory policy applicable to its students.  Revenue Procedure 75-50 specifies that the school must include the statement in its charter, bylaws, or other governing instrument or in a resolution of its governing body, and must further include a statement of its policy in all of its brochures and catalogs dealing with student admissions, programs, and scholarships.  Additionally, private schools must make their racially nondiscriminatory policy known to all segments of the community served by the school.  Rev. Proc. 75-50 provides two options: (a) publishing a notice of the racially nondiscriminatory policy in a newspaper of general circulation serving all racial segments of the community at least once annually, or (b) a school may use broadcast media and secure documentation demonstrating that there were a sufficient number of announcements made during hours where it would be brought to the attention of the general community and, further, that the broadcast radio or television station is likely to be listened to by substantial numbers of members of all racial segments of the general community.  In my experience, schools always chose the newspaper option.

By its newly-announced Rev. Proc. 2019-22, the IRS has added a third option for publicizing a school’s racially nondiscriminatory policy to the community.  In addition to the methods described above, a school may now display the notice of its racially nondiscriminatory policy on its primary publicly accessible internet homepage.  If this option is chosen, the policy must be accessible at all times during the school’s taxable year (excluding temporary outages due to website maintenance or technical problems) and must be displayed in a manner reasonably expected to be noticed by visitors to the homepage.  Rev. Proc. 2019-22 explains that a publicly accessible homepage is one that does not require a visitor to input information, such as an email address or a username and password, to access the homepage; however, if the school does not have its own website but has pages contained in another organization’s website (such as within the website of a sponsoring church), the notice must be displayed on the school’s primary landing page within the website.  Rev. Proc. 2019-22 provides that factors considered in determining whether a notice is reasonably expected to be noticed by visitors to the homepage include the size, color, and graphic treatment of the notice in relation to other parts of the homepage, whether the notice is unavoidable, whether other parts of the homepage distract attention from the notice, and whether the notice is visible without a visitor having to do anything other than simply scrolling on the homepage.  Providing a link to another page where the notice appears, putting the notice in a carousel-type banner, or requiring the user to hover over or drop down a sub-menu are all insufficient to meet the requirements.

As a result of this new Revenue Procedure, any school with a publicly accessible internet homepage or with a web page contained within the website of another organization should strongly consider publishing its racially nondiscriminatory policy on its web page to satisfy the IRS requirement to avoid any cost associated with publication.  The notice should be sufficiently prominent, considering the factors identified above for visitors to be reasonably expected to see the notice.

For anyone starting a private school and applying for tax-exempt status or for a school that has been operating without providing notice, the IRS has provided the following as an acceptable form of the notice:


The M school admits students of any race, color, national and ethnic origin to all the rights, privileges, programs, and activities generally accorded or made available to students at the school.  It does not discriminate on the basis of race, color, or national and ethnic origin in administration of its educational policies, admissions policies, scholarship and loan programs, and athletic and other school-administered programs.

Tax-exempt organizations operating schools in foreign countries should consult with a legal or accounting advisor as to satisfaction of the publication requirement in the event publication is not appropriate due to the cultural context.

Managing Growth, Opportunity, and Business Activities: Complex Organizational Structures and Why and When to Use Them

Complex Organizational Structure36th Annual Nonprofit Organizations Institute, Austin, Texas, 01/18/2019

Understanding the reasons for utilizing a more complex structure and the options available can be pivotal to an organization in fulfilling its mission.  This paper and presentation examine the options that can be utilized to build a more complex organizational structure to manage growth, opportunity, and business activities of a nonprofit organization, including an outline of reasons to create a more complex structure, an overview of and considerations for common entities utilized along with their key attributes, and guidance on managing the relationship between the parent entity and its subsidiaries including the importance of maintaining appropriate separateness.

Business Leagues and Trade Associations


State Bar of Texas 16th Annual Governance of Nonprofit Organizations Course, Austin, Texas, 08/23/2018 Co-presented with Richard W. Meyer

More than 180 years ago, Alexis de Tocqueville marveled over the use of associations in the United States through his treatise, Democracy in America, Today, Americans continue to join together for nonprofit purposes. While advancing the common business interest of their members, business leagues and trade associations are a thriving and vibrant part of the nonprofit world.  This paper and presentation provide an introduction to the tax law and a selection non-tax concerns affecting these § 501(c)(6) organizations.