Charitable Class, Disaster Relief, and First Responders

The notion of charitable class bedevils tax law. The IRS has issued no precedential guidance regarding its scope or application. After the 9/11 terrorist attack, Congress enacted special provisions applicable only to victims of that disaster. In response to statements in the legislative history of those provisions, the IRS has changed several of its positions regarding the doctrine of charitable class, changes announced only in a publication on disaster relief. Nonetheless, disaster relief continues to raise difficult issues involving charitable class for Congress as well as the IRS. In the 15 years since 9/11, Congress has enacted special legislation to permit a small group of California firefighters and two New York police offers to be treated as satisfying the charitable class requirements. This article reviews the use of charitable class in tax law, including its relationship to trust law, with particular attention on establishing new charitable purposes and classes. It then discusses disaster relief, both in the case of the 1995 Oklahoma City bombing and September 11, 2001 terrorist attack. This discussion includes consideration of the roles that crowdfunding and exemption based on lessening the burden of government play in addressing disasters. The next section of the article examines the special legislation that Congress has enacted for two small groups of first responders. The piece concludes by recommending that the IRS both undertake a study of charitable class in general and issue precedential guidance regarding charitable class in the context of disaster relief. It also urges Congress to consider holding hearings and enacting special legislation for first responders