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Fighting disclosure – Funders prefer federal law

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Opposition is growing to a New York law enacted in August that will force thousands of private foundations to buy legal notices in newspapers next year, The Wall Street Journal reported Nov. 1.

Lawyers and foundation groups are increasing efforts to repeal the law, which requires that the notice say the foundation’s annual IRS return is available for public inspection, the Journal said.

The law also says the newspaper in which the legal notice is published must be selected by the clerk of the county that’s home to the foundation’s main office.

Opponents say existing federal law makes it easier for the public to get access to foundation tax returns.

“The law is unduly burdensome and expensive, and it is unnecessary because its purposes are already fully achieved” by existing law and IRS rules, say the tax section of the New York State Bar Association.

Most foundations “could easily avoid burdensome New York regulations by incorporation under the laws of other states,” Robert H. Scarborough, head of the tax section and a partner at Freshfields Bruckhaus Deringer said in a recent letter to New York Gov. George Pataki.

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