Unintended Consequences of Taxation

Tax administration has many collateral consequences, many unintended. And not all of them are bad, either.

Take, for example, Internal Revenue Service Determination Letter Ruling LTR 200826043. This letter ruling, issued 21 March 2008, revoked the tax-exempt status of unnamed organization whose main purpose was "To executive [sic] scientific study and research into the pros and cons of decriminalizing natural consensual sexual behaviors between adults and underagers and decriminalizing what is defined as child pornography. …"

Turns out that the organization's Founder and Executive Director, who is also the sole officer and board member, has a felony criminal record for sex abuse of minors.

The IRS revoked the tax-exempt status not on any morality issues, but because, according to the organization's own documents, its primary purpose is to influence legislation, and not to educate.

Every once in a while, the IRS inadvertently does the right thing.