IRS Victorious Over Claims Made by Special Needs TrusteeIRS Victorious Over Claims Made by Special Needs Trustee

Last week, the U.S. District Court for the District of Columbia granted summary judgment in favor of the Internal Revenue Service and against the Family Trust of Massachusetts, Inc. (FTM) (Family Trust of Massachusetts, Inc. v. United States, Civil Action No. 11-00680 (Sept. 24, 2012)). FTM served as trustee for over 300 elderly and disabled individuals who took part in a pooled-asset special needs trust program. In 2005, FTM applied to the IRS for a determination that FTM was a tax-exempt organization; in 2008, the IRS issued a proposed adverse determination letter, but never issued a final adverse determination letter.

FTM subsequently sought a declaration by the district court that FTM was exempt from federal income tax under Internal ...