IRS refunds Academy $3.4 million
Ending a dispute that's lasted more than 10 years, the Internal Revenue Service returned more than $3.4 million to the AAFP on April 24. This refund puts to rest a long legal struggle between the AAFP and the IRS over taxes paid by the Academy for the years 1984-87.
The two recently resolved issues involved interest and revenue from Academy services. In the first case, the IRS claimed AAFP Placement Service was a taxable business. Secondly, the IRS said that interest the Academy received from reserves maintained in connection with a member insurance company also was taxable.
"We went to trial on both points and won," says Todd Dicus, JD, AAFP general counsel. "The court said it was consistent with the Academy's mission to work to place family physicians where they are needed. And the court said income the Academy received from insurance reserves was not taxable. The government was turned down in their appeal of the decision about interest on insurance reserves."
Close to half of the money returned was interest on the original payment, Mr. Dicus says.
"With these cases, we're finally seeing the light at the end of the tunnel concerning tax litigation," he says
Two years ago, the IRS agreed to return $3.5 million to the AAFP in a dispute involving the determination of taxable income attributed to American Family Physician.
- FP Report is published by the AAFP News Department.