The Oregon attorney general recently asked the IRS to investigate the tax-exempt status of a nonprofit museum after an investigation into the museum’s affiliation with a for-profit entity. Questions had been raised about whether some of the museum’s directors had breached their duties to the board and if proper corporate governance was taking place. For more, click `here.

This article highlights the problems that might arise between affiliated companies and companies with significant interrelationships. In this matter, the Department of Justice has not initiated legal action, but the avenue is not foreclosed. Companies must take care to maintain corporate formalities to avoid investigations such as these and their potential consequences.