IRS to be Tenant of a Trust in Philly

On April 22, 2007, a report in The Philadelphia Inquirer addressed finalized plans for the Internal Revenue Service, as a tenant, to move its local & service center operations into a huge privately-owned facility, as a long-term lease tenant. The facility, located at 30th Street, in Philadelphia, formerly used as a United States Post Office, will be completely renovated. The owner will be a real estate investment trust.

On its web page entitled "Contact My Local Office in Pennsylvania", the IRS lists its twenty-one local service offices located throughout Pennsylvania. Presently, the IRS office in Philadelphia is located downtown, at 600 Arch Street. It offers a wide array of counter services, listed here.

But the IRS presence in Philadelphia is more than just local. In 2007, certain residents of Pennsylvania and Kentucky -- or the professional tax preparers for such resident clients -- who file individual tax returns send them either to the Philadelphia Service Center or to the Cincinnati Service Center (largely dependent on whether payment is enclosed). See: "Where to File Addresses for Individual Taxpayers Filing Form 1040", "Where to File Addresses for Tax Professionals Filing Form 1040", and, most generally, "Where to File Addresses".

As to fiduciary income tax matters, applications for an Employer Identification Number, using a Form SS-4, should be sent to Philadelphia if the entity derives from these states (or if it has no designated location): Alabama, Alaska, Arizona, Arkansas, California, Colorado, Hawaii, Idaho, Iowa, Kansas, Louisiana, Minnesota, Mississippi, Missouri, Montana, Nebraska, Nevada, New Mexico, North Dakota, Oklahoma, Oregon, South Dakota, Tennessee, Texas, Utah, Washington, Wisconsin, Wyoming. See: "Where to File Your Taxes" (for Form SS-4).

On the other hand, all fiduciary income tax returns for Pennsylvania estates, trusts, charitable organizations, or split-interest organizations presently are filed at the IRS Service Center in Cincinnati instead.

Well, the point is, the IRS is busy in Philadelphia, and needs much office space. But its current Center City facility & its Northeast Philadelphia campus are inadequate to meet the needs of the IRS for the next twenty years. So government officials were looking for a new location that could consolidate all regional IRS employees.

The apparent result is a proposed move from Center City & the current campus out to 30th Street.

But the arrangements came under scrutiny by the Inspector General's Office of the U.S. Postal Service, as reported by the Inquirer in its article by Thomas Ginsberg, posted April 22, 2007, entitled "Surprising details emerge on Post Office sale" -- "U.S. investigators say a local development group had an 'apparent conflict of interest' in its many project roles".

* * * The Keating Development Group is now poised to become codeveloper of the historic building. Keating Development is a unit of the Keating Group, which also includes construction and environmental management services. Daniel J. Keating III, its chairman and chief executive, said his company did nothing improper.

The buyer, the University of Pennsylvania, which had fought so hard over the $50.6 million purchase, now is planning to sell the iconic building to Brandywine Realty Trust, owner of the nearby Cira Centre, for $20 million.

And federal taxpayers, under the soon-to-close deal, would help finance part of the project by paying a high rent - up to $32.3 million a year - for the new tenant, the Internal Revenue Service.

While acknowledging the costs are high and a few players have an intertwined history, developers and government officials say the project is aboveboard and will be hugely beneficial for the city and Penn.

"We've taken the properties and gotten them successfully developed," said Craig Carnaroli, Penn's executive vice president. "This is part of our march eastward to the Schuylkill river, where we're able to improve the quality of life for everyone." * * *

My main point is that the IRS Philadelphia Service Center is poised to move. If project arrangements are consummated, the new IRS Service Center would be at a location closer to the 30th Street Railroad Station, which will be convenient for travelers.

The USPS-OIG's & the Inquirer's points are far broader and more complex. Yet, after further inquiry, the USPS-OIG became satisfied with the fairness of the transaction for the Postal Service, reported the Inquirer:

The inspector general's office said last week that Samra [Tom A. Samra, the Postal Service's vice president for facilities] was "responsive" and that it no longer was investigating the deal, a spokeswoman said. * * *

The whole complicated transaction, including ownership changes and a memorandum spelling out the government leases, is expected to close this spring.

Alan Kessler, vice chairman of the Postal Service board of governors, said he considered the case closed. * * *

You should read the entire article online (quickly, since it may be pulled from public access after the weekend). [Update: As of May 17th, it was still available online].

It addresses the organizations' needs, proposals, conflicts of interest, self-interests, connections, and big money.