Both House and Senate Republicans had included the exemption in their tax plan drafts, with little controversy or debate. | Zach Gibson/Getty Images Newman's Own faces mammoth tax bill after lawmakers fail to spare the foundation

A decision by the Senate’s parliamentarian could force the sale of the late actor Paul Newman’s food company, and dismantle his charity.

During the Senate’s consideration of Republicans’ plans to rewrite the tax code, Parliamentarian Elizabeth MacDonough struck a provision that would have spared Newman’s Own from an unusual 200 percent tax it’s facing.


It had been seeking the provision for eight years, and appeared to be finally on the cusp of victory. Both House and Senate Republicans had included the exemption in their tax plan drafts, with little controversy or debate.

But MacDonough deemed the provision — along with more than a dozen others — to be violations of the Senate’s rules, so they were deleted before the legislation was passed last week.

“It came as a total bolt out of the blue,” said Bob Forrester, head of the foundation that owns the food company. He says he was unfamiliar with the rule.

“It was a stunning, devastating, brutal even, notification when I had heard this had happened.”

“We’re still stunned,” he said.

The IRS has given the foundation until November 2018 before the tax ax will fall. But given the time it takes to sell a company, Forrester says he needs a fix by the end of the first quarter of next year or it will have to begin divesting from the business, which sells salad dressing, dog food, salsa, wine and popcorn, among other things.

When Newman, one of the biggest movie stars of the 20th century, died in 2008, he left the company to his foundation, which gives away its profits to charity.

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The problem is a 1969 tax law that bars foundations from owning more than a small stake in private businesses. It was written with an eye toward preventing wealthy people from using foundations as tax shelters, and it imposes a deliberately confiscatory 200 percent tax on those that don’t unload their businesses after a certain period of time.

Forrester had won support from lawmakers in both parties for the exemption, including Sens. John Thune (R-S.D.) and Bob Menendez (D-N.J.).

But the parliamentarian, responsible for interpreting the Senate’s rules, called it a violation of the so-called Byrd rule. Named after the late Sen. Robert Byrd, the rule puts strict limitations on what sort of provisions can be included in “reconciliation” measures like the one Republicans are now using to muscle their tax plans through the Senate.

MacDonough also killed a bid by a handful of Senate Republicans to include a trigger mechanism that would have forced future tax increases if the GOP plan didn’t help the economy as much as lawmakers hope — which briefly brought negotiations over the tax legislation to a standstill.

She deleted more than a dozen other provisions as well, including one allowing education savings accounts for unborn children, tax breaks for people hit by flooding in the Mississippi Delta and one for tax-preparation programs for poor people.

That has frustrated those who had been pushing the provisions, and say they have little recourse to challenge the parliamentarian’s decisions.

She could be overruled by lawmakers, though that would be highly unusual.

Ironically, Forrester said lawmakers had advised him to wait to make another run at the foundation provision until lawmakers took up a broad tax-code rewrite, saying that would be his best opportunity to get it approved.

Forrester says he’s still looking for ways to get the provision passed, though he may have missed his best opportunity. He acknowledges time is running short.

“I continue to hope there is some other option,” he said. “I just can’t believe there isn’t.”

“If there is no option legislatively, then there is no option for Newman’s Own other than to break itself up.”