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Ways And Means Committee Member Calls on IRS to Investigate National Rifle Association's
Exempt Status, grills Treasury IG on Lack of IRS Enforcement at Hearing Yesterday

"NRA’s Wayne LaPierre Says He Is Being Extorted, Pressured to Resign
Group’s longtime leader says Oliver North, president of the NRA, wants him out"

By Nonprofit Blogger Friday, May 10, 2019

We have previously reported on how advocates on both the right and the left have sought to enlist the IRS in cultural wars against exempt organizations considered to be enemies, respectively, of those on the left or the right. We reported on efforts to have the Service revoke the exempt status of the Southern Poverty Law Center's exempt status here .. https://lawprofessors.typepad.com/nonprofit/2019/04/southern-poverty-law-center-long-time-tax-exempt-public-interest-law-firm-under-coordinated-attack.html . And on another group's effort to have the Service revoke the exempt status of the National Rifle Association here .. https://lawprofessors.typepad.com/nonprofit/2019/04/nonprofit-cultural-wars-continue-with-new-private-benefit-inurement-and-excess-benefit-complaint-aga.html . In the latest salvo, House Ways and Means Committee Member Bradley Schneider (Democrat, Illinois) sent a letter to the Service yesterday .. https://schneider.house.gov/sites/schneider.house.gov/files/2019.05.09-%20Rep.%20Schneider_Tax-Exempt%20Enforcement%20Letter_IRS_FINAL.pdf .. "strongly encouraging" the Service to investigate wrongdoing by the NRA. Here is an excerpt from the letter:

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As a Member of the Ways and Means Committee, I take very seriously my role and responsibility in conducting oversight of our nation's federal tax laws and ensuring the federal tax code is working as intended. It is with this duty in mind that I am writing to strong encourage you to investigate recent reports of possible wrongdoing by the National Rifle Association (NRA), which enjoys status as a tax-exempt organization under 501(c)(4) of the Internal Revenue Code (IRC). The allegations against the NRA reported in The New Yorker on April 17, 2019 .. https://www.newyorker.com/news/news-desk/secrecy-self-dealing-and-greed-at-the-nra , including instances of egregious self-dealing, deceptive billing practices, and preferences in contracting are most troubling.

. . .

As you well know, Section 501 of the IRC lays out the types of organizations that qualify for tax-exempt status, as well the rules and regulations such organizations must follow. It is a basic assumption that active oversight and enforcement will improve compliance. However, in 2018, the Treasury Inspector General for Tax Administration issued a report .. https://www.treasury.gov/tigta/auditreports/2019reports/201910006fr.pdf .. that found the further processing of multiple legitimate referrals alleging improper political activity by tax-exempt organizations were not pursued. This report finding raises questions about the IRS's enforcement of our federal tax laws.

I am concerned about the potential long-term harm that diminished enforcement will have on the many nonprofit organization that do follow the rules and take their charitable and social welfare purpose seriously. The alleged NRA operating practices also raise the question of whether current rules and procedures are adequate to guard against abuse.
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For a video of Rep. Schneider questioning the IG on the lack of IRS enforcement of tax laws regulating exempt organizations, with specific references to alleged abuses by the NRA see this:

You can also read a partial transcript of Rep. Schneider's question and answer session yesterday with the Inspector General below the fold.

Darryll K. Jones

PARTIAL TRANSCRIPT:

https://lawprofessors.typepad.com/nonprofit/2019/05/ways-and-means-committee-member-calls-on-irs-to-investigate-national-rifle-associations-exempt-statu.html#more