Posts Tagged ‘nonprofit organizaion’

Is the IRS really targeting the tea party?

Posted on: March 26th, 2012 by Teddy Wilson No Comments

Residents gather during a Waco Tea Party event. (Photo Credit: Randomized Productions/Flickr)

Conservative activists and some Republican lawmakers are up in arms about what they describe as the Internal Revenue Service conducting a partisan and ideologically driven campaign against tea party groups around the country. They claim that progressive organizations are not experiencing the same level of scrutiny. However, some progressive groups say they have had similar experiences with the IRS, and at least one expert dismisses the notion that the government is engaged in an ideological witch hunt.

Tea party groups, as well as other non-profit organizations, can apply for tax-exempt status with the IRS. Under the 501(c) designation there are 28 different types of organizations that are exempt from paying some or all federal taxes. Typically, organizations like tea party groups will apply either for 501(c)3 or 501(c)4 status, depending on the organization’s activities. One of the differences between the designations is that donations to a 501(c)3 are tax deductible and donations to a 501(c)4 are not.

In an interview with the Texas Independent, Toby Walker of the Waco Tea Party said that the group applied for 501(c)4 status by filing a 1024 form with the IRS in July of 2010. About a month later the group was informed that the IRS would take 90 days to inform it of an approval, a denial, or a request for more information. “The 90 days came and went,” said Walker. “But on their web site it said that they were behind. We started calling and checking in, and they said they were backlogged.”

Then on Feb. 7 of this year, the Waco Tea Party received a letter from the IRS asking for the answers to 20 questions. “Some of the questions were acceptable,” said Walker. “We knew they were going to ask for more information, and we weren’t surprised to get the letter. What surprised us were a number of the questions that did not pertain to the 1024.”

“Red alert”

Walker specifically cited the seventeenth question as being a “red alert.” The question asks if the group has a “close relationship with any candidate for public office or political party.” The question also asks them to describe the relationship.

“I told our treasurer to find out what that means,” said Walker. “When we called the IRS they said that close relationship is subjective and to send them the names, and they will let us know. What does that mean?”

“It was so onerous to answer,” said Walker.

The letter asked for transcripts of the group’s social media activities, including posts on Facebook and Twitter. It also requested transcripts of the group’s online radio show. Walker said that the group was looking at significant costs for printing and shipping all of the documents required. “Just to do our Twitter account would be between 2,500 and 3,000 pages,” said Walker.

Walker said that she knew that “left leaning groups” that filed the same year had been approved. While she did not name the specific groups, Walker referred to a March 8 Roll Call article. The article stated that “several liberal groups contacted by Roll Call did not report similar experiences.”

The article specifically cited Protect Your Care, a 501(c)4 organization that describes its mission as providing a space to “champion the Affordable Care Act,” as an organization that did not receive any such questionnaire letter from the IRS. Roll Call also said that one other unnamed liberal 501(c)(4) organization was granted tax exempt status in May after receiving “only a modest six-part questionnaire.”

Progressives get same treatment

However, interviews conducted by the Texas Independent with three different progressive organizations call into question charges that the IRS is engaged in ideological discrimination. Each organization reported varying degrees of interactions with the IRS, and the amount of time it took each to receive final approval also varied. However, two of the organizations did receive correspondence from the IRS requesting more information, and these letters included similar questions to those received by the Waco Tea Party.

In College Station, Texas, the Brazos Progressives, a coalition of progressive groups and businesses, originally filed for 501(c)3 status and, after being denied, filed for and received 501(c)4 status. Clean Elections Texas, an organization that seeks to build support for a public funding option for candidates seeking public office in Texas, filed for 501(c)4 status and said that they avoided requests for more information by being advised on what specific information the IRS was looking for on the 1024 forms.

A staff member of a progressive organization in Texas spoke with the Texas Independent on the condition of anonymity due to the fact that their organization is undergoing a similar review as the Waco Tea Party. The staff member said that that while the organization’s application for 501(c)3 and 501(c)4 status went through “fairly smoothly,” the organization also had to answer extensive follow-up questions about its finances and mission.

“We received a questionnaire of around twenty questions,” said a staff member. “The letter was looking for a deeper understanding of our organization. There were no questions that were that surprising. I think they [the questions] were just about really drilling into why we wanted to have a tax exempt status. It made us focus on what we are working on and what kind of great good agenda, not just a partisan agenda, we are working toward.”

“The IRS is asking similar questions of organizations from all over the political spectrum.”

The staff member, who said that he has worked for multiple 501(c)3 and 501(c)4 organizations during the Clinton, Bush, and Obama administrations, said that he has perceived no difference in how non-profits applying for tax-exempt status are treated. “When the IRS asks questions, then you answer them,” said the staff member. “If you are upset with being upfront and clear about your organization, then maybe you shouldn’t be filing for a 501(c)4 status.”

A comparison of the letter from the IRS released by the Waco Tea Party and of a letter provided by the progressive Texas organization found that both are extensively detailed, asked similar questions, and were tailored to each organization. Both letters asked for copies of the organization’s board meeting minutes and for copies of each organization’s web sites. Questions also addressed specific concerns that the IRS had with each organization but, on the whole, did not appear to treat the organizations differently.

Marcus Owens, an attorney who represents non-profit organizations and has previously worked with the IRS, told the Texas Independent that the IRS is attempting to “get behind the rhetoric” of organizations that are interested in public policy.

“The IRS is asking similar questions of organizations from all over the political spectrum,” said Owens. “The real issue for the IRS when it looks at organizations that apply for 501(c)4 status is whether or not they are social welfare organizations or something else. It’s not whether or not they should be exempt or not, but which code section they should be exempt under.”

While Owens did think that some of the questions were too broad and could have been worded better, he also said that groups applying for tax exempt status have options when questioned by the IRS.

“Fundamentally the IRS has a right ask the questions,” said Owens. “However, the IRS is usually open to negotiating how much information you need to provide. What is clear is that this application process is normally not improved by public posturing. It is the task of the organization or the organization’s representatives to add to the facts and make the case to the IRS.”

Walker says that when the Waco Tea Party received the letter from the IRS, the group contacted its members, volunteers, and supporters. At no time did the group contact the IRS directly for clarification of the questions or to negotiate what information would be acceptable.

The Waco Tea Party also sought out the American Center for Law and Justice for legal advice and representation.

The ACLJ has taken up the cause of the Waco Tea Party and other tea party groups. The ACLJ describes itself as “committed to ensuring the ongoing viability of freedom and liberty in the United States and around the world.” Founded in 1990 by television evangelist Pat Robertson, the group has gained notoriety for taking up conservative causes. These have included providing a legal defense for a public bus driver who was fired for refusing to take a woman to a Planned Parenthood clinic in Texas.

“When a branch of the fed government is violating citizens’ rights, they need to be investigated and put into their constitutional box.”

The ACLJ posted a petition on its web site to “Stop the IRS from Silencing the Tea Party.” The petition claims that under the Obama Administration the IRS “appears to be conducting politically motivated investigations of tea party organizations nationwide.” The petition characterizes the investigations as “bullying tactics” that are “designed to silence these organizations.” The petition calls for the Speaker of the House and others to “provide IRS oversight.” Other Republican lawmakers and candidates have joined in supporting these claims, and some have called for congressional investigations.

Rep. Flores gets involved

Republican Rep. Bill Flores (TX-17), whose district includes Waco, penned a letter to House Committee on Oversight on Government Reform Chairman Rep. Darrell Issa stating that he is “concerned that the IRS is targeting tea party organizations around the country.” The letter requests that Issa’s committee open an investigation into the issue and hold congressional hearings. Republican senators also sent a letter to Commissioner of the IRS Douglas Shulman, requesting a response to similar concerns and demanding that the agency hold further “demands for information.”

The Waco Tea Party also taken to social media to make its case that it is being targetted by the IRS, characterizing it as a battle between the “IRS versus the tea party.” Posting multiple status updates and links on Facebook and Twitter, the group has made the claim that you are “either with us or against us and the constitution.” The group has also promoted the petition drive by the ALCJ, tweeting “defend the tea party from the IRS, sign the petition and call Congress.”

Another recent tweet reads: “The left is trying to silence Rush, and the IRS is trying to silence the tea party.”

Walker shares the desire for an investigation and hearings. “Yes there needs to be congressional hearings,” she said. “When a branch of the fed government is violating citizens’ rights, they need to be investigated and put into their constitutional box.”

Waco Tea Party IRS Letter//

IRS Letter to Progressive Group//

IA: UNI withholds details about agreement with Bank of America

Posted on: June 21st, 2010 by The American Independent No Comments

Officials at the University of Northern Iowa have refused to disclose contracts between it’s alumni association and Bank of America, a decision that stands in contrast to the state’s other public universities, the University of Iowa and Iowa State University. That denial also falls in line with with similar actions UNI took in 2007 when its relationship with the bank was under scrutiny from state authorities.

The contracts requested by The Iowa Independent detail the alumni association’s “affinity agreement” with Bank of America. The agreement has allowed the bank to market credit cards to UNI alumni in return for hundreds of thousands of dollars in royalties for the association.

A university spokeswoman said because the alumni association is independent from the state-funded university, the documents can be kept confidential.

“Because the UNI Alumni Association is under a confidentiality agreement with Bank of America, the association cannot provide you with a copy of the agreement unless it is required to do so by law or it has the consent of Bank of America,” Rebecca Schultze wrote in an e-mail last week. “Because it is a separate 501(c)4 organization, the association’s attorney has opined that it is not obligated by law to provide third parties with copies of the agreements, which means that the association is bound by the terms of the confidentiality agreement.”

The school’s grounds for denying the request muddies the distinction between what is public and what is private. On one hand, the alumni association is a separate legal entity and maintains tax status as an independent nonprofit organization. And as an independent entity, the group isn’t checked by the rules governing public institutions — specifically, in this case, open records laws.

On the other hand, however, the UNI Alumni Association and the university are so interdependent it’s hard to draw clear lines. The state-funded university supplies the alumni association some funding, office space and some salary dollars.

Differences at Iowa colleges

Alumni groups at all of Iowa’s public universities — UNI, the University of Iowa, and Iowa State University — have affinity agreements with Bank of America. However, openness about the agreements differs.

At ISU, for instance, a link to the alumni association’s contract with Bank of America is available on the group’s website. The ISU alumni association has consistently cooperated with requests for information about its credit card program.

In 2007, U of I denied the State Board of Regents request for its alumni association’s contract with Bank of America. However, the university eventually produced the documents and today, the alumni association discloses details about the program upon request.

And then there’s UNI. Just like U of I, officials there butted heads with state authorities in 2007 over whether the contract between the alumni association and Bank of America is a public record. UNI was the last of the three public universities to disclose its affinity agreement to the State Board of Regents. But officials denied a media request for the documents last week.

At ISU, university departments are listed as parties on the contracts with Bank of America. And at U of I, the contract deals with university-owned trademarks and logos. At UNI no university departments have signed on to the contract with the bank, according to Bill Calhoun, UNI vice president of marketing and advancement.

Transparency elsewhere

Federal credit card legislation signed by President Barack Obama last year targets credit card companies’ dealings with colleges and, in particular, aims to make the arrangements more transparent:

An institution of higher education shall publicly disclose any contract or other agreement made with a card issuer or creditor for the purpose of marketing a credit card.

But on campuses across the country, details about the arrangements are sometimes sparse.

“Certainly the transparency has increased now that schools are required to disclose their contacts, but some of the contracts are done through independent alumni organizations. There’s still some room for growth regarding transparency,” said Ben Protess in an interview with The Iowa Independent. Protess has examined affinity agreements across the country for The Huffington Post Investigative Fund, a nonprofit journalism outlet.

And even where organizations acknowledge their requirement to disclose the agreements, that disclosure isn’t always proactive.

“There’s also the fact that not many people know these affinity agreements exist. Sure, they’re public record, but who knows to ask for them?” Protess said. “Another problem with the lack of transparency is that schools are not posting the contracts on their websites. Unless schools publish the contracts online, many students and parents won’t know they exist.”

Protess revealed in a report earlier this month that as many as 800 colleges or alumni associations have affinity agreements with credit card companies.

What’s hidden

Some universities likely fight to keep their contracts secret in order to hide credit schemes which target students. Some colleges and alumni associations get more royalties if their students accrue debt on the university-branded cards.

But that’s not the case here. In 2008, U of I and ISU alumni associations barred marketing the cards to students, and the groups recently formalized that move by amending their contracts, ending provisions of their contracts which called for school officials to offer the bank lists of students’ names and contact information. And UNI had stopped marketing the cards to students by 2007, officials said.

That UNI made that change before many others schools suggests there aren’t questionable conditions in the undisclosed contracts. Still, the alumni association’s status as an independent organization makes it exempt from submitting to open records requests.

Read the contracts:

University of Iowa affinity agreement with Bank of America
U of I amendment ending marketing to students
Iowa State University affinity agreement with Bank of America
ISU amendment ending marketing to students

(Photo: Flickr Creative Commons/BigBeaks)