Tuesday, September 29, 2009

ACORN EO Shoe Drops: Accusations Fly About Tax Exemption Issues

The controversy surrounding the Association for Community Organizations for Reform Now (ACORN) involves numerous legal issues, but none of which were unique to nonprofit organizations - until now.  First, the staff of Senator Chuck Grassley (R-Iowa), ranking member of the Senate Finance Committee, has released a critical report relating to tax exemption issues.  The report asserts that while ACORN itself appears to be a taxable entity, there are numerous tax-exempt organizations - primarily section 501(c)(3) charities - affiliated with ACORN and that funds flow among these various entities in a manner that the report characterizes as "a big shell came [sic]."  Additional information compiled by the staff is available on Senator Grassley's press release page, including letters from Senator Grassley to the IRS and to OPM requesting information about ACORN and its related entities.

Second, in response to a request from Representative Darrell Issa (R-Cal.), ranking member of the House Committee on Oversight and Government Reform, and Senator Susan Collins (R-Maine), ranking member of the Senate Committee on Homeland Security and Government Affairs, the Treasury Inspector General for Tax Administrations (TIGTAwrotestating it "is initiating a review of the IRS' oversight of tax-exempt Section 501(c)(3) organizations and Section 527 organizations and will review internal IRS referral processes with regard to nonprofit fraud investigations."  This new initiative is occurring even though less than three months ago TIGTA issued a report focusing on the Tax Exempt and Government Entities Division's Fraud Program.

ACORN's response to the number allegations against it can be found on its home page.  See also this piece by Pablo Eisenberg, Senior Fellow at Georgetown's Center for Public & Nonprofit Leadership, published in The Chronicle of Philanthropy.

LHM

http://lawprofessors.typepad.com/nonprofit/2009/09/acorn-eo-shoe-drops-accusations-fly-about-tax-exemption-related-issues.html

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