Monday, January 2, 2012

Congressional Focus on AARP's Tax-Exempt Status Continues

As previously blogged, Chairman Charles Boustany (R-LA) of the House Subcommittee on Oversight asked Internal Revenue Service Commissioner Douglas Shulman to provide extensive information regarding IRS oversight of tax-exempt organizations.  Boustany announced last week that the House Oversight Committee will be focusing on the nonprofit sector's "modes of operation."  The Chairman's latest letter to the IRS, dated December 21, addresses AARP's Section 501(c)(4) tax-exempt status.  In particular, Boustany is concerned about AARP's relationship with HearUSA, Inc., a provider of hearing enhancement products, which raises additional questions about the nonprofit's product endorsements and royalty revenue.  Specifically, the Chairman questioned whether fees and royalties that AARP receives from other business contracts constitute unrelated business income, subject to the unrelated business income tax.  In a previous letter to the IRS Commissioner, Boustany stated that “AARP is not the only tax-exempt organization that more closely resembles a for-profit enterprise, rather than an organization formed for social welfare or public charity."  Boustany has stated that he is not targeting AARP, but rather is examining the entire nonprofit sector.


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