Wednesday, April 25, 2012
In its continuing coverage of troubles U.S. nonprofit organizations are having with the Egyptian government (previously blogged about here and here), the NY Times reports that the Egyptian Insurance and Social Affairs Ministry has rejected registration applications from eight U.S. nonprofits. The grounds for the rejections are reported to be that the groups' activities violated Egyptian sovereignty. The groups ranged from the well known Carter Center to a Mormon missionary group to an organization for Coptic Christian orphans. Reuters also reports that this week Interpol denied a request from Egypt to issue worldwide arrest warrants for 15 employees of U.S. non-governmental organizations, including 12 who are U.S. citizens. The reported grounds for the denial was that the request was not in line with Interpol's rules that forbid political, military, religious or racial interventions.
LHM & KWS
The Charlotte Observer is running a five-part series on nonprofit hospitals in the Charlotte, North Carolina area. So far the series has focused on their apparently high profits, sparse charity care, aggressive bill collection practices, and lobbying clout. It provides a case study of a question that has been plaguing nonprofit hospitals across the country: are they truly different from their for-profit counterparts?
Hat Tip: EO Tax Journal
Tuesday, April 24, 2012
Common Cause released yesterday its lengthy letter to the IRS asserting that the American Legislative Exchange Council (ALEC) has underreported its lobbying expenditures and does not qualify for section 501(c)(3) status. The online version of the letter in turn provides links to thousands of pages of exhibits that Common Cause says support its assertions. Common Cause filed the letter under the Tax Whistleblower Act, 26 U.S.C. § 7623(b), although there is no indication that Common Cause is seeking any financial reward if the IRS in fact determines that ALEC owes unpaid taxes.
Statement by Alan P. Dye on Latest Harassment Tactic Against ALEC by Liberal Front Groups
WASHINGTON – Alan P. Dye, legal counsel to the American Legislative Exchange Council (ALEC), issued the following statement in response to the frivolous IRS complaint by Common Cause against ALEC:
“The attacks on the American Legislative Exchange Council are based on patently false claims being made by liberal front groups that differ with ALEC on philosophical terms.
“The current complaint mostly ignores applicable law and distorts what it does not ignore. After three decades of counseling clients on nonprofit and federal disclosure requirements, it’s clear to me that this is a tired campaign to abuse the legal system, distort the facts and tarnish the reputation of ideological foes.
“Without question, Common Cause is a partisan front group masquerading as an ethics watchdog.”
USA Today reports that while wealthy individuals and corporations dominated giving to SuperPACs so far this election cycle, several nonprofit organizations also contributed millions of dollars. The largest was the National Education Association, which gave over $3.5 million, making it the fourth largest source of SuperPAC funds. The AFL-CIO is also near the top of the list, with over $2 million in contributions, as is the SEIU with slightly over $1.8 million given.
More significant, however, is the amount of money flowing to nonprofit organizations to be spent directly on election-related communications. The most prominent of these organizations is Crossroads GPS, a section 501(c)(4) organization associated with Karl Rove that has received close to $100 million this election cycle according to Politico. Politico has also posted publicly released copies of the fiscal year 2010 Form 990 and short year 2011 Form 990 for Crossroads GPS. The redacted Schedule Bs to these returns show the sizes of the donations by the largest contributors - including one donor who gave $10.1 million - without revealing their identities.
Monday, April 23, 2012
Questions continue regarding whether the American Legislative Exchange Council, or ALEC, qualifies for its claimed section 501(c)(3) status given its apparently extensive lobbying. Common Cause has long complained that ALEC underreports its lobbying activities, including filing a complaint making this allegation with the IRS last year. Its concerns have recently attractive significant media attention, including a New York Times article this weekend and NPR coverage last week and today. The recent attention began in the wake of the Trayvon Martin shooting because of ALEC's support of "stand your ground" laws, which led a number of corporate supporters of ALEC to end their funding (see, e.g., CBS News story), but has now grown beyond that limited issue . Common Cause recently filed a second complaint with the IRS, the details of which it plans to release later today.
ALEC states it "works to advance the fundamental principles of free-market enterprise, limited government, and federalism at the state level through a nonpartisan public-private partnership of America’s state legislators, members of the private sector and the general public." It has both state legislator members and private members, including prominent business corporations. One significant advantage of ALEC being classified as a section 501(c)(3) organizations is that the private members could deduct contributions to the group as charitable contributions, while contributions to other types of 501(c) organizations are generally not deductible to the extent they are used for lobbying (under Internal Revenue Code sections 162(e) and 6033(e)).
IRS Accused of Improperly Releasing 501(c)(3) Donor Information Tying Romney to Same-Sex Marriage Opponent
The National Organization for Marriage, a section 501(c)(3) organization supporting traditional marriage, released documents alleging showing that an unredacted Schedule B to its 2008 Form 990 that was obtained by the Human Rights Campaign and given to the Huffington Post must have come from the copy of the form filed with the IRS. In a letter to the IRS, NOM asserts that it was able to remove a layer of redacting on the Schedule to reveal IRS added information, including an "OFFICIAL USE ONLY" stamp. The information revealed was particularly explosive because it showed a $10,000 donation from a Mitt Romney connected political action committee, Free and Strong America PAC, as well as the names of 49 other significant donors to NOM.
If true, this is a very serious situation as it suggests someone inside the IRS has decided to leak confidential taxpayer information, almost certainly for political reasons. Yet there has been surprisingly little if any news coverage of this story, other than in the tax trade press (Tax Notes Today (subscription required)) and a blog entry at the Weekly Standard. While media bias with respect to coverage of the same-sex marriage debate could be the explanation, another possibility is that despite much rhetoric about the importance of taxpayer privacy, in the age of Facebook and Twitter people view such privacy as much less important - particularly when it comes to donations to charities - than is generally assumed.