by Rep. Brad Schneider (D-IL) is a junior member of the House Ways and Means Committee. He ranks 20th in seniority among 25 Democrats in the committee majority. The House Ways and Means Committee helps to oversee the Internal Revenue Service. He is using his membership on the committee to push the IRS into investigating the NRA’s 501(c)(4) non-profit status. This comes a couple of weeks after Everytown filed a complaint with the IRS regarding that status. While still a junior member of the committee, his request obviously carries more weight than that of Everytown.
Today he sent a letter to Commissioner Charles Rettig of the IRS asking him to review the NRA’s non-profit status in light of the recent allegations of “self-dealing, deceptive billing, and other abuses of tax exempt status”. The letter is below and a PDF can be seen here.
Dear Commissioner Rettig:
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 strongly encourage you to investigate recent reports of possible wrongdoing by the National Rifle Association (NRA), which enjoys status as a tax-exempt organization under Section 501(c)(4) of the Internal Revenue Code (IRC). The allegations against the NRA reported in The New Yorker on April 17, 2019, including instances of egregious self-dealing, deceptive billing practices, and preferences in contracting are most troubling.
Our tax system is based on voluntary compliance. It is therefore essential that individuals and entities alike have full confidence they will be treated fairly, and the rules and regulations under the law will be applied equally. The American people trust the government will actively ensure all organizations are not engaging in misconduct, and specific to tax-exempt organizations, refraining from impermissible political activity. All entities and individuals who skirt the rules for personal gain should be pursued and penalized.
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 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 organizations 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.
In light of this information, I respectfully ask that you review whether the recent allegations against the NRA warrant reconsideration of the organization’s tax-exempt status. If you determine there is not sufficient information or resources to undertake this review, and other routine examinations of tax-exempt social welfare organizations, I ask that you provide recommendations to Congress on how we can best ensure the IRS is able to appropriately enforce our nation’s tax laws.
Non-profit organizations have always played a critical role in our society, improving the lives of millions of Americans. When trust in our tax laws is eroded, Congress and the Administration have a joint responsibility to investigate and act. The American people deserve to know that tax-exempt organizations are not abusing their preferential tax treatment and are operating according to their intended social welfare purpose, which is to benefit society.
I thank you in advance for your consideration.
Sincerely,
Bradley S. Schneider
MEMBER OF CONGRESS
Schneider references a 2018 report from the Treasury Inspector General for Tax Administration regarding referrals alleging improper political activity by tax-exempt organizations. Mind you that at 501(c)(4) is allowed to engage in some political activity. Moreover, it was the weaponized IRS during the Obama Administration that was going after Tea Party and other other conservative organizations. Remember Lois Lerner? I wonder how many of the referrals that were not pursued were related to that time period. Hmm.
Inspector General J. Russell George was testifying before the House Ways and Means Committee today and Schneider used his time to grill him regarding the NRA and its 501(c)(4) status. He pitched his argument in terms of funding cuts to the IRS and whether that would impair their ability to go after organization like the NRA if it was found to engage in illegal and improper activity. Of course as the transcript makes clear, the leading questions all dealt with the NRA.
You can see the questioning in the YouTube video below helpfully provided by Rep. Schneider’s office.
I often feel sorry for any official who has to testify before Congress. The questioning is not really a give and take question and answer session so much as it is the politician rambling on in a political statement with an occasional question interspersed.
That said, the pressure on the NRA is being increased. As I said yesterday, the NRA can either get its house in order itself or it will be done for them. If I seem to be harping on getting their house in order, it is because I want to see a strong, effective NRA and not some neutered shadow of its former self.