Nonprofits Question IRS Probes
The National Association for the Advancement of Colored People is locked in a standoff with the Internal Revenue Service, preferring to risk its tax exemption rather than hand over documents for an I.R.S. review that the civil rights group contends is politically motivated. While it is rare for an organization to defy the I.R.S. openly, the N.A.A.C.P. is not the only group that believes it is being made a government target for its positions on issues. Roughly a dozen nonprofit organizations have publicly contended that government agencies and Congressional offices have used reviews, audits, investigations, law enforcement actions and the threat of a loss of federal money to discourage them from activities and advocacy that in any way challenge government policies, and nonprofit leaders say more are complaining quietly. “In previous administrations, there’s been the occasional instance of what might appear to be retaliation, but when it started happening in a serial way, it began to look like a pattern to us,” said Kay Guinane, counsel for the nonprofit advocacy project of OMB Watch, a government watchdog group that has published two reports on the issue.
Government agencies, which are under increasing financial pressure themselves, say they are merely enforcing rules on use of public money and nonprofit assets. Federal law prohibits organizations from using government financing for lobbying purposes, and tax law limits the use of charitable assets in general for lobbying. “In the 1990’s and early 2000’s, some of our grantees hadn’t been reviewed, hadn’t had a site visit in some time,” said Kathy Harben, a spokeswoman for the Centers for Disease Control and Prevention. “In October 2002, the financial management office renewed its commitment to reviewing funded programs through regular site visits.”
Gauging whether liberal groups are being singled out for review more than conservative ones is almost impossible to determine because audits, investigations and threats are rarely made public. Liz Towne, director of advocacy programs for the Alliance for Justice, a group that educates charities about how to avoid running afoul of tax laws that restrict their ability to lobby, said, “When we talked to the brain trust of lawyers who represent nonprofits around the country, they were saying, ‘Well, I don’t know if we see a pattern that goes beyond the usual kinds of complaints and investigations.’ “But, she added, the group sensed a “higher level of attention to nonprofits and their activities and that people are getting more sophisticated in how to get nonprofits to back off their message.”
To the extent that the IRS is targetting groups on a particular side of the ideological spectrum while ignoring those with similar profiles on the opposite side of the spectrum, this is obviously problematic. That said, groups who lobby government, involve themselves in electioneering, and otherwise engage in the political process are clearly not entitled to claim tax exempt status. Why the NAACP (or the NRA or Christian Coalition or similar group on the Right) should enjoy the same status as the Kiwanis Club is unclear. The taxpayer shouldn’t have to subsidize lobbying groups.