Congressman's Push for Probe of NRA Finances Could Put Gun-Rights Group's Nonprofit Status at Risk
The Internal Revenue Service should investigate the National Rifle Association's non-profit status to determine whether it ran afoul of the tax code, Congressman Brad Schneider said in a report that highlights allegations of financial misconduct at the gun-rights group.
The document, released Thursday, forms a renewed call for investigating the NRA and recounts reporting over the past year that has brought to light lavish spending and insider deals. These sorts of transactions are subject to heightened scrutiny when occurring under the auspices of a non-profit organization, which the NRA is.
The NRA is being investigated by the attorneys general of New York and the District of Columbia for potential violations of the tax code. Schneider is also pressing the IRS to look into the gun-rights group's tax returns.
Schneider is a Democrat who sits on the House Ways and Means Committee, which has oversight of the non-profit sector. However, the report and accompanying investigation was undertaken by his individual office.
The allegations could threaten to undermine the NRA's tax-exempt status, which is essential to the group's ability to raise funds.
Schneider's report documented what appears to be a discrepancy between the NRA's disclosures to the IRS and information about the NRA retained by Congress.
In 2011, for example, the NRA reported spending no money on outside lobbyists. In disclosures to Congress, however, firms operating on the NRA's behalf reported spending hundreds of thousands of dollars on lobbying activities that year, including on a measure that would exclude the gray wolf from the Endangered Species Act.
The report alleges that the NRA "filed incorrect, and possibly fraudulent," returns to the IRS, noting that 2011 "was not the only year" inconsistencies were found.
"The NRA and its leadership are abusing the American taxpayer and enriching themselves to the detriment of their dues-paying members," Schneider told Newsweek.
While not common, multiple tax experts explained to Newsweek, discrepancies between tax filings and lobbying disclosures can potentially be explained by different reporting requirements. The IRS defines lobbying as a direct attempt to "influence" legislation. Congress adopts a more expansive definition, encompassing lobbying activities that include "research" and "planning" in support of influence operations.
It is possible that reimbursed expenses would not have to be reported on the line in the NRA's tax returns that identifies payments to lobbyists. The NRA did not return Newsweek's request for comment about the disparate disclosures.
The report follows a year of public revelations about the NRA's spending habits that have led to questions about its viability as a non-profit. Tax law strictly regulates how non-profit groups can spend donor money, and some arrangements by the NRA have aroused the suspicion of tax experts.
For example, the report focuses on the NRA's attempted purchase of a $6 million mansion in the Dallas area for the private use of its CEO, Wayne LaPierre. While the transaction, reported by the Washington Post, ultimately fell through, Schneider highlighted the event as part of a record of "wrongdoing and abuse of the tax code," according to his office.
The NRA has publicly denied wrongdoing and described the scuttled venture as a potential investment. The tax code provides that the use of a non-profit's resources for the private benefit of insiders could lead to a revocation of its tax-exempt status.
"The ball is really in the court of the IRS," Schneider said. "I've met with them. It is clear on the surface that the NRA is abusing its rules. Once the IRS does its work, that will become clear to them as well."
Schneider is also lambasting the NRA for what the report alleges are attempts to stymie compliance with his office's oversight. Ackerman McQueen, the NRA's now-estranged public relations firm, received a request for documents from Schneider in August 2019. Ackerman told Schneider in response that it could not disclose files from its NRA account without the group's prior consent, pursuant to a confidentiality provision in the pair's operating contract.
Should Congressman Richard Neal, chairman of the Ways and Means Committee, decide to take up Schneider's work, the body could issue subpoenas for documents without having to count on voluntary compliance. This could move Schneider's investigation past several roadblocks he says his office has encountered in trying to obtain documents.
New York Attorney General Letitia James is locked in a similar fight with Ackerman. Her office has issued subpoenas for documents to the firm as part of an investigation into the tax-exempt status of the NRA, which has invoked the same confidentiality provision in an attempt to quash James' order.
Schneider has repeatedly urged the IRS to probe the NRA's dealings with insiders. However, the agency would not be able to publicly confirm whether it was conducting such an investigation.