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Congressman Brad Schneider

Representing the 10th District of Illinois

Schneider Questions Treasury Inspector General on NRA Abuse of Tax-Exempt Status

May 9, 2019
Press Release

Today, Congressman Brad Schneider (D-IL), a member of the House Ways & Means Committee, questioned J. Russell George, the Treasury Inspector General for Tax Administration, on possible misuse of the National Rifle Association’s (NRA) tax-exempt status, and the capacity of the Internal Revenue Service (IRS) in the face of funding cuts to adequately investigate organizations that abuse these rules.

This follows a letter sent from Schneider to the IRS Commissioner Charles P. Rettig citing troubling misconduct by the NRA uncovered by recent reporting, including allegations of egregious self-dealing, deceptive billing practices, and preferences in contracting, and urging an investigation into the organization’s tax exempt status.

 

Link to Video of Schneider Questioning:

YouTube

For Download

 

PARTIAL TRANSCRIPT:

 

Schneider:
One area of concern for me is the cost to the American taxpayers from supposed charitable and social welfare organizations that get special tax preferences and then abuse those preferences for personal gain, or self-dealing. I am also concerned that that such egregious behaviors are not being adequately pursued by the IRS. 

 

Inspector General George, I’d like to raise a few scenarios that could represent improper behavior by a tax-exempt organization and get a yes or no answer if you think this activity is troublesome or would warrant further investigation.

 

First, let’s suppose a Board Member of a non-profit organization owns a company that sells millions of dollars in products or services back to that same non-profit organization, and at inflated prices? Do you find this troubling? Please answer yes or no.

 

George:
It’s concerning.

 

Schneider:

Suppose a senior executive and top fundraiser for a non-profit organization has a stake in a media company that the non-profit directs millions of dollars in business to. Should this activity raise any flags?

 

George:
It would raise questions.

 

Schneider:

What if the newly selected president of the Board of Directors of a non-profit organization subsequently received a contract worth more than $1 million from the non-profit’s largest vendor within days of assuming his position. Would this create a likely conflict of interest?

 

George:

It would depend on the circumstances, but the potentiality exists.

 

Schneider:

Something you would look at?

 

George:

Yes

 

Schneider:

Last scenario: let’s say the CEO of a non-profit charged hundreds of thousands of dollars of lavish travel expenses to the non-profit’s largest vendor without adequate documentation? Would that be something that the IRS should look into?

 

Thank you Inspector General. I’ll ask it again, we have laid out four scenarios if they were actual cases would they warrant further investigation for possible abuse of the non-profit’s tax-exempt status?

 

George:

Yes

 

Schneider:

Thank you, I agree. But as you might have surmised, these scenarios aren’t hypothetical. They are allegations of self-dealing within the NRA, a 501(c)(4) organization with 5 million members. It’s incredibly disturbing to see these allegations and to think that NRA executives are possibly misappropriating their donors’ contributions and abusing their non-profit status for personal gain—and the American taxpayer is subsidizing the bill.

 

This morning, I sent a letter to the IRS Commissioner, and copied you, requesting an investigation into these allegations and whether they warrant reconsideration of the NRA’s tax-exempt status. I appreciate your attention to this matter.

 

More broadly, in 2018, your office published a report on the process for investigating referrals of impermissible activity by tax exempt organizations.  Given the follow up since your report and your interactions with IRS Management, do you believe there are adequate policies and procedures currently in place to enable the IRS to examine improper conduct by tax-exempt organizations and whether the IRS has sufficient information and resources to uncover abuse?

 

George:

They instituted extensive revisions to their existing policy, and our most recent review of it show that they are following those new policies, and eventually we will follow up again to make sure mistakes aren’t being made. But as of now, they are taking the steps that they committed to us to take.

 

Schneider:

But one of the concerns in the report was that referrals of potential abuse by non-profit organizations has not been followed up on, have those been subsequently followed up on?

 

George:

Most of them I believe have been provided, there were some that weren’t, but a lot were.