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Congressman Brad Schneider

Representing the 10th District of Illinois

Schneider Urges IRS Investigation into NRA Tax-Exempt Status

May 9, 2019
Press Release
Recent media reports detail allegations of self-dealing, deceptive billing, and other abuses of tax-exempt status by NRA

Today, Congressman Brad Schneider (D-IL), a member of the House Ways & Means Committee, urged the Internal Revenue Service (IRS) to investigate the tax-exempt status of the National Rifle Association (NRA) following reports of serious wrongdoing.

 

In a letter to IRS Commissioner Charles P. Rettig, Schneider cites troubling misconduct uncovered by recent reporting, including allegations of egregious self-dealing, deceptive billing practices, and preferences in contracting.

 

“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,” writes Schneider in the letter.

 

Schneider also raises concerns over the IRS’s ability to enforce our current tax laws and guard against abuse. In 2018, the Treasury Inspector General for Tax Administration issued a report that found the processing of referrals alleging improper political activity by tax-exempt organizations were not sufficiently pursued.

 

“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,” concludes the letter.

 

The full letter is available online. The text is included below:

 

May 9, 2019

 

The Honorable Charles P. Rettig

Commissioner

Internal Revenue Service

1111 Constitution Avenue, NW

Washington, D.C. 20224

 

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

 

 

cc: The Honorable J. Russell George

Treasury Inspector General for Tax Administration