Originally published on Forbes.com.
Given the outrage that Republicans have expressed about the “targeting” of the Tea Party by the IRS, you would think that they would be slow to advocate IRS political targeting. Apparently it is more a matter of whose ox is being gored.
When the Council on American-Islamic Relations (CAIR) called for Ben Carson to step out of the Presidential race, he countered by demanding that the IRS immediately revoke its exemption. Then this week Reince Priebus, Chair of the Republican National Committee, wrote to Commissioner Koskinen about a grave matter concerning the Clinton Health Access Initiative.
According to published reports, CHAI has acknowledged errors in the reporting of government grants in its IRS Form 990 filings for 2012 and 2013. However, yesterday, in a report in Politico, CHAI confirmed that despite publicly admitting these errors earlier this year, it had no plans to amend its filings. As you are fully aware, IRS Form 990 is certified under penalty of perjury, and in both years, foundation Chief Financial Officer Julie Feder certified the filings. …..
Given CHAI’s history of repeatedly failing to accurately report the amount of money it received from foreign governments and its refusal to amend its Form 990 filings, there is no way to tell whether there exists other undisclosed foreign government grants without the IRS conducting a full audit of CHAI’s financial records. I therefore urge you to conduct such an audit and compel CHAI to make the necessary amendments to its Form 990s from 2010 to 2013.
What Is This All About?
In the letter, Priebus indicates that the RNC has filed Form 13909. That is how you rat out a not for profit. Unless you want to be anonymous, the IRS will send you an acknowledgment that they received the form, but because of privacy rules, that will be the last you will hear from them on the matter. They will not tell you whether or not an audit was triggered as a result of your complaint.
What happens with the form is that an experienced exempt organization revenue agent performs a technical analysis to determine whether further action is required. The possible outcomes are a referral to have the organization audited, a referral to consider the matter at a later date, kicking the determination up to a senior committee or a determination that the information does not require further action. As noted, the complainer will not be told what happened due to privacy rules.
If you look at Form 13909, you will note that there are nine categories of wrong doing that might be reported such as directors using assets for personal gain, the organization involved in political activities and deceptive or improper fundraising practices. There is also a box marked Other(describe), which is probably where the particular wickedness perpetrated by CHAI would have to go.
A Transposition Error?
Accordingly to the letter this is about CHAI not accurately reporting the amount of money that it gets from foreign governments. I spent a lot of time combing through CHAI’s Form 990 for one of the years in question (2012) to get a sense of what they were talking about and came up empty. So I checked out the post by Josh Gerstein on Politico titled Clinton Foundation spinoff won’t refile tax returns which related back to a statement by Maura Daley
“We regret to admit that there was a typographical error made when completing the revenue breakout section of the Form 990,” Daley wrote. “The amounts in the 2012 and 2013 Forms 990 were inadvertently transposed: the Non-Government sourced amounts was entered on the Government line, and the Government sourced amounts was entered on the ‘all other’ line. We are working diligently to make the necessary amendments to the returns.”
The HIV organization’s 2012 return and a revision filed last year reported receipt of about $45.4 million in government grants.
That I could figure out. If you go to Page 9 of the Form 990 you will see that Line 1 of the statement of revenue ($88,448,655) is broken down into six categories of which three are relevant to CHAI. 1(d) is Related organizations – $4,000,000, 1(e) is Government grants – $45,408,042 and 1(f) is All other contributions, gifts, grants, etc – $39,040,613. Apparently the amount on Line 1(e) should be on 1(f) and visa versa.
I leave it to the reader to determine how grave a matter this is, but I feel an obligation to be fair to the poor fellow who signed as paid preparer. I don’t know him personally but I recognize his firm’s name. You have to go look if you want to find out. Here is my confession. That error probably could have gotten by me too. The error would likely have been made by someone at a very low level, conceivably someone in India, although I’m not sure how much 990 outsourcing is going on. Ironically, if someone had entered $39,040,513 instead of $39,040,613, that would have been caught since it would make totals not agree, By transposing two numbers within a subtotal though only someone with a sharp eye would catch it.
Apparently CHAI has now announced that it will amend, but that does not satisfy Priebus, who still wants the IRS to launch a major investigation.
A Metaphor
It has become an article of faith in some circles that the delays and intrusive inquiries involving Tea Party exemption application were politically motivated. The main evidence of that motivation is Democratic lawmakers complaining about dark money organizations and Lois Lerner and President Obama bemoaning the Citizens United decision. Everybody agrees that the IRS shouldn’t oughta have targeted the Tea Party, whether it did or not. So why should the IRS now target the Clintons? And launching an audit in response to a clerical error would clearly be political targeting.
So here is my metaphor. Imagine that the country is a family and that our political class represents the parents and government agencies the elder siblings. (Remember it is a metaphor. It does not have to be perfect). The Republicans are Dad. Dad pretty much figures the kids know how to take care of themselves. He worries about spending too much money and is very concerned about home security. He wants the daughters to stay chaste before marriage. The Democrats are Mom. Mom worries about security too, but isn’t so sure about all the gadgets Dad wants to buy. She worries a lot about the kids having a good diet and getting their checkups and the like. She is a little more realistic about the girls being girls and wants to make sure they have good birth control. I think you could add to that.
Neither Mom nor Dad is really all that responsible when it comes to money. For the most part the elder sibling spend money on the projects that Mom and Dad want. Some of them like the Bureau of Land Management will bring in money here and there, but it is the IRS that brings in the bulk of the money. And, as it turns out, the IRS is probably the most abused of the elder siblings. Dad has been punishing the IRS , for seeming to favor Mom, but won’t be satisfied with neutrality.
In a healthy family Mom and Dad work out their differences and compromise and then present a united front. They actively avoid involving the kids in their disputes. Of course this is only a metaphor, but when it comes to the “elder siblings” it holds. It is poisonous to politicize any government agency, but it is not just the agency that has to resist the politicization, but also the politicians.
This particular lapse on the part of CHAI is clearly trivial and pushing the IRS to make a big deal of it is irresponsible.
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