POLITICS

NRA Could Lose Tax-Exempt Status Over Shady Business Practices, Report Says

"The litany of red flags is just extraordinary,” a former IRS official told The Trace.

The National Rifle Association appears to have shot itself in the foot. 

A massive new report by The Trace, in conjunction with The New Yorker, alleges that the gun lobbying group has willfully obscured where its money goes, permitted multiple conflicts of interest and engaged in dubious payout arrangements, all while crying out to its members for more donations.

Reporter Mike Spies viewed internal documents and state filings for his story, published Wednesday. His investigation found that hundreds of millions of dollars were siphoned off to top NRA executives and vendors, and that public relations firm Ackerman McQueen, which has worked with the gun group since the 1970s, is essentially running the ship. Tax filings for 2017 reveal that the NRA paid Ackerman McQueen more than $40 million that year.

From Spies’ report:

The NRA and Ackerman McQueen have become so intertwined that it is difficult to tell where one ends and the other begins. Top officials and staff move freely between the two organizations; Oliver North, the former Iran-Contra operative, who now serves as the NRA’s president, is paid roughly $1 million a year through Ackerman, according to two NRA sources. But this relationship, which in many ways has built the contemporary NRA, seems also to be largely responsible for the NRA’s dire financial state. According to interviews and to documents that I obtained — federal tax forms, charity records, contracts, corporate filings, and internal communications — a small group of NRA executives, contractors, and vendors has extracted hundreds of millions of dollars from the nonprofit’s budget, through gratuitous payments, sweetheart deals, and opaque financial arrangements. Memos created by a senior NRA employee describe a workplace distinguished by secrecy, self-dealing, and greed, whose leaders have encouraged disastrous business ventures and questionable partnerships, and have marginalized those who object. “Management has subordinated its judgment to the vendors,” the documents allege. “Trust in the top has eroded.”

Marc Owens, former head of the Internal Revenue Service division that oversees tax-exempt enterprises, told The Trace that the “litany of red flags is just extraordinary.”

“The materials reflect one of the broadest arrays of likely transgressions that I’ve ever seen,” Owens said. “There is a tremendous range of what appears to be the misuse of assets for the benefit of certain vendors and people in control. Those facts, if confirmed, could lead to the revocation of the NRA’s tax-exempt status.”

And without its tax-exempt status, the Trace report suggested, the NRA would “likely not survive.”

On Thursday, Shannon Watts of Moms Demand Action announced that the gun safety group Everytown had filed a complaint with the Internal Revenue Service over the NRA’s tax-exempt status. (Everytown is the parent organization of Moms Demand Action.)

Everytown “is calling on the IRS, Congress, and state charities regulators to investigate the [NRA], its officers and board members to determine if a pattern of financial mismanagement and self-dealing is so pervasive as to jeopardize their tax-exempt charity status,” Watts said in a tweet thread.

This latest hit can be added to a long list of problems for the NRA. In 2017, the group reported a loss of $55 million in income as membership plummeted. More recently, a HuffPost investigation found that an NRA official was in contact with a prominent Sandy Hook conspiracy theorist in an attempt to cast doubt on the facts of the Parkland, Florida, school shooting that left 17 people dead. The NRA declined to say whether it fired that official.

Read The Trace and The New Yorker’s full investigation here.

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