IRS audit of NAACP was asked

Documents from '00-'01 mention fundraiser, then-Rep. Ehrlich, Steffen


Gov. Robert L. Ehrlich Jr.'s chief fundraiser asked the Internal Revenue Service to investigate the NAACP's tax-exempt status shortly after the 2000 presidential campaign, questioning whether the civil rights organization had inappropriately sought to influence the election.

Two months later, Ehrlich - then a Baltimore County congressman - wrote to the agency urging a response to Richard E. Hug's complaint and directing that the answer also be sent to his "special projects coordinator," Joseph F. Steffen Jr.

Attorneys for the NAACP said the letters were among 523 pages of documents the IRS accumulated to begin its October 2004 inquiry into the Baltimore-based civil rights organization's tax-exempt status.

Leaders at the National Association for the Advancement of Colored People, who have called the IRS audit a political smear campaign to silence the group, released the documents yesterday, saying they represent only a fraction of the information the IRS has turned over to the NAACP in response to the group's request that the agency reveal the complaints that initiated the audit.

The NAACP received the documents in March 2005 after making several requests under the Freedom of Information Act, and an attorney with the organization said he hopes that making these documents public will prompt the federal agency to release other documents in its files.

Along with speeches, newspaper articles and NAACP news releases, the hundreds of pages include letters from members of Congress sent on behalf of their constituents to the IRS. The constituents, including Hug, had questioned whether the NAACP's activities had crossed into political campaigning - prohibited under the group's tax-exempt status. If the IRS were to agree, donors to the group would lose their ability to claim tax deductions.

The other lawmakers included: Sen. Lamar Alexander of Tennessee, Sen. Susan M. Collins of Maine, Sen. Strom Thurmond of South Carolina, Rep. Jo Ann Davis of Virginia, Rep. Larry Combest of Texas and Rep. Joe Scarborough of Florida, now an MSNBC personality. Like Ehrlich, all are Republicans.

Hug said yesterday that his Dec. 14, 2000, letter to IRS Commissioner Charles O. Rossotti was prompted by a television ad sponsored by the NAACP's National Voter Fund. In the campaign ad, the daughter of James Byrd, a black man dragged to death by three white men in a pickup truck in Texas, blames then-Texas Gov. George W. Bush for refusing her pleas for hate-crime legislation.

Hug, who was then the finance chairman in Maryland for Bush's 2000 presidential campaign, said the ads were an attack on Bush from a group that is forbidden to engage in political campaigns.

"I was acting as a citizen, and I think that everyone else ought to be concerned if they have nonprofit status and they are using political ads," he said in a telephone interview yesterday. "I don't have any argument with the NAACP, I have a problem with any nonprofit that spends taxpayer money on political advertisements."

In the letter, Hug began: "Dear Charlie," reminding Rossotti that they were both members of the Young Presidents Organization, a group of global business leaders.

"Our paths have diverged since then, but both of us seem to be doing well," he wrote.

Hug goes on to say that he is concerned about the NAACP's political activity. "This organization has become increasingly political in recent years ... and I would suspect much of its contributed funds are being used for political purposes."

Hug and Steffen have close ties to Ehrlich that have been scrutinized over recent months. Hug - who helped Ehrlich raise more than $10 million in the 2002 gubernatorial campaign - was appointed by the governor to the University System of Maryland Board of Regents. He announced his resignation from the board last week so he can help raise money again, complying with a new law banning political activities by board members.

Steffen, a longtime gubernatorial aide dubbed the "Prince of Darkness" by Ehrlich, attracted attention in early 2005 after acknowledging spreading rumors about Baltimore Mayor Martin O'Malley on the Internet. Since then, the governor and his staff have distanced themselves from Steffen, but lawmakers are investigating his role in state employees allegedly being terminated for political affiliation.

The Ehrlich letter released yesterday by the NAACP suggests Steffen played a significant role in the former congressman's office.

Ehrlich's three-paragraph letter, dated Feb. 14, 2001, asked Rossotti if he received Hug's letter and enclosed a copy.

"I would appreciate it if you would provide us with a status update on this matter as soon as possible," Ehrlich wrote.

Henry Fawell, a spokesman for the governor, said the letter was simply a five-sentence inquiry on behalf of a constituent.

"The governor didn't express an opinion one way of the other," Fawell said. "He simply asked for a response to a constituent. That's what members of Congress do."

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