NAACP retains tax exemption despite Bond's speech, IRS says

September 01, 2006|By Kelly Brewington | Kelly Brewington,Sun reporter

The Internal Revenue Service has ruled that NAACP Chairman Julian Bond did not jeopardize the civil rights group's tax- exempt status when he criticized President Bush during a speech in 2004.

In a letter dated Aug. 9, the IRS told the National Association for the Advancement of Colored People that it "continues to qualify" as a tax-exempt organization, which means its donors can make tax- deductible contributions.

The agency said it had reviewed a videotape of Bond's speech at the NAACP's annual convention two years ago and determined that it did not violate rules prohibiting political activity by tax-exempt groups. In the speech, Bond harshly criticized Bush's domestic agenda and the war in Iraq.

"This video footage allowed the Service to gain information regarding the context in which Mr. Bond's speech was made," the IRS' letter says. "That additional information, when added to the information that the Service had previously been able to gather, indicated that political intervention did not occur."

Leaders of the Baltimore-based NAACP held a news conference in Washington yesterday to unveil the letter and to criticize the IRS for beginning the investigation.

In the letter, the IRS says that it began looking into the NAACP after receiving "information from the general public alleging that Bond opposed Bush's re-election in the speech."

`Politically motivated'

"We believed then as we do now that it was politically motivated, nothing more than a blatant attempt to intimidate the strong voice that has been speaking truth to power in America since 1909," Bond said of the IRS inquiry after distributing copies of the letter to reporters.

The IRS began the inquiry in October 2004, a month before the presidential election and three months after Bond delivered a blistering critique of Bush's policies at the NAACP's annual convention.

IRS officials declined to discuss the letter yesterday.

The NAACP leadership has characterized the investigation as a political smear campaign. In May, the organization released hundreds of documents turned over to the group by the IRS, including letters Republican members of Congress sent to the IRS on behalf of their constituents.

Ehrlich letter

Among them was a 2000 letter written by Gov. Robert L. Ehrlich Jr.'s chief campaign fundraiser, Richard E. Hug, questioning whether the civil rights organization had inappropriately sought to influence the 2000 election.

Two months later, Ehrlich - then a congressman representing Baltimore County - wrote to the agency urging a response to Hug's complaint and directing that the answer be sent to a member of Ehrlich's staff. Hug declined to comment yesterday.

Ehrlich has defended his actions, characterizing his letter as a routine follow-up to a constituent's request.

Through a spokesman, the governor declined to discuss the IRS inquiry yesterday but mentioned the administration's efforts to persuade the NAACP to keep its headquarters in Maryland. The NAACP leadership has expressed its intention to move its offices in Northwest Baltimore to Washington.

"The governor did not have a position on this previously and does not have one regarding today's announcement," said Henry Fawell, an Ehrlich spokesman. "The governor is busy working to keep the NAACP headquarters in Maryland, where it belongs."

News that the IRS has dropped its investigation of the NAACP is an encouraging sign for other nonprofits, said Kay Guinane of OMB Watch, a nonprofit watchdog organization in Washington.

"I think what this means is that the IRS has recognized that nonprofits have a right to criticize their public officials for their actions and their policies, and that is not the same thing as campaigning in an election," she said.

Guinane said the inquiry into the NAACP was conducted amid increased enforcement at the IRS corresponding with the 2004 election cycle.

In April 2004, the IRS sent letters reminding charities that they were forbidden to engage in political activity, a practice of the agency before every general election since 1992. In addition, the IRS began a program that summer that scrutinized more than 100 nonprofits concerning possible campaign activity.

Guinane said the letters rattled nonprofits.

"The law that prohibits partisan activity by charities and religious organizations is extremely vague, so it's difficult to know what activities are going to be permissible and what isn't," she said.

That's where politics comes in, said Pete Sepp, a spokesman for the National Taxpayers Union, a fiscally conservative taxpayer watchdog group.

"Unfortunately, the IRS' tax history has always been fodder for political critics on both sides of the spectrum," he said.

Recent critics blame the Bush administration, but Sepp noted that President Bill Clinton was also criticized when the IRS began investigating the conservative-leaning group Judicial Watch.

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