01 Feb 2005 NAACP to IRS: Drop Dead

This story about the NAACP refusing to comply with an IRS request for documents — a typical IRS action in an audit of this type — amazes me. Does the NAACP really think it can retain its tax-exempt status while refusing to comply with an audit — or are the documents the IRS wants so damning, the group has little choice but to try a hail-Mary strategy?

As the AP reports it:

The NAACP, the nation’s oldest civil rights organization, is refusing to cooperate with an IRS investigation into whether its chairman made an improper political speech, charging that the timing of the probe was itself politically motivated.

The National Association for the Advancement of Colored People said in October that the group’s tax-exempt status was under review after its chairman, Julian Bond, gave a speech that criticized President Bush.

In a letter to the IRS on Thursday, NAACP attorneys said the group will not hand over documents requested in the probe and argued that the IRS followed improper procedure by launching its exam before the group filed its 2004 tax return…

…The IRS could request that the Justice Department ask a federal court to enforce the summons and hand over the requested documents.

Under tax law, charities are not allowed to endorse candidates or support their election or defeat. Without taking a position on whether the NAACP did this, I can say (speaking as the CEO of an organization that operates under these rules) that there is nothing you can say on your tax return that makes it OK to engage in otherwise prohibited political activity.

Perhaps the NAACP thinks it can intimidate the IRS into backing down. I am skeptical that it can.

This matter makes the resignation of Kweisi Mfume as the NAACP’s president, which became effective just a few weeks ago, all the more interesting in retrospect. Perhaps the resignation is unrelated, but it is worth noting that Mfume resigned rather unexpectedly before the audit began, but after the IRS’s intention to conduct an audit became known to the NAACP. Perhaps Mfume perceived the audit would prove to be a painful experience for the group — and preferred not to be associated with the results?