IRS: IRS Reversal on Groups’ Tax-Exempt Status

IRS Reversal on Groups' Tax-Exempt Status

In April of 2003, the IRS reversed its prior decision to revoke section 501(c)(3) tax-exempt status for two groups whose activities had been subject to scrutiny in the course of a prior House Ethics Committee investigation of former House Speaker Newt Gingrich (R-GA).

In early 1997, the House Ethics Committee found that Speaker Gingrich's entanglement with certain Section 501(c)(3) tax-exempt organizations was substantially motivated by partisan, political goals, despite a longstanding prohibition on campaign intervention by such organizations. Among these organizations was the Abraham Lincoln Opportunity Foundation, which operated out of the offices of a political action committee dedicated to achieving Republican control of the House (GOPAC), had common officers and employees with that political committee, and funded television programs to train Republican activists. The House voted to reprimand Speaker Gingrich for providing inaccurate, incomplete, and unreliable information to the Ethics Committee in the course of its investigation of his involvement with a web of tax-exempt organizations and for failing to seek and follow legal advice to ensure his projects with these organizations complied with the campaign activity prohibition of Section 501(c)(3) of the Internal Revenue Code. In 1998, following the House Ethics Committee investigation and House vote, the IRS revoked the Section 501(c)(3) tax-exempt status of the Abraham Lincoln Opportunity Foundation. It also revoked the Section 501(c)(3) tax-exempt status of a private foundation associated with a supporter of Speaker Gingrich, which had contributed to the Abraham Lincoln Opportunity Foundation.

In April of 2003, however, the IRS reversed both revocations of section 501(c)(3) tax-exempt status. The supporter of Speaker Gingrich whose foundation had lost tax-exempt status had secured IRS review of the revocations through referral of the case in 2001 to a newly created "independent review office" within the IRS. According to a Roll Call article of April 28, 2003, it appears that no effort was made by the IRS independent review office to contact the special counsel who had led the House Ethics Committee's prior investigation examining the Abraham Lincoln Opportunity Fund (though it did receive evidence from the supporter of Speaker Gingrich seeking a restoration of his foundation's 501(c)(3) status). The special counsel and a number of tax law and campaign finance experts were highly critical of the IRS's decision, claiming that the Abraham Lincoln Opportunity Foundation was political and partisan in nature and expressing concern about the campaign finance implications of the tax agency's reversal.

Click here to view a copy of the letter from the IRS indicating restoration of the tax-exempt status of the private foundation associated with the supporter of Speaker Gingrich.

Click here to view a copy of a letter from the IRS indicating restoration of the tax-exempt status of the Abraham Lincoln Opportunity Foundation

Click here to view a copy of an April 28, 2003 Roll Call story on the IRS's reversal.

Click here to view a copy of a June 8, 2003 New York Times story on the IRS's reversal.

Last Updated (Tuesday, 15 June 2010 21:19)

 
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