IRS Investigates Chamber of Commerce for Tax Fraud

The Internal Revenue Service is investigating whether or not, "the group mixed funds for charitable and noncharitable political purposes in violation of tax codes."

It's pretty clear that most of the 501(c)3s that are attached to lobbying groups have nothing to do with what should be educational purposes:

Cyrus Mehri, a Washington lawyer who brought the I.R.S. complaint on behalf of U.S. Chamber Watch, said in an interview that the chamber’s current political activities were, in effect, being underwritten with money intended for charitable work.

The complaint focuses on loans and grants totaling about $18 million that were made beginning in 2003 to a nonprofit affiliate, the National Chamber Foundation, by the Starr Foundation, a charity started by the founder of A.I.G. and now led by Maurice R. Greenberg, the insurer’s former chairman.

Lawyers for Chamber Watch said their research, based largely on public tax filings, found that none of the principal on some $12 million in loans had been paid back and that the money appeared to have been given to the chamber’s foundation for unrestricted use.

This actually strikes close to home for me, as I actually incorporated a 501(c)3 tax exempt organization, Arisia, and while I don't regret doing so, it got the organization a lower postal rate in its early, pre everyone-has-email, days, which helped a lot.

That being said, it's a group that basically holds a science fiction convention every year, and the fact that it was legal to register as a tax exempt educational organization, as opposed to a non-profit membership organization, a 501(c)7 where contributions are not tax deductible, still bothers me.

There is a lot of abuse in the tax exempt organization regulations, whether it is science fiction conventions generally, the Chamber of Commerce's faux charity, or the various think tanks out there, and it really needs to be fixed.