IRS Targeting Veterans Groups; House Committee Demands Answers

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August 29, 2013; Navy Times


Local affiliates of the American Legion and other veterans groups have reported that the IRS sent them inquiry letters about the composition of their membership and their activities. The inquiry letters are apparently based on standards printed in a 2011 IRS training manual that specifies 75 percent of members must be current or former veterans. Local groups are being asked to provide proof of members’ military service as well as copies of governing documents and other information. Failure to comply may result in a $1,000-per-day fine. A $12,000 fine was recently levied on the American Legion post in Round Rock, Texas, for failure to comply with an inquiry letter within the specified deadline.

The chairman of the House Veterans Affairs Committee, Rep. Jeff Miller (R-FL), sent a letter to acting IRS Commissioner Danny Werfel asking for an explanation of the inquiry letter initiative, including questioning how the membership requirements outlined in the IRS training manual were communicated to local veterans groups. A similar letter has been sent by Sen. Jerry Moran (R-KS).

Privacy concerns were raised by the groups, but not only because they were being required to provide membership lists. The standard for documenting military service is the Form DD-214, the “separation papers” each veteran receives. Those forms include Social Security numbers and other personal information. While many local American Legion posts keep DD-214s on file, they felt uncomfortable sending copies in response to the IRS inquiry letters until Social Security numbers were redacted. While it may be reasonable that the IRS wishes to assure that nonprofit status is conferred only on legitimate veterans’ groups, the requirement that a nonprofit disclose its membership roster is troubling on constitutional grounds. Not only do all nonprofits have some privacy rights, even in an era of accountability and transparency, but their members have the same right of association without fear of government interference as all citizens do.

Another complicating factor in complying with the IRS inquiry letters is that not all veterans have copies of their DD-214. Many veterans, including veterans of World War II, the Korean Conflict, and Vietnam, were accepted for membership by veterans groups long before the IRS membership documentation requirement. The burden being placed on the membership organizations may also be a burden on the members and, perhaps, the military itself, should it have to respond to a surge in requests for decades-old DD-214s.

Especially for an IRS Exempt Organizations (EO) Division already under multiple investigations for its handling of applications for tax exemption, the questions about its handling of local veterans groups come at a difficult time and will further stress the agency’s already strained managerial resources. With the reverence in which military veterans are held, scrutiny on the IRS’s actions towards veterans groups will be especially intense.—Michael Wyland

  • Ben S

    The “right of association without fear of government interference” is not a right to tax exemption. I’m struck by the way in which the reporting about all these “targeting” “scandals” ignores the legitimate criteria for receiving tax exemption and the associated issue of the costs of tax exemption wrongly conferred.

  • Joan

    Why is it that VETERANS never want to provide anything??? Why do VETERANS feel they are above any one slse?? I really think people are getting sick of the duping and conning by VETERANS

  • Jon

    Does this mean I can claim to be a veteran organization and get tax free status without having to prove it, getting immunity from audit? The issue with veterans organizations taking ineligible members dates back decades. The most telling response of the IRS action was the American Legion was requesting that congress loosen the rules for membership. In other words, the evidence suggests were cheating on their taxes and are using charges of targeting to delay the IRS from catching them, while they lobby congress to change the rules. I also find it crazy that the American Legion cites privacy concerns for showing a government document to the government. If they don’t want to do so, the solution is simple, don’t use 501 c(19) status. Just pay taxes like other clubs.

  • Shawn

    Awwwww… I can see that some how I ended up on some loopy assed leftwing rant rag, simply by checking up on American Legion and VFW Sites and articles.

    Having been in the military for a span of 31 years I can completely understand why the Legion questions the $1,000 a day fine for not providing full membership details on demand.

    Imagine if every church in the USA was required to provide proof that every member of the congregation was really a christian and provide a copy of the certificate their parents got at the christening, oh, I guess maybe 50 years ago… and have that by Friday or I’ll fine you $1,000 per day.

    You people complaining so loudly have got to be kidding me… I risked my life for 30 years to protect your whinning asses.. What was I thinking.. Actually I was thinking that the majority of people are decent folks… Then there is the rest of you.

    A copy of a DD 214 requested from the VA can easy take a year to be received.

    Just give the IRS the rolls with names and period of service. The IRS accountants can spend their own precious time reviewing past Tax statements verifying federal service.

    The rest of you can go sit in a dark corner, pretend you are a mushroom and suck on your thumbs.

  • William T Reilly

    We should change the way our government collects taxes to a consumption tax. The Fair Tax Bill HR25 & S13 only 135 pages vs the 70,000 some pages of IRS nonsense. It would put a stop to all of this crazy bickering about who is or is not. It is very simple folks when you buy something new you pay your tax on the spot, no record keeping, no worrying about your status or what bracket you are in. Every legal citizen with a SS number receives a prebate to compensate for taxes on essentials,this makes the Fairtax more progressive and fair than any income tax ever will.
    It also will level the playing field for our manufacturers and producers on the world markets including our own,by putting a tax on imports. Go to for all the info you will ever need. WTR

  • David

    I am a veteran. I gave four years of my life to serve my country and it’s interests. Which could in some situations end my mortal life. I served in the combat arms in peace time. I was an Airborne paratrooper. Which means Icould of been easily killed in a training accident like a friend of did back in 1988, let alone all of those veterans who volunteered and lost their lives after my time of service was up. Today, it is estimated that only a total of 1% of the current population are veterans. Makes me take pause to consider that veterans whether we served in peacetime or in war are the the real citizens of this country, and in some respects are above those who did not serve. Now I may think this way but it doesn’t make it true. Like beauty, these ideas are just in the eyes of the beholder.

  • Jon

    There is nothing “left wing” about supporting the governments role in making sure that every organization claiming to be a veterans organization is actually a legitimate law abiding veterans organization. As hard as it may be to believe, there are plenty of fake charities and plenty of real charities that break the rules. Yes catching “bad guys” places a burden on legitimate organizations, but that is the fault of the cheats, not the IRS. Now that being said, I believe there is SOME legitimacy to the American Legions complaint. The IRS guide tells them that “Each organization’s records must show that its purposes and activities continue to be appropriate for an exempt organization.” But never specifies DD214 be maintained. However, without a DD214, How would you have the AL prove their membership qualifies them for 501 c19 status? Take them at their word? They have to prove their tax privileges it just like everyone else Veterans organizations have been caught cheating in the past. Millions in tax fraud. Should the American Legion get a free pass? No. The obvious solution is simply that the legion branches that don’t maintain the needed records need to get and maintain them. I frankly am doubtful of the claim they were fined $1000 a day for not having the records. Unfortunately, we don’t get to hear the IRS’s side of the story and the American Legion is making claims without releasing documentation to support it. I can find no statutory fine for failing “have” the documentation, the response for that is loss of nonprofit status. It seems more likely they were fined for a failure to respond to an inquiry. Worst thing you can do is to ignore an IRS deadline. Ignoring a request is NOT a good way of responding, but unless they release the letter we will never know.

  • Tom

    If the IRS is collecting information on ALL non-profits, then fine, require the Legion, the VFW, etc to submit records. But I for one would like to see IRS’ demand for similar information from, MALDEF, the NAACP, La Raza, etc.

  • Earl Jones

    I hope all military personnel will remember the fact that Hillary Clinton was put in charge of Bill’s healthcare commission in 1995 and tried to socialize medicine then. Congress would not allow it then, but did allow her to take away the promised, earned, lifetime, no-cost health care to military retirees, which they had been promised as a benefit of a career in the military. She instituted Tricare, an HMO to unilaterally replace the no-cost health care. I retired from the Army the same year and went to law school. Upon graduation and passing the Bar I filed a mass-action lawsuit to regain our no-cost health care in 2000. Congress passed Tricare for Life and we agreed to non-suit our case: “Botard Et Al v. Dept of Defense. We ended up getting most of the original promise back if we live to 65. I just hope everyone remembers that in 2016. You may contact me at:

  • Earl Jones

    We did provide a career of service to our country — what have YOU provided?

  • Earl Jones

    Please contact me if you have concerns about your absentee ballot not being counted in the 2014 elections. The DNC tried to do that in 2000 in Florida to the military absentee voters and I stopped them in Pensacola. They will try to do it again in 2014 in close battleground states. I am a retired attorney, but I can give you advice as a friend on how to fight it at: