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State News

May 16, 2013

Ala group dropped tax-exempt bid amid IRS delays

MOBILE, Ala. —

Faced with what seemed to activists like a curious amount of scrutiny from the Internal Revenue Service and mounting expenses, an Alabama tea party group gave up its fight for tax-exempt status rather than answer yet another letter from the federal government.

Now, a leader suspects his group was caught up in what the IRS now says was an improper review of conservative groups.

Pete Riehm, chief executive of the Mobile-based Common Sense Campaign, said in an interview Tuesday that the cost of pursuing tax-exempt status for the organization overcame the benefit of getting the tax break, so his organization quit the effort.

Riehm is worried about the overall effect that disclosures about the IRS' practices nationwide will have on the political system.

"This has a chilling effect regardless of your political stripe," said Riehm, who unsuccessfully ran for Congress last year in the 1st Congressional District along the coast.

The Justice Department announced this week it was opening a criminal investigation into the IRS' targeting of tea party groups for extra scrutiny over whether they qualified for tax-exempt status. Attorney General Eric Holder said the FBI is coordinating with the Department of Justice to see if any laws were broken.

The revenue service apologized and called the additional scrutiny inappropriate.

Alabama Attorney General Luther Strange, a Republican, issued a statement asking groups to contact his office if members believe their organization was targeted.

Riehm said his group began the process of seeking tax-exempt status in late 2009. The application process took two years and the IRS never granted the group tax-exempt status.

"We are neophytes at this," said Riehm. "We are very unsophisticated and unaware of how political hardball is played."

The Common Sense Campaign had to pay an $850 filing fee and $2,000 in attorney fees even though a lawyer who was friendly with the organization gave them a discount.

As the application lingered without an answer, Riehm said, the group was told it had been lost. They were told to resubmit it with additional information.

A new IRS person was assigned to the request in late 2011 and started asking more questions, he said.

"They wanted a list of our donors and the names of their employers," he said.

Riehm gave The Associated Press a copy of an undated later that he said the organization received from the IRS sometime around the end of 2011.

The two-page letter came from the IRS' exempt organizations office in Cincinnati, Ohio, and requested the group provide numerous documents and information including a detailed description of its activities and finances and any information related to candidate endorsements or campaign events. The letter also requested a list of communications to the group's members and others including speeches, website, blog posts, advertising, news releases and other literature.

The letter does not specifically ask for the names of the groups' members or for information related to members' employment.

The letter was one of numerous letters that went back and forth between the group and the IRS, Riehm said. He said the volunteer group could not immediately provide copies of other communications because of issues with its filing system.

During the summer of 2012, the Common Sense Campaign decided to give up on the application because it was costing them more in legal fees and in time and trouble than they would ever save being tax-exempt.

"We just decided to punt," he said.

The group currently has about 300 dues-paying members from 10 counties in south Alabama, Riehm said. He said they felt they were being singled out for scrutiny, but they didn't think anyone would care.

"Last year at the Tea Party Conference of Alabama, we realized that (a) Wetumpka (group) was having the same issue, but we still didn't think anything would come of it," he said.

Riehm said his group plans another board meeting in a couple of weeks and might decide then whether to take any other action on the application.

 

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