Sunday, December 4, 2016

A first look at the latest NOM IRS referral

For as long as National Organization for Marriage and Brian S. Brown cause disquiet in our community, they shall have no peace. Because NOM is essentially a proxy for the Catholic Church and the U.S. Conference of Catholic Bishops Mr. Brown is wed to the notions that a) NOM's integrity is unassailable and; b) that the rules that apply to everyone else do not apply to them. Brown and his lot are wrong on both counts.

Moreover, the fact that the Church disapproves of gay people makes its bishops collectively intellectual antiques. They cannot get away with torturing and burning suspected witches anymore so LGBT people fill the void for supposed perpetrators of evil.

My readers deserve a first look. Here is a portion of the referral that is going out this evening (I am still futzing and proofing):
According to Internal Revenue Service regulations:

An IRC 501(c)(3) organization may not subsidize any political intervention activity or substantial lobbying activity of an affiliated IRC 501(c)4 organization in any manner. The Service has ruled that a subsidy can take several forms:
  1. Direct transfer of funds from the 501(c)3 entity to the other organization.
  2. Paying expenses of the other organization.
  3. Non-arm's-length dealing for shared facilities or employees.
  4. Use of the IRC 501(c)(3) mailing list on a preferential or non-arm's length basis.
It is my considered opinion that National Organization for Marriage Education Fund (“NOM-Ed”), a 501(c)3 is subsiding National Organization for Marriage (“NOM”), a 501(c)4 organization. This calls into question not only the legitimacy of the 501(c)3 but whether or not contributions for 2015 qualified as tax deductible.
  • At the end of 2013 NOM-Ed was owed $1.9 million by NOM. Without those loans, NOM would not have been solvent. (It remains technically insolvent.) Management claimed at the time that this was an advance of management fees. However, economic logic does not support this hypothesis; not in the size of the fess and not through liquidation of the debt to date. It would appear that the management fee was set arbitrarily to conform to the cash requirements of NOM.
  • At the end of 2015 NOM owed NOM-Ed $628,000. The reduction in debt appears to be a journalized adjustment rather than an actual transfer of funds.
  • During 2015, NOM-Ed’s accounts payable swelled from $139,540 to $593,709 without any appreciable activity to support funds due vendors. Indeed, reviewing program expenditures, there is no apparent justification for these sums other than the activities of NOM, the 501(c)4.
  • Without appreciable activity, NOM-Ed claims to have expended $270,000 for conferences and conventions and $620,000 in shared costs. An audit will most likely confirm that NOM-Ed is paying a substantial amount of NOM’s bills. Moreover, is unlikely that shared facilities and employees are on an arms-length basis.
  • I can confirm, for a fact, that the two organizations are using a shared mailing (email) list, again, not on an arms-length basis.
Ultimately, financial desperation causes organizations to violate the rules but financial desperation does not excuse those violations.
The objective is to cause the organizations to be audited. I am reasonably certain that an audit will confirm the regulatory irregularities. However, the Service is underfunded and understaffed — by GOP design.

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