IRS Should Investigate NRA Over Potential Tax-Law Violations, Senate Democrats Say

Gun Enthusiasts Attend NRA Annual Meeting In Indianapolis
Wayne LaPierre, NRA vice president and CEO attends the NRA annual meeting of members at the 148th NRA Annual Meetings & Exhibits on April 27, 2019 in Indianapolis, Indiana. Senate Democrats asked the IRS to investigate the NRA after the Finance Committee minority members published a report documenting potential tax law violations. Scott Olson/Getty

Top Democrats in the U.S. Senate are calling on the Internal Revenue Service to open an inquiry into the tax-exempt status of the National Rifle Association.

The NRA is the nation's largest gun-rights organization, boasting millions of grassroots members, and has come under siege in recent months amid a governance and financial scandal.

The letter, from Finance Committee Ranking Member Ron Wyden (D-OR) and Minority Leader Chuck Schumer (D-NY), comes nearly one week after Wyden and other minority committee members released a hefty report documenting allegations of improper dealings at the highest levels of the NRA related to the group's 2015 Moscow trip.

[Read the letter below.]

"Predictably, the report by Senate Finance Committee Democrats is being used to justify yet another politically motivated investigation into the NRA," William A. Brewer III, the NRA's outside counsel, told Newsweek in a written statement. "This partisan investigation was fueled by unfounded allegations obviously driven by the Minority's dislike of the NRA's political point of view. The exercise should raise concerns about an abuse of government power and waste of taxpayer funds. Fortunately, for the NRA and all advocacy groups, political speech is protected by the First Amendment of our Constitution."

The Finance Committee report alleged that senior NRA officials condoned efforts to cultivate ties with influential Russian nationals, including government officers and industry magnates. Some of these individuals were under sanction from the Treasury Department's Office of Foreign Assets Control, casting a shadow on the appropriateness of the visit.

"[Our] findings raise questions about whether certain NRA activities violated the organization's social welfare requirements," Wyden and Schumer wrote on Wednesday. "Evidence in the report confirms that some members of the NRA delegation participated in the Moscow trip primarily or solely for the purpose of advancing personal business interests, rather than advancing the NRA's tax-exempt purpose."

While the gun-rights group ultimately distanced itself from the trip, which included a board member and incoming NRA president, the alleged use of organization resources to prepare visas and coordinate logistics raises serious concerns about whether the NRA was operating for the benefit of private individuals, known as inurement, rather than for the public's interest, as its tax-exempt status requires.

Furthermore, the report raised questions about whether interactions between NRA officials and designated Russian nationals ran afoul of U.S. international sanctions, which limit a wide variety of activities with sanctioned parties.

The NRA is already being scrutinized by the New York State attorney general, Letitia James, and the attorney general for Washington, D.C., Karl Racine, over its status as a non-profit, in large part because of reports that in recent months have documented lavish spending and transactions enriching board members. Its CEO and executive vice president, Wayne LaPierre, was revealed to have received hundreds of thousands of dollars worth of clothing and luxury travel on the NRA's dime.

Conservatives Come Together For Annual CPAC Gathering
A picture of Executive Vice President Wayne LaPierre is seen at the National Rifle Association (NRA) booth during CPAC 2019 February 28, 2019 in National Harbor, Maryland. Alex Wong/Getty

The Senate Finance Committee's probe and report on the Moscow trip add yet more fodder to the perception that the NRA lacks appropriate governance controls. The NRA has had to retroactively approve multiple, controversial transactions benefiting organization insiders because of conflict of interest issues. Even as it concerns the Moscow trip, the NRA asked for retroactive reimbursement, for funds it already expended, in order to insulate itself from the activities of its officials abroad.

"As you are aware, public reporting also suggests that the NRA may have been engaged in other significant and persistent acts of potential private inurement and other impermissible acts," Wyden's letter concludes. "Given this report's concerning findings and other allegations of potential violations of tax-exempt law by the NRA, it is incumbent on the IRS to fully investigate the organization's activities to determine whether the NRA's tax exemption should be disallowed."

It is unknown if the IRS is currently probing the NRA's tax-exempt status, and the agency does not comment on pending or potential investigations. However, the removal of the group's non-profit designation could be detrimental, if not outright fatal, to NRA operations. The NRA is able to exist, in large part, because it does not pay taxes on income and because its donors are allowed to remain anonymous.

"The Association's financials are audited and its tax filings are verified by one of the most reputable firms in the world," Brewer added. "The NRA is committed to utilizing best practices in the areas of accounting and governance."

Even with the tax benefits provided to exempt organizations, the NRA is struggling financially. The group's net assets declined for the third year in a row, according to documents filed with North Carolina regulators, leaving its coffers at their lowest levels since 2012.

This story has been updated to include a comment from the NRA's outside counsel.