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TIGTA to Inspect ACORN

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September 25, 2009

The controversy over the community-organizing group ACORN is widening as the Treasury Department’s Inspector General for Tax Administration has agreed to investigate the political activities of some of the group’s tax-exempt affiliates.

TIGTA Inspector General J. Russell George wrote a letter to Congressman Darrell Issa, R-Calif., ranking member of the Committee on Oversight and Government Reform, saying his office would investigate the group in response to a letter from Issa and his colleague, Sen. Susan Collins, R-Maine. ACORN, short for the Association of Community Organizations for Reform Now, has been in hot water in recent weeks after hidden camera videos emerged showing employees giving advice to a couple posing as a pimp and prostitute on how to falsify their tax returns and claim some fictitious underage prostitutes from El Salvador as dependents.

In response to the outrage over the videos, both houses of Congress voted to cut off funding to the group and the IRS has suspended ACORN’s participation in its Volunteer Income Tax Assistance program (see IRS Drops ACORN).

ACORN has long been an object of scorn by conservatives, who have accused the group of helping elect Democrats through its voter registration efforts in inner-city neighborhoods. While ACORN is not a tax-exempt organization, it does have affiliates around the country that are tax-exempt. Sen. Charles Grassley, R-Iowa, ranking member of the Senate Finance Committee, has written separately to IRS Commissioner Douglas Shulman asking him to probe how ACORN’s tax-exempt affiliates are using charitable contributions for political and lobbying activity. Republican staff members have found that 42 tax-exempt organizations are affiliated with ACORN.

ACORN executive director Bertha Lewis has defended her group’s use of the contributions, telling the Associated Press, “Every dollar that we spend we spend legally in accordance with government regulations.” She calls the charges that have been building against her group “politically motivated” and noted that ACORN has been cutting ties to over 100 of the affiliates since she took over last year in the wake of a financial scandal involving the group’s founder and his brother.

However the investigations come out, ACORN has been severely damaged in recent weeks by the videos and subsequent accusations. The controversy could also have a spill-over effect next year as politicians begin campaigning for the midterm elections, and Republicans try to win back control of the Senate. The effect on ACORN-affiliated 501(c)(3)groups like Project Vote, for which Barack Obama worked in 1992 during his community-organizing days, could also be severely restricted if the TIGTA investigation finds evidence of wrongdoing. It also could mean one more hurdle for Democrats to overcome if they want their base to register to vote and show up at the polls next year during a crucial election season that will help determine the second half of Obama’s term.

Other nonprofit groups could also be caught up in the TIGTA probe. George wrote to Issa that TIGTA was "initiating a review of the IRS's oversight of tax-exempt Section 501(c)(3) organizations and Section 527 organizations and will review internal IRS referral processes with regard to nonprofit fraud investigations." He noted that TIGTA has conducted several audits in the past of the IRS's oversight of tax-exempt organizations. Grassley too has pushed several such probes, especially of some high-flying televangelist ministries and their tax-exempt status. Expect to see more such probes in the year ahead.

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