In New Letter, Sens. Wyden & Schumer Formally Request IRS Investigate NRA For Potential Tax Law Violations And Determine Whether NRA Should Lose Its Tax-Exempt Status

October 2, 2019

Washington, D.C. Senate Finance Committee Ranking Member Ron Wyden, D-Ore., and Senate Minority Leader Chuck Schumer, D-N.Y., today referred the findings of the report, The NRA and Russia: How a Tax-Exempt Organization Became a Foreign Asset to the IRS and requested the agency investigate the NRA’s potential violations of tax laws along with other publicly reported allegations of self-dealing to determine whether the NRA should lose its tax-exempt status.

The Senators write, “The investigative report released by the Finance Committee minority staff confirms the extensive interactions between Butina, and her Russian government sponsor—Alexander Torshin, and the NRA cited by the DOJ. These findings raise questions about whether certain NRA activities violated the organization's social welfare requirements. Specifically, in addition to multiple meetings between Russian individuals and NRA officials that took place within the U.S., NRA officials and donors met with a number of Russian companies, government officials and oligarchs closely connected to the Kremlin during the 2015 trip to Moscow. The individuals and companies involved in the Moscow meetings included some that were the subject of U.S. sanctions at the time of those meetings.

“The report also raises concerns about potential private inurement and use of exempt resources for non-exempt activities. 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. The findings of the report further suggest that NRA officials’ use of the organization to advance personal business interests may have exposed the NRA to further involvement by Butina and Torshin. Accordingly, we transmit to you today the Finance Committee minority staff report on NRA’s interactions with Russian nationals for your use in any examinations of the NRA's activities and exempt status.”

Text of the letter to IRS (LINK) is available here:

Commissioner Rettig,

The Internal Revenue Service (IRS) is responsible for administration of federal tax laws, including the enforcement of Internal Revenue Code rules governing the activities of tax-exempt organizations. These rules exist not only to protect the federal tax system, but also to ensure that tax-exempt organizations and their resources are used exclusively in furtherance of their exempt purpose. Congress has long been concerned about foreign adversaries’ potential exploitation of tax-exempt organizations to undermine American interests.

On July 15, 2018, Maria Butina was arrested in Washington, DC and charged by the federal government with conspiracy to act as an agent of the Russian Federation within the United States as part of an effort to gain political access within the United States utilizing a “GUN RIGHTS ORGANIZATION,” understood to be the National Rifle Association of America (NRA)—a section 501(c)(4) tax-exempt organization. In April 2019, she pleaded guilty to one count of conspiracy to act as a foreign agent in the United States without registering with the U.S. Department of Justice (DOJ) and was sentenced to 18 months in prison.

Following these developments the Finance Committee Ranking Member and other Democratic colleagues initiated an investigation into the NRA’s interactions with Russian nationals, including Butina, other Russian nationals, including some sanctioned by the U.S. Government and officials of the Russian government, both in the U.S. and during the NRA delegation’s 2015 trip to Moscow.

The investigative report released by the Finance Committee minority staff confirms the extensive interactions between Butina, and her Russian government sponsor—Alexander Torshin, and the NRA cited by the DOJ. These findings raise questions about whether certain NRA activities violated the organization's social welfare requirements. Specifically, in addition to multiple meetings between Russian individuals and NRA officials that took place within the U.S., NRA officials and donors met with a number of Russian companies, government officials and oligarchs closely connected to the Kremlin during the 2015 trip to Moscow. The individuals and companies involved in the Moscow meetings included some that were the subject of U.S. sanctions at the time of those meetings.

The report also raises concerns about potential private inurement and use of exempt resources for non-exempt activities. 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. The findings of the report further suggest that NRA officials’ use of the organization to advance personal business interests may have exposed the NRA to further involvement by Butina and Torshin. Accordingly, we transmit to you today the Finance Committee minority staff report on NRA’s interactions with Russian nationals for your use in any examinations of the NRA's activities and exempt status.

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. 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.

Russia’s interference in the 2016 elections represented an unprecedented attack on American democracy. Russia will continue to target U.S. elections in 2020 and beyond, using social media, disinformation and hacking, as well as other espionage and cyber operations, according to Director of National Intelligence Dan Coats’ 2019 Worldwide Threat Assessment. In light of the continued efforts of Russia to undermine American democracy, IRS must use its full authority to prevent foreign adversaries from again exploiting tax-exempt organizations to undermine American interests. 

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