| Back OpEd News | |||||||
|
Original Content at https://www.opednews.com/articles/opedne_sandy_fr_070829_editorial_3a_let_the_s.htm (Note: You can view every article as one long page if you sign up as an Advocate Member, or higher). |
|||||||
August 30, 2007
Editorial: Let the Sun Shine
By Sandy Frost
The IRS wants to hear from you about their suggested changes to the exempt organization tax return AKA the 990. This should even the playing field so that all non profit groups can operate according to the same standards of accountability, disclosure and transparency.
::::::::
If you've ever wanted to tell the Internal Revenue Service (IRS) what you think, now is your chance.
For the first time in over 25 years, the IRS is updating the exempt organization tax return, more commonly known as the 990, and they want your input.
"We're looking for comments on the redesigned form so we meet the needs of the organizations and public," said IRS spokesman, Eric Smith.
"We take all comments very seriously," he emphasized. "We're not just going through the motions. Anyone who is interested in this sector, anyone who is a 'stakeholder,' the IRS wants to hear from you."
"It's been over a quarter of a century since we've changed the form and certainly, exempt organizations have changed and have a different role in the 21st century," Smith continued. "We want real input from all interested parties," he explained. "We're looking for comments before we finalize the form and it's useful for us when the stakeholders of exempt organization (non profit) groups do this."
Senate Finance Committee hearings, a GAO report and investigative journalists have found that some groups, including the Red Cross, the United Way, the Nature Conservancy, the Smithsonian and the Shriners, may have committed tax fraud by hiding excessive salaries, sweetheart deals, lavish spending, executive mortgages and conflicts of interest.
"We need to ensure that charitable assets benefit those who need them most rather than those who need them least," said Senator Chuck Grassley, R-IA, former chairman of the Senate Finance Committee. "The 990 filing is often the public's only look at a non-profit's finances. They deserve accountability for the generous tax breaks the federal government offers to tax-exempt groups. The IRS's revisions are on the right track."
Current chairman of the Senate Finance Committee, Senator Max Baucus, D-MT, said that "This new form will help the public and the IRS assess whether tax-exempt organizations are staying true to the reasons they were granted exempt status in the first place. We must be assured that the public's donations are used appropriately. The Form 990 is as good as the information provided...to be beneficial the information must be complete and accurate. Unfortunately, that is often not the case."
"While we always hear that sunshine is the best disinfectant, sunshine can't do its work unless we open the blinds," both wrote in a letter to Henry Paulson, Secretary of the Department of Treasury. "The sooner we open those blinds, the better."
The IRS is redesigning the form based on three guiding principles:
1- To enhance transparency, so the IRS and the public are provided a realistic picture of the organization.
2- To promote compliance by accurately reflecting the organization's operations so the IRS may efficiently assess the risk of non compliance.
3- To minimize the burden on filing organizations.
According to a letter from Senators Grassley and Baucus to Henry Paulson, the Secretary of the Treasury, the new form is designed to make charities accountable by asking for more information in the areas of:
1. Executive compensation. "Some charities are as creative as for-profit entities in providing compensation – paying for housing, first-class travel, spousal travel, deferred compensation, inventive compensation and bonuses, fringe benefits, loans , dining and often entire life-styles."
2. Endowments. "The former Commissioner of the IRS spoke a few weeks ago, prior to his departure, that charities needed to provide charitable work commensurate with their resources...this is keeping with the commonsense view of the American taxpayer who subsidizes by billions of dollars a year the work of charities – that the point of giving is to help the community and those in need and not help a charity build an even bigger bankroll."
3. Related Organizations. "There needs to be a complete understanding of all related organizations – both for-profit and non profit – of a charity. It is important that the public be able to understand the big picture of what is going on at a charity."
4. Joint Ventures "To know the work of the charity it is critical to understand the joint ventures in which the organization is engaged."
5. Governance. "Time and time again, we have seen poor governance at the core of problems at charities."
6. Dollars raised v Dollars for Charity. "There is probably no greater interest of the public then wanting to understand the answer to this question when they make a donation: How much of the money is actually going to the charitable activity?"
7. Hospitals. Many of the issues we've discussed above have significant applicability to hospitals.
One non profit hospital that could benefit from these reforms is the Shriners Hospitals for Children. A March of 2007 New York Times front page article questioned how the Shriners have used burned and crippled children to raise money allegedly for the hospitals that was, instead, spent on lavish ceremonies, executive mortgages , partying, trips and lawsuits.
To say the very least, the Shriners have serious paper work problems that could, if scrutinized by state and federal authorities, jeopardize their non profit status.
Case in point involves what was found after recent headlines described a recent Shrine parade crash in Chattanooga, Tennessee. (1)
Though the local prosecutor decided to not file charges against the Shriner driver who crashed into a crowd, injuring eight and sending five to the hospital, further investigation reveals that, according to Tennessee charity officials, the group sponsoring the parade, the Southeastern Shrine Association (SESA) is not registered as a charity. A search of Guidestar.com shows that SESA has not filed tax returns with the IRS nor is the group listed as a "related organization" on the group returns of the Alhambra Shrine Temple.
This pattern of omissions is modus operandi for Shriners corporate and their fraternal counterpart, from the top all the way down through the 191 temples and over 1,900 clubs.
If the Shriners Hospitals for Children had filed accurate and complete tax returns, the public, donors, members (the "stakeholders") and IRS would know that:
Charitable donations funded executive and employee mortgages.
Governing documents were changed so that top executives had nearly unlimited power to execute any and all types
of transactions.
Charitable donations were used to defend against and settle malpractice and discrimination lawsuits as well as prosecute a current defamation lawsuit against a fellow Shriner and a former IRS agent. (2)
Related organizations include the Masons, the Knights Templar and secret group, the Jesters. (3)
A lobbyist was hired in 2005 to lobby against the Sarbanes-Oxley Act, on which some of these 990 reforms are based.
A former executive appeared to be operating his personal Florida for profit corporation out of Shriner HQ.
Shrine groups run by Shrine officers often include their family members.
If Shrine temples and clubs filed accurate and complete exempt organization and group tax returns, the public, donors, and members ("stakeholders") as well as the IRS would know that:
The Gwinnet County Shrine Club had raised nearly $100,000 through illegal Texas Hold 'Em tournaments.
The Omar Temple lost a court case after they tried to get $300,000 from the Myrtle Beach Shrine Club and was violating their exempt organization's purpose by forcing the Dorchester Shrine Club to pay off their mortgage instead of sending money raised to support the Children's hospital.
The Shriners fraternal prosecute only 19% of crime and fraud found in their temples because they "don't want their names in the papers and the bad PR."
Are these omissions the result of sloppy record keeping or are they intentional?
This quote from page 72 of the winter 2003 Shriners Treasurers Association minutes provides a clue:
"Going to the second page (of the IRS tax exempt return 990), there's too much work being done, I'm not being over critical, I'm just saying let's just do the minimum disclosure to the IRS" – Bob Phillips, Director of Temple Accounting"
Why would the director of Temple Accounting tell the Shrine treasurers to "do just the minimum disclosure to the IRS"? Might it be because corporate seems to operate the same way? Are these executives purposefully keeping these things from the public and IRS?
No one will know until the Shriners answer the questions on the updated 2008 exempt organization tax returns.
Remember, the IRS wants to hear from you.
The comment period lasts until Sept. 14, 2007.
Comments can be emailed to the IRS at Form990Revision@irs.gov or mailed to:
IRS
Form 990 Redesign, SE: T-EO
1111 Constitution Avenue, NW
Washington, DC, 20224
1 - News coverage can be read here.
2 - The lawsuit can be read here.
3 - The updated Shriners Temple Accounting manual, item 3 - 27, instructs temple treasurers to answer the 990 "related organization" question 80b, "To enter the of name of organization as Imperial Council of the Ancient Arabic Order of the Nobles of the Mystic Shrine and check exempt box." This question should include, at the very least, the Masons, as one must be a master Mason to join the Shriners.