Not likely but true—the National Rifle Association (NRA) reported the tax fraud of its own executive board.
The NRA has had its share of troubles lately. For several years, investigations into the conduct of the NRA and its officials have made news. In 2019, the New York State Attorney General produced a brand-new subpoena to the NRA—and that was after an already eight-month investigation. From campaign finance, to tax fraud and compliance issues, New York State AG Letitia James took aim at an organization known for its political and financial opacity.
The external litigation and internal infighting came to the forefront in November 2020 when the NRA itself reported on its NRA Chief Exec Wayne LaPierre and other inner circle cronies for their use of the NRA honeypot for their own enrichment, including travel. The move by the NRA is seen as a potential attempt to own up to excess, tax problems, and financial improprieties before the government does it for them.
The tax and financial disclosures came in the form of a tax filing signed by Mr. LaPierre himself. As reported by The Washington Post, Mr. Pierre stated in a deposition last year that “he never reported as personal income the travel and entertainment expenses the NRA paid on his behalf because he thought those benefits were provided as part of his leadership role at the organization.” Let’s be clear—failure to file, or to file false income tax returns, is not a fringe benefit for any C-suite exec.
The move by the NRA to disclose its financial improprieties comes after a dust-up in August 2020 when Ms. James filed a seminal lawsuit that seeks to level the organization by exposing longtime corruption in the ranks. Ms. James also referred the issue to the Internal Revenue Service, a first step toward an IRS criminal tax investigation.
In the wake of its internal personal warfare, difficult split from Ackerman McQueen, and the changing and conflicting interests of donors and declining membership rolls, the NRA has some business to attend to. Like so many other organizations, the NRA has been negatively impacted and seen its fortunes decline with the cancellation of fundraising and other events due to COVID-19.
The missteps of the NRA will play out in court for years, but cracks are starting to show. In November 2020, the NRA agreed to pay a $2.5 million civil fine plus a five-year suspension of its sale of its questionable NRA-branded insurance products.
Tax crime, ethics and governance problems, and financial instability add up. If you become aware of compliance problems within your organization or company, speak with an experienced tax attorney sooner than later.
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