LANDMARK UNLEASHES
MAJOR CRIMINAL COMPLAINT AGAINST NEA
FOR
IMMEDIATE RELEASE
CONTACT:
(703) 689-2370
(703) 689-2373 (fax)
info@landmarklegal.org
www.landmarklegal.org
(HERNDON, VA)...Landmark Legal Foundation, the leading authority on the
political activities of the nation's teachers unions, today has formally
requested that the Criminal Investigation Division of the Internal Revenue
Service (IRS), and the Criminal and Tax Divisions of the U.S. Department of
Justice take criminal action against the National Education Association (NEA)
for violating federal reporting and tax requirements.
Landmark has examined thousands of pages of NEA internal strategic planning
and budgetary documents, tax returns and other materials that prove that the
union has concealed from the IRS tens of millions of dollars of tax-exempt dues
it has spent on political activities.
"The complaints we filed today show, in meticulous detail, how the nation’s
largest, most powerful and most political union has flagrantly ignored its tax
obligations," explained Landmark President Mark R. Levin. "We have
given the IRS and the Justice Department a step by step roadmap to investigate
the NEA and, where warranted, pursue criminal charges."
Under the Internal Revenue Code, unions such as the NEA are required to
report – and pay taxes on – all tax-exempt funds spent by the union to
influence the election or defeat of any candidates. These expenditures include
direct cash contributions to federal, state and local political campaigns,
in-kind contributions like salaries and employment costs of union employees
delegated to work on campaigns, union funded advertising and polling that
benefits a specific candidate or political party, and other efforts designed to
advance a specific campaign or party. Political expenditures or contributions
to a political party or campaign organization are supposed to be funded
separately, through a political action committee or PAC. At least since 1994 –
the first year Landmark began tracking the union’s political expenditures – the
NEA has spent tens of millions of dollars derived from its members’ tax-exempt
dues payments on unreported political expenditures and activities.
Some examples of these expenditures include:
$ 1,993,735 In the NEA’s Strategic Plan and Budget for fiscal years
2000-2002 for "[a] coordinated state-specific campaign developed and
implemented to elect bipartisan pro-public education candidates in the 2000 general
election."
$76,400,000 To fund the UniServ program in 1999-2000 NEA Budget – A
nationwide network of more than 1,800 NEA-funded affiliate employees who,
according to one account, act as "the largest army of paid political
organizers and lobbyists in the U.S., dwarfing the forces of the Republican and
Democratic national committees combined."
$ 9,600,000 In the NEA’s 1996 Strategic Focus Plan to "build bipartisan
constituencies among those running for and elected to public office to support
public education." Some of the activities funded by this appropriation
included, "screening candidates for federal office; conducting political
surveys for candidate evaluation; mobilize members and other resources…to
support the election of pro-education candidates and ballot measures; provide
technical assistance, surveys and training in political campaign work to
affiliates and members at all levels; identify and evaluate new/innovative ways
to effect election results, such as mail ballot early voting, term limits on
state elected officials, etc.; cultivate working relationships with Democratic
and Republican parties."
And millions of dollars in other political expenditures funded out of
tax-exempt member dues over the past several years.
To further underscore the union’s political priorities, Landmark included in
its complaints a recent quote from Randall J. Moody, the NEA’s federal policy
manager, to political workshops at the union’s 2003 national convention.
"Politics move our policy. We work through UniServ." UniServ is the
national network of more than 1,800 NEA-funded representatives who serve as
political activists in nearly every state and local school district in the
country.
Founded in 1976, Landmark Legal Foundation is a nonprofit, public interest
law firm with offices in Kansas City, Missouri and Herndon, Virginia.
Highlights of Landmark’s Latest Complaint Against the NEA
Landmark’s latest complaints to the IRS and the Justice Department provide
meticulously documented accounts of the NEA’s violations of federal law. Some
of the laws the NEA have violated include:
Failure to File Certain Information Returns
Taxpayers are required to provide certain information on their tax returns.
Under Internal Revenue Code (IRC) Section 6033 even tax-exempt organizations
such as the NEA must file a form 1120 POL detailing the group’s political
activities and expenditures. Landmark’s complaints demonstrate that the NEA has
not filed a single 1120 POL with any of its tax returns since 1994. In
addition, the union claims on each of its tax returns that it spends nothing on
political activities. The Foundation has documented, through the union’s own
publications, news reports and other materials, how the NEA spends millions of
tax-exempt member dues each year on political activities. Violating IRC Section
6033 may result in a fine of up to $50,000.
Coordinating 'nonpartisan activities’ with a political candidate or
party:
Under federal law (26 CFR 1.527-6(b)(5)), a tax-exempt organization like the
NEA is permitted to engage in nonpartisan activities such as voter registration
drives and get-out-the-vote campaigns, provided that the activities are not
conducted in coordination with, or on behalf of, a political party or an
individual candidate’s campaign. Landmark documents the NEA’s involvement in a
coordinated political campaign in 1996 with the Democratic National Committee,
various Democratic campaign organizations and other tax-exempt groups like the
AFL-CIO and Emily’s List.
Imposition of Accuracy Related Penalties:
Under Internal Revenue Code (IRC) Section 6662(d), taxpayers are required to
file tax returns that accurately report their income and expenditures. The NEA
has filed tax returns (IRS form 990) since at least 1994 that contain false
information about the union’s political expenditures. The fact that the
information is false has been demonstrated frequently and repeatedly in
comprehensive complaints compiled by Landmark to the IRS, the Federal Election
Commission and the Labor Department, by congressional hearings and by extensive
print and broadcast media. The penalty for violating IRC 6662 (d) can be equal
to 20 percent of the underpayment. In addition, if the underpayment of taxes is
substantial, the fine may be increased by 10 percent.
Attempt to Evade or Defeat Tax:
The IRS must determine whether the NEA has engaged in a willful attempt in
any manner to, "evade or defeat any tax imposed by [IRC Section 7201(c)]
or the payment thereof." Landmark’s complaints show persuasively that the
union’s failure over several years to report its political expenditures on its
tax returns is deliberate attempts to evade tax liability. The penalty for
violating IRC Section 7201(c) is a fine up to $500,000.
Willful Failure To File Return, Supply Information, Or Pay Tax:
Any person (or organization) – such as the NEA - that willfully fails to
file a tax return or pay taxes shall be subject to a penalty of up to one year
in prison and/or a fine of up to $100,000 (IRC Section 7203). Again, by failing
to include political expenditure information on its federal tax returns since
at least 1994, the NEA has violated this section of the Internal Revenue Code.
Fraud and False Statements:
Like any other taxpayer, both the union and the NEA official who signs the
union’s tax returns must verify that the information included in the return is
true and accurate. If an official knowingly files a fraudulent return, or
knowingly includes false information in a tax return, than the union and that
official personally may be subject to a fine of not more than $50,000 and/or
imprisonment for up to one year. (IRC Section 7206). Landmark’s complaint
demonstrates that the union, by claiming no political expenditures on its form
990 tax returns while, at the same time spending millions on political
activities, is in breach of this section of the Internal Revenue Code.
Perjury:
Again, the NEA is required to file truthful tax returns. The fact that they
haven’t violates (18 USC Section 1621). This violation exposes NEA official to potential
fines and imprisonment up five years.