Legal Filings

Legal Filings
Mar 14, 2006

CREW Files IRS Complaint Against Grover Norquist’s Americans For Tax Reform

Washington, DC - Citizens for Responsibility and Ethics in Washington (CREW) today filed an Internal Revenue Services (IRS) complaint against Americans for Tax Reform (ATR), and American for Tax Reform Foundation (ATR Foundation), conservative, non-profit organizations led by right-wing activist Grover Norquist. The complaint asks the IRS to investigate activities by the groups which may violate IRS regulations and require a revocation of their tax-exempt status.

The complaint alleges that Norquist used either or both ATR and ATR Foundation as commercial enterprises by laundering money derived from Indian casino clients of former lobbyist and convicted felon Jack Abramoff. The casinos made contributions to ATR, which then skimmed a fee off the top before passing the money on to former Christian activist Ralph Reed and other anti-gambling activists. In this way, Norquist, Reed and Abramoff were able to disguise the fact that the money used to fund anti-gambling activities was generated through Indian gambling. The point of the anti-gambling campaigns was to prevent competition to the Indian casinos.

Reed originally denied knowing the funds came from Indian casinos, but during hearings held by the Senate Indian Affairs Committee, Sen. John McCain released numerous e-mails clearly demonstrating that he did, in fact, know where the money came from. The e-mails show that Reed and Norquist worked with Abramoff to create the anti-gambling campaigns and to develop the scheme to hide the origins of the money.

The complaint also alleges that the money ATR received from the Indian casinos constitutes taxable business income because ATR was providing services unrelated to its tax-exempt purpose: to increase public awareness about the size and regulations of government and rally support for lower taxes and smaller government. Charging a fee for serving as a pass-through for money used to finance anti-gambling campaigns bears no relation to ATR's stated tax-exempt purpose.

Finally, the complaint alleges that ATR violated IRS public disclosure requirements by refusing to provide a copy of its application for tax-exempt status when requested to do so.

"Mr. Norquist's misuse of his non-profit organizations as commercial enterprises violates the IRS code, and necessitates an immediate investigation," Melanie Sloan, executive director of CREW said today. "The IRS has been quick to step in and investigate liberal organizations, but has so far failed to demonstrate a similar appetite for examining the activities of conservative groups. There is no better place to start than with an exhaustive review of how Jack Abramoff, Ralph Reed and Grover Norquist exploited the laws intended to promote charitable works."

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