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Empower Texans could have some tax problems

Schadenfreude alert:

BagOfMoney

Empower Texans, an organization at the center of the state’s far-right conservative movement, reported no political expenses on its 2012 tax returns to the Internal Revenue Service, despite showing $350,000 in campaign expenditures to state authorities, documents show.

The group, which claims to support fiscal responsibility and greater transparency in government, is best known for funding challengers going after Republicans it believes are too moderate, such as House Speaker Rep. Joe Straus, a San Antonio Republican.

“That is a very serious discrepancy, because it tends to suggest – it’s not, obviously, definitive – but it tends to suggest that the (tax return) was completed in a way that is knowingly incorrect,” said Marcus Owens, who was the director of the division of the IRS that oversees tax-exempt organizations from 1990 through 2000. “Absent some cogent and persuasive explanation of those two, that strikes me as potentially a criminal problem and certainly a civil problem.”

Another attorney well-versed in the IRS’ rules and procedures for nonprofits was equally critical.

“To the degree they are filing reports with the state ethics commission showing political spending, and they’re not showing them on their (tax returns), I find that questionable,” said John Pomeranz, a Washington D.C.-based attorney, who specializes in the law governing lobbying and political activity by nonprofits. “I’m trying to think of a way that could be justified, but I don’t really think it can be.”

[…]

Empower Texans’ nonprofit status makes its tax returns public record. Information from the tax returns reviewed from 2008 until 2012 also raises questions about whether the group has used an affiliated nonprofit, the Empower Texans Foundation, to improperly subsidize its political activity.

According to those records, Sullivan’s salary at Empower Texans fell greatly after the Empower Texans Foundation was created. However, the pay he received from the foundation more than made up the difference. In 2009, the year before the foundation was established, Sullivan made $99,600 in 2009, working 60 hours a week, serving as the president of Empower Texans.

However, in 2011, he made only $38,842 (about $19 an hour), as Empower Texans’ president. But he made $81,600 (roughly $78 an hour) serving as a director on the foundation’s board, tax returns show.

The pattern repeated itself in 2012: Sullivan, again listed as Empower Texans’ president, made $45,633 there, while earning another $81,600 from the foundation.

“That definitely suggests the (foundation) is subsidizing (Empower Texans), and the IRS doesn’t like that,” Pomeranz said.

While the IRS allows affiliated nonprofits to share staff and other costs, it requires that each organization carry its own weight, Owens said. He added that failure to do that could endanger the foundation’s tax-exempt status.

The tax returns, known as 990s, have come into the spotlight as the Ethics Commission considers adopting rules that would require nonprofits, like Empower Texans, to report their donors if at least 25 percent of their expenditures are “politically motivated.”

I know, it’s hard to believe that anyone as honest and forthright as Michael Quinn Sullivan could be playing fast and loose with the rules. Clearly, we need a nice, long, thorough investigation to get to the bottom of this.

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One Comment

  1. Bayard Rustin says:

    I recently saw a segment on KPRC’s Dateline Houston. I thought it was something about state officials taking junkets to exotic destinations. Instead, it was an “expose” on food-stamp recipients using their benefits in Hawaii. And, for their disinterested party that verified how dreadful this practice was, they used Michael Quinn Sullivan! It might as well have been produced by Jared Woodfill. To me, it was a marketing ploy to pander to mean people that live in Tomball, West U, Kingwood and The Woodlands.