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Resolutions approved in wake of IRS audits

Resolutions approved in wake of IRS audits

In the face of reports that The American Legion and other veterans service organizations (VSOs) are being targeted by the Internal Revenue Service, delegates to the Legion’s national convention in Houston recently passed three resolutions that include calling for Congress to look into the IRS’ field investigations into Legion posts chartered under 501(c)(19) – or nonprofit – status.

Auditors with the IRS reportedly are starting to fine Legion posts around the country for not keeping records of veterans’ DD-214s, the separation document given by the military to prove honorable service, or other valid documentation. The DD-214 reveals Social Security numbers, dates of birth and, in some cases, places of birth and medical information. The American Legion and IRS do not need this information; the information may be "blacked out" and a copy filed by the post. The Legion and the IRS only need your name, dates of service and character of service. Documents with this information need to be kept securely.

Legion members still serving in the U.S. Armed Forces won’t receive a DD-214 until they are discharged.

Legion Post 447 in Round Rock, Texas, was fined $12,000 for lack of compliance before finding documents to satisfy inspectors; the IRS said it can’t comment on individual taxpayers or organizations.

As a result, national convention delegates passed three resolutions regarding the IRS:

Resolution 62 seeks an amendment to Section 501(c)(19) of Title 26 U.S. Code to either remove the minimum percent of veterans in the post or to provide clarifying language that the minimum percentage be based upon the aggregate enrollments based on the entire national organization of the VSO, rather than on a local community-based post.

Resolution 63 calls for Congress to rectify the problems with Chapter 4.76.26.1 of the IRS Exempt Organizations Examination Guidelines regarding wartime service periods.

Resolution 64 calls for Congress to rectify problems with Chapter 4.76.26.2.2(2)b. of the Jan. 27, 2011, IRS Exempt Organizations Examination Guidelines so it shall provide for at least 75 percent of the members of which are past or present members of the U.S. Armed Forces and substantially all of the other members of which are individuals who are cadets or are spouses, widows, widowers, ancestors, or lineal descendants of past or present members of the U.S. Armed Forces, and that all of its members are either members of a veterans post or organization who are related to a member of such post or organization.

Legion posts must maintain a list of members and the category of membership (veteran, degree of relation or nonveteran or non-relative). If a post receives deductible contributions, it must also maintain a list of members, their dates of service, whether they are war veterans and, if not, whether they are spouses, widows, or widowers of war veterans, veterans or cadets.

Legion posts and departments have been in compliance and have kept appropriate records, and in good faith, with these directives as set forth by the IRS, and the Legions feels it is being wrongly targeted by the IRS, and is being held to arbitrary and capricious requirements that are inconsistent with IRS’s own publications.

Lawmakers agree. Since the reports surfaced, Sen. Jerry Moran, R-Kan., and Rep. Jeff Miller – chairman of the House Committee on Veterans Affairs – both have written letters requesting that the IRS respond to complaints its inspectors are asking posts to provide discharge papers or service records during reviews of their tax-exempt status.

"Even after they return home from war, veterans in America continue to fight battles," Moran said in a letter to Acting IRS Commissioner Danny Werfel. "Many struggle to find a job, face difficulties accessing quality health care services, or wait senselessly long periods of time for their benefits claims to be processed by the federal government. The last thing veterans should have to worry about is their privacy within veteran service organizations, or the ability of those organizations to endure seemingly arbitrary IRS audits and the severe financial penalties that could ensue. This news is deeply concerning to me and the thousands of veterans I represent in Kansas."

Miller also wrote a letter to Werfel.

"Congress has already provided for the tax exempt status of many veterans’ organizations in recognition of both the selfless service of their members and the important role VSOs play in honoring, remembering and assisting some of the most vulnerable and worthy among us – wounded warriors, disabled veterans, military families, and the widows, orphans, survivors, and dependents of the fallen," Miller said in a statement. "Allegations that VSOs are now being unfairly targeted by the very government they sought to protect and defend are nothing short of unacceptable to me."

More in Membership & Post Activities

 

PJ

November 4, 2013 - 7:43am

Legion is in violation of it's tax exempt staus everyday by allowing the local town drunks to enter the lounge everyday and spend their own money. Simple Remove the bar, and make those so called drunks do something for the community and help the vets they are to serve. Our little Post VT has no bar( Thus as you say No drunks)

Doug Enos

December 22, 2013 - 4:50am

Every Post has the opportunity to allow BONIFIFID Guests to enter the post. allowing the chance for a post service officer to interview the guest to see if they qualify for membership or veterans assistance. NO ONE is turned away at our post. Plus we are not a local cheap drink post. No one signs you in , you do not get served.

LAh

December 15, 2013 - 7:53pm

Very biased comment you must be a liberal,who cares if your Post has no bar!

Owl Creek Observer

October 5, 2013 - 3:14pm

Resolutions and statements from politicians are all well and good, but what is the bottom line regarding copies of DD Forms 214? Are we now required to keep them on file or not? When can we anticipate receiving firm guidance from Headquarters on this? If you ask a dozen different Legionnaires about it, you'll receive a dozen different answers.

Doug Enos

December 22, 2013 - 4:53am

read the original requirements for 501 c 19 status. You must and will have a DD 214 on file for every member/veteran. NOW times have changed. Secure the documents. locks, encryptions... Duh...

schehld

September 7, 2013 - 12:41pm

If I had the time I would like to start a nationwide movement to abolish all tax exmpt organizations. Starting with the American Legion. Expecting the IRS to monitor compliance of thousands of tax exempt organizations is an impossible task. My local Legion is in violation of it's tax exempt staus everyday by allowing the local town drunks to enter the lounge everyday and spend their own money. The current and past officers refuse to even read the IRS regulations and mistakenly believe anyone can use the post by simply signing in as a guest. I have withheld my support of the post for the past 2 years. When is the national going to clean up this mess. My guess is never. Dennis Schehl, Past Adjutant and Finance Officer, Sykesville Maryland Post 223.

Doug Enos

December 22, 2013 - 4:58am

Why punish all of us for one or two that choose to be rouge. Contact National and tell then of the behaviors IT WILL BE CORRECTED!!! American Legion National will not tolerate a rouge Post in any manor. Quite Bitching and act!! OUR national charter will not be lost due to a post on the run.

LAh

December 15, 2013 - 8:00pm

You are either a socialist or a reformed drunk maybe a member or a false religion, has you legion gone to VA hospitals collected food, clothes, toys for tots just what have YOU done to have such a bad attitude.

David Olson

December 3, 2013 - 4:31pm

Dennis, What you propose would be exactly what the government and the IRS wants. Socialism is the issue. Without our tax exemption status, the cost of performing the services to our veterans would triple and all these services would then have to be provided by our government who loves putting more people on their payroll to monitor and distribute the services. Then we would be supporting the drunks in the back rooms of congress and the senate along with the white house. Try withholding your dues from them!

Lenard E. Smith SGM, Retired

October 31, 2013 - 8:58pm

I would say the IRS should be abolished 10% flat tax, period.

mojolegion49

September 27, 2013 - 2:18pm

Dennis, i feel your pain, however, the problem is not with the drunks, its the leadership. I would encourage you to attend the monthly meeting and voice your opinions to the body. Then "RUN" for that office and kick the real drunks out on the curb, or reduce them to membership status. Some of the most effective leaders in this ares are retired military with tons of experience. We need to stop running away and hiding. Hell!! kick em out and stand up for your post and the many many great men and women who deserve to utilize that post

Crap

April 6, 2014 - 1:08pm

I will totally agree the fact and issues are leadership!!! The issue with standing up and fighting for office or what is right? Most legions I have been involved with all the officers are related, and accuse the members trying to make a change of doing something wrong. Mainly being accused of stealing and kicking them out on things they know are not true. I know of a legion that not one time did they swear any of their American Legion Riders into office. The commander at the time told the Director of the ALR when you don't have a receipt or lose a receipt hand write one out. For the first 2 to 3 years not one time did the Legion ask for any records from the ALR on anything. When the ALR director and spouse decided to step down from office the Legionnaire members accused them of stealing, had a CPA do an audit and found everything was accounted for. One of the officers for the legion signed a paper stating the director of taking his shirt off in the legion when in fact this officer was not present at the time of the alleged event took place. If they would have done an audit on this legion at the time they were falsely accusing the director and spouse they should have been doing an audit on the legion itself. Since then, I know for a fact they have removed all their old computers with new ones,things to make you wonder?? The ones behind everything are now holding offices themselves. The entire reason the director and spouse were kicked out for 99 years was they had issues with one of the family members in office at the time. Plus one of the officers knew the state golf outing that the spouse was involved with still owed the riders money.

Ronald DuBois

September 14, 2013 - 12:45am

Dennis Schehl - Post 223, Dear Dennis, It's not National's job to clean up the mess at Post 223, and as a past Officer you should know better than to use this as a forum to air the shortcomings of your Post. If the Officers of Post 223 can not institute and enforce the rules needed to prevent unauthorized people from using your Post, then you need new Leadership. Failing that, you should discuss it with County. Still no satisfaction? Bring it to Department. You do know what the Chain of Command is - right? I also suggest all Officers attend the appropriate classes at Officer Training School, which is actually a requirement. As for your movement to abolish all tax-exempt organizations, what would that solve? There is a very real need to exempt many types of organizations from Federal taxes, so they have the means to perform the duties they were created for. They still pay local and State fees and taxes, like the Sales tax and licensing fees. If anything needs to be abolished, it's the IRS - not tax-exempt organizations. Think about this - How many of your problems would go away if the IRS disappeared? This is a very real possibility that many groups are working on. Get involved. Your fellow comrade, Ron DuBois Chaplain and Past Commander, Post 128 Teaneck, NJ

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