Putting the IRS to Political Use?

In September 2005, an Internal Revenue Service auditor darkened the door of Greenpeace, the organization known for its frontline environmental activism against nuclear testing, commercial whaling and destruction of wilderness, and stayed for three months.

“There’s no doubt there was a political motive behind it,” says Carol Gregory, spokeswoman for Greenpeace.

According to the group, the auditor confirmed that the investigation was instigated by a letter sent in 2003 to the IRS by Public Interest Watch (PIW), a Los Angeles-based nonprofit organization whose motto is ​“Keeping an eye on the self-appointed guardians of the public interest.”

PIW asked the agency to investigate the U.S. affiliate of Amsterdam-based Greenpeace for using tax-exempt donations to fund non-tax-exempt activities in violation of U.S. tax laws. 

“I don’t have a professional problem with Greenpeace’s agenda; I have a problem with them using their tax-exempt status to engage in what is, in my opinion, political behavior,” says Lewis Fein, PIW’s interim executive director. ​“We police nonprofit abuse; we are non-ideological.”

Greenpeace believes that Exxon Mobil Corp., which for the past five years has been a frequent target of Greenpeace political actions for its position on global warming, was the catalyst for the audit. ​“We were campaigning very effectively against Exxon Mobil and it was part of their tactic to try to silence us, or at least tie us up in knots in dealing with the audit,” says Tom Wetterer, a Greenpeace attorney.

In 2003, PIW was almost entirely funded by Exxon Mobil. Of the $124,094 in donations PIW received between August 2003 and July 2004, $120,000 came from the oil company.

According to Fein, the decision to focus on Greenpeace was not influenced by Exxon Mobil’s funding. ​“I have never spoken with anyone from Exxon; nobody has ever called me from Exxon; I have never corresponded with anyone from Exxon,” said Fein, who took over in March 2004.

​“I’d be surprised if everyone connected to PIW back then could make the same statement, given that then Exxon Mobil was pretty close to being its full funder [at that time],” says Wetterer.

In an e-mail, Exxon Mobil spokesman Mark Boudreaux said the corporation is no longer funding PIW and gave its last donation in 2004. ​“We gave general support to the organization, not earmarked for any specific purpose,” he said.

After an extensive investigation of Greenpeace’s compliance with tax laws as well as its political activities, the IRS auditor found that Greenpeace’s acts of civil disobedience were too small compared to its other activities to warrant a revocation of its nonprofit status. Wetterer says Greenpeace is making efforts to comply with several advisories issued by the auditor. 

“Our concern is that industry can use a nonprofit to come after us because we’ve challenged their opinion on global warming,” Wetterer says. ​“It’s a misuse of the tax system to get the IRS to conduct an audit based on spurious allegations.”

An IRS representative says the agency does not discuss the process for selecting organizations to audit. Anyone can refer an individual or business to the IRS for investigation through a letter or a referral form on the IRS Web site. Referrals can be made anonymously.

“[The IRS has] simply refused to provide statistical data in terms of what their enforcement is,” says Susan Long, co-director of the Transactional Records Access Clearinghouse (TRAC), a Syracuse, N.Y.-based organization that researches the federal government’s staffing, spending and enforcement activities.

Early this month, TRAC won a lawsuit against the IRS in federal court, which ordered the agency to turn over data pertaining to tax audits and examinations. ​“Hopefully part of what will be there is some information about sources of audit and statistics,” Long says.

In the meantime, the reasons behind IRS audits of nonprofit organizations remain elusive.

Fein declined to comment on organizations currently under investigation by PIW. But other nonprofits on the ​“Dirty Half Dozen” list on PIW’s Web site include Rainforest Action Network and MoveOn​.org, as well as Pat Buchanan’s The American Cause and the anti-immigration group Federation for American Immigration Reform.