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Hollywood Conservative Group Grapples With IRS Scrutiny As It Seeks Tax-Exempt Status

Hollywood’s largest fellowship of conservatives and right-of-center independents, Friends of Abe, has kept a low profile, driven by the desire to network with like-minded showbiz figures in a left-leaning industry.

But the org has been engaged in an effort of almost three years to establish 501(c)3 non-profit status that has posed a challenge to its ability to stay under the radar yet obtain a common non-profit status that has been given to other Hollywood-connected non-profits and charities. That has drawn the scrutiny of the Internal Revenue Service.

At one point, according to sources familiar with the IRS review, the agency inquired about obtaining access to a portion of its website that would allow it to view a list of members, which Friends of Abe did not provide, although that was not in the most recent list of questions that the agency sent to the group last week.

“It has been a slow process for FOA,” said Jeremy Boreing, a director, screenwriter and producer who is a lead organizer for Friends of Abe. “They (IRS) have asked for an awful lot of things. We have been spending the last three years trying to get that determination.”

In the most recent inquiry, the IRS asked for information such as the nature of events they have held featuring speakers Paul Ryan, Rick Santorum and Herman Cain, and whether they were candidates for office at the time, sources said. They also asked for information about how speakers were selected, and why a speech introducing Cain could not be considered campaigning.

They also asked for the criteria for such figures as Thaddeus McCotter and Kevin James to have advertisements of meet-and-greet appearances post on their website. The IRS also has examined other portions of the group’s website, accessible only to members and including postings about various events as well as a job board listing of openings in the industry.

The IRS’s guidelines for 501(c)3 organizations, set up so charities and educational entities can have tax exempt status, say that it cannot be an “action organization, i.e., it may not attempt to influence legislation as a substantial part of its activities and it may not participate in any campaign activity for or against political candidates.”

The organization is not exactly secret, as the press has reported such figures as Kelsey Grammer, Dennis Miller, Gary Sinise, Lionel Chetwynd and Jon Voight as FOA members, and many of those celebrities have been public about their political opinions. After launching almost 10 years ago, its regular functions have drawn an array of national political figures, like House Majority Leader Eric Cantor and then-Republican National Committee chairman Michael Steele, with larger annual gatherings of about 1,500 people at David Murdock’s Ventura Farms.

But its events are closed to the press, primarily because lesser known members have expressed fears that their conservative positions will be held against them in the hiring process. And some members say they have been concerned about giving access to specific membership information, not just because of the prospect of it being released to the public because of the industry history of the blacklist and the implications of “turning over names,” as one member said.

Nevertheless, the most recent letter from the IRS seeking more information, which included a dozen or so questions for more information, did not include any request for a a roster of members.

“The list has been a matter of discussion,” Boreing said. “I know the membership list has come up, but I don’t know if that is a requirement in our determination.”

An IRS spokesman said that they could not by law comment on individual cases. Boreing declined further comment.

Organizers of its events say that it is a fellowship, even though ideology has brought them together, and that it is neither an outlet for campaigning or for fund raising, and that it does not endorse candidates. Some members wear Friends of Abe buttons, with its name a reference to Abraham Lincoln. It’s also a play on Friend of Bill, used by those close to Bill Clinton as well as members of Alcoholics Anonymous.

“We have no political agenda at FOA,” Boreing said. “Our agenda is our fellowship.”

He added, “FOA is not trying to steer any outcomes. It is just trying to give opportunities for members to meet up with one another.”

Many organizations that are engaged in forms of political activity file two statuses: The People for the American Way, co-founded by Norman Lear, lobbies on a number of progressive issues, is registered as a 501(c)4, defined as a social welfare organization and including unions and trade associations that are permitted to lobby. But it also has a 501(c)3 designation for the People for the American Way Foundation, which handles its educational and voter registration work.

The nature of the IRS’s inquiries into groups applying for 501(c)4 nonprofit status became the subject of considerable controversy last year, after revelations that the IRS put greater scrutiny on applicants based on their names or political affiliation. An Inspector General’s report concluded that the agency used “inappropriate” criteria in identifying groups with specific policy positions, like conservative groups or ones with “Tea Party” in their names.

In response, the IRS issued proposed new guidelines in November in an effort to better define the application process.

Elizabeth Kingsley, attorney specializing in nonprofits at Harmon, Curran, Spielberg & Eisenberg in Washington, said that when it comes to applicants for tax-exempt status, it would be “inappropriate” for the IRS to ask for a list of members, but “it may not be inappropriate to ask for qualifications for members.”

She said that it was also “relevant question” to ask about the purpose of a political figure’s speech, as the IRS  was to make sure that a group isn’t engaged in campaign activity.

“Those are not crazy questions for an organization trying to determine a standard, and one that is very vague and not really well defined,” she said. She also said that the IRS, in trying to determine if an organization is in the public interest, wants to make sure that the benefits of an organization don’t accrue to a select number of members.

But she acknowledged that suspicions would be raised given the revelations of the type of questions that were asked of some groups.

“If their initial action was a very negative intrusive request for information, and now they are going to be asked everything through that lens,” she said.

Frances R. Hill, professor at the University of Miami School of Law, also said that it would be “virtually never appropriate” for the IRS to seek to see a list of members. Of particular concern, she said, is the years-long backlog of applicants waiting to see if their status is approved.

“Here’s the deal: The IRS under the prior management, to use a polite phrase, lost control of the inventory and all sorts of groups got caught up in it,” she said.

She said that a group like Friends of Abe will have to demonstrate that it has a publicly available benefit, a requirement for 501(c)3 status, allowing donors to deduct them money they give from their tax returns. “I don’t know the facts of the organization so it is hard to say, but the question [in all cases] is who is the charitable class of beneficiaries getting the public benefit?”

Marcus Owens, attorney specializing in nonprofits at Caplin & Drysdale in Washington, said that he thinks that “where the IRS is going is, “How do you become a member, and is the group closed or open. But once again, who the members are, the identity of the members isn’t particularly relevant for them unless it is a front for some business or for a political party.”

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