IRS backs down from invasive requirements on Veterans groups

Once again America’s veterans have showed the rest of the public that standing up can make a difference, this time against one of the most feared agencies in the country, the Internal Revenue Service.


In August the IRS had issued a rule requiring veterans service groups such as the American Legion to turn over detailed and invasive records on all its members in order to maintain their tax exempt status. The information included personal information on all of its members.


The rule falls under “Exempt Organizations Examination Guidelines,” which falls under the jurisdiction of Exempt Organizations had Lois Lerner, who apologized for improperly targeting tea party groups earlier this year. Lerner also attempted to plead the Fifth Amendment when testifying before Congress.


However, prior to her invoking the Fifth Amendment rights she read a statement saying that she had not broken any laws. It was later determined that by reading the statement she had waived her rights and could have been forced to return and testify before Congress. After being suspended with pay for several months, Lerner abruptly retired from the agency with full benefits.


The relevant section of the rule stated that agents were required to review a list of information to verify its composition and as part of the verification process, “The organization must maintain members’ military service dates to establish that contributions to the organization are deductible.”


“The IRS now requires American Legion posts to maintain dates of service and character of service records for all members… The penalty for not having the required proof of eligibility is, apparently, $1,000 per day,” the American Legion stated at the time.


Earlier this summer, a number of American Legion outposts received a visit from IRS agents who asked them to provide reams of information on their member’s discharge forms known as a DD 214.


The American Legion fired back, and in response the IRS who was facing intense public scrutiny for asking similarly invasive questions of conservative groups such as the content of their prayers and attempting to force promises they would not engage in social activity such as protesting outside of a Planned Parenthood clinic, said the requirement for the DD 214 information has existed since 1999.


Rep. Jeff Miller (R-FL), head of the Veterans Affair Committee fired off a letter on Aug. 28 complaining about the rule change in the IRS manual which was made in 2011.


The IRS responded to Miller by claiming the rule change did not exist and was simply longstanding IRS policy.


“Your letter also requested a description of what prompted the January 2011 policy change. The January 2011 IRM revision was not a policy change, nor did we modify the IRM to require agents to request additional information. In the time frame provided, we have only been able to research our historical IRM sections dating back to 1999. However, our review of those IRM sections shows that this information regarding membership documentation is also in the enclosed 1999, 2003, and 2005 IRM updates,” the agency said.


While many individuals and organizations might have backed down at this point, the American Legion continued to press the issue, meeting with a series of IRS officials until they agreed to redefine their rule.


On Nov. 26, the IRS acquiesced and updated their manual to state that the only time agents can request information from DD 214 forms is if they have clear evidence of wrongdoing.


“If an agent possesses information that contradicts documentary information provided or if the organization fails to satisfy a reasonable request, agents may then request DD Forms 214 or other discharge documents from the organization in order to ascertain compliance with the federal tax laws cited herein. DD Forms 214 must include the name, department, component and branch of service, and record of service dates. All other personal information may be redacted,” the manual now says.

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