IRS complaint filed alleging tax fraud by the U.S. Chamber of Commerce

The U.S. Chamber Watch is taking some bold action to check the power of the U.S. Chamber of Commerce. The nonprofit, formed in May of this year, just filed a complaint with the IRS alleging:

...before the 2004 election, the AIG-affiliated Starr Foundation and the U.S. Chamber and its affiliates - under the leadership of Hank Greenberg and Tom Donohue, respectively - may have colluded to transfer over $18M from AIG’s affiliated charitable foundation (the Starr Foundation) to the National Chamber Foundation (the U.S. Chamber’s public charity) and ultimately to the U.S. Chamber. The U.S. Chamber then used that money for political purposes, including a campaign to roll back post-Enron corporate accountability laws, and re-elect President Bush. Using charitable dollars for political purposes is expressly illegal.

In response, U.S. Chamber Watch is calling on the IRS to investigate these serious violations and revoke the nonprofit status of the National Chamber Foundation.

The complaint, filed on the Friday before September 11, received little media attention. Eric Lichtblau of the New York Times appears to be the only reporter to cover the filing. His article went up on the NYT website September 10 and a version of the article was in the printed New York edition on September 11. Lichtblau was not able to get a comment from the IRS. It is not known if the IRS will take any action and if it does, don't expect a swift determination:

I.R.S. regulators have often been wary of wading into political grievances, particularly after evidence emerged during the Watergate scandal that the Nixon White House had sought to use the agency for political purposes.

But in recent years the agency has occasionally gotten involved in politically tinged controversies. In one high-profile case in 2004, Republican complaints led it to open an investigation into the N.A.A.C.P.’s tax-exempt status after the group’s leader criticized President George W. Bush in a speech. The I.R.S. concluded two years later that the remarks did not violate the group’s nonprofit restrictions on political activity.

Lichtblau's summary of the complaint:

Cyrus Mehri, a Washington lawyer who brought the I.R.S. complaint on behalf of U.S. Chamber Watch, said in an interview that the chamber’s current political activities were, in effect, being underwritten with money intended for charitable work.

The complaint focuses on loans and grants totaling about $18 million that were made beginning in 2003 to a nonprofit affiliate, the National Chamber Foundation, by the Starr Foundation, a charity started by the founder of A.I.G. and now led by Maurice R. Greenberg, the insurer’s former chairman.

The U.S. Chamber Watch has a website that describes the purpose of their organization as follows:

The mission of U.S. Chamber Watch is to promote greater transparency and accountability in American political processes by shedding light on the funding and practices of the largest private interest lobbyist in America, the U.S. Chamber of Commerce.

U.S. Chamber Watch conducts research on the activities of the U.S. Chamber and cooperates with small businesses, investors, and consumer protection, environmental and other public interest groups dedicated to protecting an open American political process. U.S. Chamber Watch will educate members of the public, elected officials and the business community, to challenge the U.S. Chamber’s misrepresentations and distortions of fact and to hold accountable the anonymous funders of the U.S. Chamber’s extremist political advocacy.

The nonprofit was formed by a group of five unions but none of those unions are named on the website.

Chamber Watch is providing a full copy of the complaint (16 page pdf) here. They are also providing a Question and Answer on the complaint and implications of the complaint.

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...when I still had my store, a representative of the U.S. Chamber of Commerce came in to get me to join.

She showed me a picture of Congress, saying "This is the biggest collection of crooks ever assembled."

My response was to kick her out of the store.

Now, I'm even happier that I did.

business owners and local chambers of commerce were as wise as you. I am glad this new watchdog is working to monitor the Chamber. The unions have lost a lot of power and standing in the last couple of decades but they are still one of the few in a position to be able to be somewhat of a check on corporate America.