NY Attorney General Launches Investigation of NRA’s Tax-Exempt Status

The National Rifle Association is in turmoil and New York Attorney
General Letitia James just added to the group’s ongoing problems.

On the same day that Oliver
North was forced out as NRA president after a failed attempt to oust Chief
Executive Wayne LaPierre (imagine that, Oliver North trying to organize a
coup), a spokesperson for James’ office confirmed that New York’s attorney
general had opened a formal investigation of the NRA’s tax-exempt status,
including issuing subpoenas and an order for the gun-lobby group to preserve
internal documents.

“The Office of New York State Attorney General Letitia James
has launched an investigation related to the National Rifle Association (NRA),” a spokesperson for James’ office told NPR. “As part of this investigation,
the Attorney General has issued subpoenas. We will not have further comment at
this time.”

An outside lawyer for the NRA told NPR that the organization
would “fully cooperate with any inquiry into its finances.”

Last year, before she was elected, James promised
to investigate the NRA’s nonprofit status as part of her platform to
address gun violence, the New York Daily
News reported at the time. James has called the NRA a “terrorist
organization.” As a 501(c)(4) organization, the NRA can conduct lobbying, and
donations to the group are not tax-deductible, as the newspaper pointed out.
But the NRA appears to circumvent this at times via its foundation, a 501(c)(3)
organization.

A recent
profile of the NRA by The New Yorker,
citing federal tax forms, charity records, corporate filings, and other internal
documents, noted that “a small group of N.R.A. executives, contractors, and
venders has extracted hundreds of millions of dollars from the nonprofit’s
budget, through gratuitous payments, sweetheart deals, and opaque financial
arrangements.”

A senior NRA employee described the environment at the
organization as “distinguished by secrecy, self-dealing, and greed, whose
leaders have encouraged disastrous business ventures and questionable
partnerships, and have marginalized those who object.”

The former head of the Internal Revenue Service division
that oversees tax-exempt organizations, Marc Owens, told The New Yorker, “The litany of red flags is just extraordinary.”

In response to that article, the advocacy group Everytown
for Gun Safety filed
a complaint to the IRS over the NRA’s tax-exempt status. Everytown for Gun
Safety also called for federal and state investigations into the NRA’s charity
operation.

“We’ve seen a lot of smoke — now there is fire,” Nick Suplina, managing director for law and
policy at Everytown, said in a statement at the time.

The complaint notes that the NRA Foundation allegedly
transferred $19.2 million and $18.8 million in tax-deductible donations to the
NRA in 2016 and 2017, respectively. The foundation also apparently loaned the
NRA $5 million. All of this could spell big trouble for the NRA given the
recent announcement by the New York attorney general’s office.

And it couldn’t have happened to
a worse group of people.

As The New York Times noted, James has
jurisdiction over the NRA because it was chartered in New York. Her office
has broad authority to investigate nonprofit groups, as was seen in the recent
action against Donald Trump’s charitable foundation. Last December, under an
agreement with then-New York Attorney General Barbara Underwood, the Trump
Foundation was dissolved due to “a shocking pattern of illegality.”