CREW Asks IRS to Investigate Nonprofit Org for Late Filing

March 22, 2018

The Honorable David J. Kautter
Acting Commissioner
Internal Revenue Service
1111 Constitution Ave., N.W.
Washington, DC 20224

Dear Acting Commissioner Kautter:

Citizens for Responsibility and Ethics in Washington (“CREW”) respectfully requests the Internal Revenue Service (“IRS”) investigate whether Freedom Frontier, a nonprofit organization exempt from taxation pursuant to section 501(c)(4) of the Internal Revenue Code (“Code”), failed to file its 2016 tax return on time.

Freedom Frontier's Failure to File Its Tax Return on Time

Freedom Frontier is a nonprofit corporation established in Texas in 2011 and granted tax-exempt status the same year.¹

As a section 501(c)(4) tax-exempt organization, Freedom Frontier is required to file annual Form 990 tax returns.² The tax returns must be filed within four and a half months after the end of the organization's fiscal year.³ For organizations like Freedom Frontier that use a calendar year cycle, the annual Form 990 is due on May 15 of the following year.⁴ The IRS automatically grants one three-month extension, and tax-exempt organizations may request — and are routinely granted — a second three-month extension for reasonable cause.⁵

Freedom Frontier's 2016 Form 990 initially was due May 15, 2017. If the organization received both of the allowable three-month extensions, Freedom Frontier's 2016 Form 990 due date was November 15, 2017.

To date, the IRS does not appear to have received Freedom Frontier's 2016 Form 990 tax return. Public information about tax-exempt organizations is available in the IRS's Exempt Organizations Business Master File Extract (“EO BMF”), which “includes cumulative information on exempt organizations” with data that is “extracted monthly,” is “available by state and region,” and represents “the most recent information the IRS has for these organizations.”⁶ The EO BMF was updated most recently on March 12, 2018.

CREW searched the comma separated value EO BMF files for each region on March 13, 2018 using the term “Freedom Frontier,” and located a listing for Freedom Frontier in the District of Columbia. According to that listing, the most recent information available for the group covers the tax period ending in December 2015, meaning it was extracted from Freedom Frontier's amended 2015 Form 990. By contrast, the EO BMF already contains 2016 tax year information for other nonprofits. For instance, One Nation, a section 501(c)(4) tax-exempt organization based in Virginia, filed its 2016 Form 990 on November 15, 2017.⁷ The EO BMF listing for One Nation includes information through the tax period ending December 2016.

Freedom Frontier's 2016 Form 990 itself does not appear available from the IRS. On November 17, 2017, CREW submitted a Form 4506-A request to the IRS's Return and Income Verification Services Unit in Ogden, Utah for Freedom Frontier's 2016 Form 990.⁸ CREW has not yet received a response to that request. On March 16, 2018, CREW followed up by calling the IRS using the Tax Exempt and Government Entities Customer Account Services phone number to ask about Freedom Frontier's 2016 Form 990 tax return. The IRS representative who took CREW's call said that if the information from the 2016 return was not in the EO BMF, it meant the agency had not received it yet. In addition, outside services such as Guidestar that provide the public information about tax-exempt organizations, including Form 990 tax returns provided to them by the IRS, do not appear to have Freedom Frontier's 2016 Form 990.⁹

In a further attempt to obtain Freedom Frontier's 2016 From 990, CREW also sent a letter requesting it from the organization on November 28, 2017, using the address listed in Part VI, Section C, Line 20 of Freedom Frontier's amended 2015 Form 990.¹⁰ CREW has not yet received a response to that request. On March 8, 2018, CREW called Freedom Frontier to request its 2016 Form 990 using the phone number listed in Part VI, Section C, Line 20 of the group's amended 2015 Form 990 and left a voicemail when the call was not answered. CREW's phone call has not yet been returned.

Violation

26 U.S.C. § 6033

Tax-exempt organizations are required to file annual Form 990 tax returns, and must file them on time.¹¹ Those tax returns are due within four and a half months after the end of the organization's fiscal year.¹² Tax-exempt organization with more than $1 million in gross receipts may be penalized up to $100 per day for filing late.¹³

Freedom Frontier's 2016 tax return was due May 15, 2017 and no later than November 15, 2017 if the group received the two allowed extensions, meaning that if the return has still not been filed it is between 127 and 311 days late. In addition, Freedom Frontier's gross receipts must have been more than $1 million during its 2016 tax year. According to Federal Election Commission (“FEC”) records, Freedom Frontier contributed $4,425,000 to independent expenditure-only committees in 2016.¹⁴ Since Freedom Frontier reported on its 2015 tax return that it ended the year with $311,293 in net assets, the organization could not have contributed $4,425,000 to political committees without having gross receipts of more than $1 million during its 2016 tax year.¹⁵

This is not the first time Freedom Frontier has had issues filing its tax return. In 2016, Freedom Frontier initially filed a Form 990-N for its 2015 tax year, telling the IRS it raised no more than $50,000.¹⁶ After CREW publicly reported that Freedom Frontier's filing of Form 990-N was inconsistent with the fact that the organization had contributed $250,000 to an independent expenditure-only committee in 2015, Freedom Frontier filed an amended 2015 tax return in April 2017, disclosing that the organization actually had raised $1,185,000 in 2015 and spent $873,707.¹⁷

Conclusion

Based on the publicly available information, Freedom Frontier apparently failed to file its 2016 tax return on time and is at least 127 days late in filing. Therefore, the IRS should investigate Freedom Frontier and, should it find that Freedom Frontier has violated its obligations under the Code, take appropriate action.

Thank you for your prompt attention to this matter.

Sincerely,

Noah Bookbinder
Executive Director
Citizens for Responsibility and Ethics in Washington
Washington, DC