Brody calls for IRS investigations

By: By Imari Scarbrough -

RALEIGH — Rep. Mark Brody announced Sunday that he will file a bill to prompt the IRS to look into whether the NCAA and ACC violated their tax-exempt status last year over House Bill 2.

Both the NCAA and ACC were among a host of businesses and organizations that vowed to boycott North Carolina over House Bill 2. The NCAA moved seven championships for this academic year to other states in September and the ACC later said it would move its 10 championships from North Carolina.

By doing so, both organizations have committed “financial extortion,” according to Brody, and prompted his decision to file the bill. He announced the decision in a Facebook post on Sunday.

The representative said that both the NCAA and ACC both jeopardized their tax-exempt status according to IRS rules.

“As far as the bill itself with the tax-exempt status is the only way that we can fight the economic extortion that goes along with the move by the ACC and the NCAA to force us into — force us being the General Assembly — into passing social legislation that has literally nothing to do with their core mission of their organizations,” Brody said. “And that’s what it is, is we believe — or I believe and my sponsors believe — that they stepped out of bounds and out of the scope of what they’re allowed as a tax-exempt organization by not only lobbying for something that’s not anywhere near their core principles and values, but that they’re trying to usurp the proper function of the General Assembly, which is to protect privacy and safety rights of the citizens. They have no business being in there, but yet they’re pushing this social legislation and backing it up with extortion.

“As far as the timetable goes on how we want to move it, that’s the next step, to — once it gets read in, we’ll get our committee assignment and from there we’ll move on,” Brody continued. “But we’re hoping the public will get more involved in this issue and kind of drive it all.”

His bill would push the state to ask the IRS to investigate.

“Number one, you’ve got to put in perspective, this bill allows the General Assembly to file a formal complaint with the IRS,” he said. “The IRS will then make the determination to do the investigation and make the determination. It’s not like a lawsuit where you have to present your case or anything, this is where we present our case in the form of a complaint form and the IRS takes it from there.”

The IRS doesn’t have a definite metric of how much lobbying is “too much.”

“In general, no organization may qualify for section 501(c)(3) status if a substantial part of its activities is attempting to influence legislation (commonly known as lobbying),” the IRS states on its website. “A 501(c)(3) organization may engage in some lobbying, but too much lobbying activity risks loss of tax-exempt status.”

“An organization will be regarded as attempting to influence legislation if it contacts, or urges the public to contact, members or employees of a legislative body for the purpose of proposing, supporting, or opposing legislation, or if the organization advocates the adoption or rejection of legislation,” the IRS adds. “Organizations may, however, involve themselves in issues of public policy without the activity being considered as lobbying. For example, organizations may conduct educational meetings, prepare and distribute educational materials, or otherwise consider public policy issues in an educational manner without jeopardizing their tax-exempt status.”

“What the IRS uses is ‘substantial,’” Brody said of the law. “They use the word ‘substantial’ and what they say is that you can’t do a substantial part of your organization is lobbying or political activity. For example, if the North Carolina General Assembly says, ‘We’re going to stop funding university athletics,’ well, that would be an appropriate place for the NCAA and their conferences to send somebody here and lobby for, ‘I think that’s a bad idea,” okay? ‘That’s a bad idea.’ But if we also, we’re looking at the word ‘substantial’ meaning, it’s a substantial variation or deviation from their core mission. If you’re a non-profit organization, you have to state your core mission, and you can vary a little bit but if the IRS won’t enforce a substantial variation of their core mission, then what’s the use of limiting the non-profits? I mean, a nonprofit could do anything, even get involved with politics, if you want to vary from your core mission.”

The word “substantial” may be vague.

“The IRS needs to define that, and we’re prompting them, we’re saying, ‘We bring this case before you to define what that means,’” Brody said.

Asked if he believes a ruling in his favor could set a precedent, he said he does.

“I think if the IRS rules it did violate their nonprofit status, I think it would set precedents for every non-profit organization,” he said.

Brody said he anticipates “a lot of support” if the media helps publicize the bill.

“I think the majority of North Carolinians will support this, but I don’t know — a lot of it will be relying on the media to get the message out, to get an accurate message,” he said.

Congressman Richard Hudson, R-Concord, who formerly represented Anson County, voiced a similar belief to Brody’s in a statement issued via email Sept. 14, 2016.

“This is political theatre by the NCAA and ACC,” Hudson said at the time. “If these multi-million dollar, tax-exempt organizations were interested in social change and not making a political statement, they would proceed with their marquee events in North Carolina and enact any transgender bathroom policy they wanted. This blatant political move — less than two months before the election — brings into question their tax exempt status. This is an avenue we intend to explore.”

Late Monday afternoon, Brody said he intended to file the bill that day but was having a delay with a primary sponsor. The bill was not listed on the North Carolina General Assembly’s website among House bills filed that day.

Reach reporter Imari Scarbrough at 704-994-5471 and follow her on Twitter @ImariScarbrough.

Claims ACC, NCAA could have violated tax-exempt status over HB2

By Imari Scarbrough

Eventual tax changes?

During the National Prayer Breakfast, President Donald Trump declared that he would remove the Johnson Amendment. In his speech, Trump said that he grew up in a “churched home” and that those in the room with him had their own religious beliefs.

The amendment disallows 501(c)(3) nonprofits from supporting or opposing political candidates.

“The people in this room come from many, many backgrounds,” he said. “You represent so many religions and so many views. But we are all united by our faith in our creator and our firm knowledge that we are all equal in his eyes. We are not just flesh and bone and blood. We are human beings with souls. Our republic was formed on the basis that freedom is not a gift from government, but that freedom is a gift from God.

“It was the great Thomas Jefferson who said, ‘The God who gave us life, gave us liberty,’” Trump continued. “Jefferson asked, ‘Can the liberties of a nation be secure when we have removed a conviction that these liberties are the gift of God?’ Among those freedoms is the right to worship according to our own beliefs. That is why I will get rid of, and totally destroy, the Johnson Amendment and allow our representatives of faith to speak freely and without fear of retribution. I will do that. Remember.”

Brody said that he has been against the amendment, named for then-Senator Lyndon B. Johnson, “since Johnson submitted it.” Congress approved the amendment in 1954.

“I’ve started that since Johnson submitted it,” he laughed. “So, yeah, I would support that.”

Although he disagrees with the Johnson Amendment, he believes the NCAA and AAC need to be held to the tax law for non-profits.

“The Johnson Amendment dealt with churches, and we’ve always had a special place in this country for churches and the churches that do their mission, and their mission is to teach the word of God as they see it and kind of direct peoples’ lives in that direction,” Brody said. “Now, if that goes along with politics, well, then, obviously, that’s part of the direction of everything that you support this, your support that, are you against this or that, do you support these candidates, etc. We’ve had a separation of church and state, meaning that the government can be involved in the affairs of the church, not the other way around.”

The Johnson Amendment affects all non-profits whether religious or secular, according to the IRS.