USA First Look

US government revokes tax-exempt status for Richard Spencer's white nationalist group

Internal Revenue Service records show that the National Policy Institute, which promotes racism, white nationalism, and populism, automatically lost its status as a 501(c)(3) nonprofit after failing to file returns for three years in a row.

Richard Spencer, who leads the racist National Policy Institute, speaks at the Texas A&M University campus in College Station, Texas, in December 2016.
David J. Phillip/AP/File
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Richard Spencer, a major figure in the so-called alt-right movement and head of the white nationalist National Policy Institute, may be facing trouble from the IRS.

An inquiry led by the Los Angeles Times found that IRS records indicated that Mr. Spencer may have not filed the proper paperwork to raise funds for the think tank for three years running, causing the group to lose its 501(c)(3) nonprofit status. The investigation also found that Spencer may have violated IRS rules that forbid nonprofits from expressing support or opposition for political candidates during an election year.

Spencer remains one of the most prominent white nationalist figures in the United States. He told the LA Times that he plans to appeal the IRS decision to remove the institute's tax-exempt status.

"I don't know what to say. I don't want to make a comment because I don't understand this stuff," Spencer said. "It's a bit embarrassing, but it's not good. We'll figure it out."

According to Spencer, an IRS error led him to think that the group did not have to file tax returns. Apparently, the government service had misclassified the institute, publicly listing it along with charities not required to submit certain forms. The IRS realized its mistake in February, retroactively removing the NPI from the tax-exempt list as of May 15, 2016, the due date for the group's nonexistent 2015 tax return. It is standard policy to remove tax-exempt status for a group that does not file tax returns for three years in a row.

But despite the alleged error on the part of the IRS, tax experts say that Spencer's group should have been filing taxes anyway.

"They should have known that they should have been filing," Philip T. Hackney, a law professor at Louisiana State University who formerly worked for the IRS specializing in nonprofits, told the Los Angeles Times. "It's very clear under the law that if you don't file for three years, you lose your status."

The NPI was founded by publisher William H. Regnery II in 2005 and raised $442,482 in tax-deductible contributions between 2007 and 2012 for white nationalist causes, despite its lack of tax transparency. Spencer claimed in the interview with the Times that the group had filed the proper paperwork to operate as a nonprofit in Virginia, but Virginia Department of Agriculture and Consumer Services spokeswoman Elaine Lidholm said that the status of the organization was still under review.

"It's not uncommon for someone to start a registration, not give us enough information and we never hear from them again," she said.

Spencer's trouble with the IRS comes after his very public dismissal from CPAC in February for his extreme right-wing views. As the Christian Science Monitor's Amanda Hoover reported at the time:

CPAC spokesman Ian Walters told NBC that Mr. Spencer’s ticket had been refunded, saying that his views were "repugnant."

A controversial figure, Spencer is credited with coining the term alt-right, which refers to a branch of the right-wing that has roots in white supremacy.... His presence has spurred outrage and protest at venues around the nation.

“I think everyone – everyone recognizes that there has to be identity politics in the world, that white people defined the United States, and we're now experiencing an increasing minority status,” he told NBC Thursday, noting that he had credentials and had spent about an hour at the event speaking with attendees and the media before he was “politely” asked to leave.

And Spencer's public political profile may have caused even more problems for his organization. According to IRS rules, leaders of 501(c)(3) organizations "cannot make partisan comments in official organization publications or at official functions of the organization" during election years.

This could be a problem for Spencer, who has made a name for himself over the past year as an ardent Trump supporter. At an alt-right conference just after the election Washington, Spencer made headlines by ending his speech with, "Hail Trump! Hail our people! Hail victory!", receiving Nazi salutes in response. And on the NPI website the September before the election, Spencer also published partisan comments: "I invite you to join us in the fight against Hillary Clinton, and the liberal agenda that's haunted our country for generations."

"I would say that the fundraising pitch on the website and the conference that they held where he made those comments, I think that those both definitely are infractions," Chuck McLean, a senior research fellow at Guidestar, a site that monitors and publishes records of nonprofits, told the Times.

Former IRS employee Mr. Hackney disagreed, however, saying the retroactive stripping of the tax-exempt status may allow the institute to sidestep the violation on a technicality.

"As a technical matter, they can't have violated the provision, because they weren't a charity anyway," he said.

The IRS spokeswoman told the LA Times that was unable to comment, since "federal law prohibits the IRS from commenting on a particular taxpayer or case."

This article contains material from the Associated Press.

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