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Herger, Boustany and Reichert Ask IRS to Investigate AARP’s Tax-Exempt Status

April 08, 2011

Washington, DC – Today, Ways and Means Health Subcommittee Chairman Wally Herger (R-CA), Ways and Means Oversight Subcommittee Chairman Charles Boustany (R-LA) and Congressman Dave Reichert (R-WA) sent a letter to IRS Commissioner Douglas Shulman, requesting IRS to review and examine whether AARP, Inc. should continue to be exempt from federal taxation.  Specifically, the Congressional Members expressed a wide range of concerns uncovered in the recently released “Behind the Veil: The AARP America Doesn’t Know,” a report exposing the conflict between AARP’s drive for profits at the expense of the best interests of its members and the organization’s activities that call into question its tax-exempt status.  The facts in the report conclude that AARP stands to make upwards of one billion dollars over the next ten years as a result of the new health care law through the sale of AARP endorsed-Medicare insurance products.

The report began as an effort to conduct oversight of the tax-exempt sector and better understand AARP’s organization and structure.  The joint letter, signed by Herger, Boustany and Reichert specifically requests that the IRS review the findings detailed in the report and assess whether the IRS should conduct a further, more thorough examination of AARP.

The letter requested that the IRS examine:

  • Whether the operational activities of AARP, Inc. and its affiliates are primarily motivated by political or profit interests, instead of by service to the community;
  • The separateness of federal grant cash and lobbying activities between AARP’s Internal Revenue Code (IRC) 501(c)(3) charitable organizations and its IRC 501(c)(4) advocacy organization;
  • Whether it is appropriate to continue characterizing AARP Inc.’s revenue generated from insurance products as royalty income that is exempt from Unrelated Business Income Tax (UBIT);
  • Due to evidence suggesting AARP, Inc. asserts control over its affiliates, whether the activities of its affiliates should be attributed to the tax-exempt parent, AARP, Inc.

The full letter can be read here.