Partisan Challenge to NAACP Tax Exempt Status Ends

he ruling ended its two-year investigation into whether a 2004 election-year speech by NAACP Chairman Julian Bond violated rules prohibiting tax-exempt organizations from endorsing or opposing political candidate.

The NAACP said the IRS determined "that political intervention did not occur" in relation to Bond's speech at the organization's annual convention that year. The decision came six weeks after Bush addressed the NAACP's convention for the first time during his presidency.

"It's disappointing that the IRS took nearly two years to conclude what we knew from the beginning: the NAACP did not violate tax laws and continues to be politically non-partisan," said NAACP President and CEO Bruce S. Gordon. "Tax-exempt organizations should feel free to critique and challenge governmental policies under the First Amendment without fear of IRS intervention."

The IRS launched the audit in October 2004, three months after Bond criticized Bush administration policies in his July 11 speech. In an October 8 letter, the IRS said the NAACP "distributed statements in opposition of George W. Bush for the office of the presidency." The letter also said that Bond's speech "condemned the administration policies of George W. Bush on education, the economy and the war in Iraq."

Among the audit-related documents obtained by the NAACP during the investigation and released to the public was a letter from then-Rep. Robert L. Ehrlich Jr. asking the IRS to respond to a complaint about the NAACP from political donor Richard Hug.

The documents also included letters calling for an investigation of the NAACP from Sens. Lamar Alexander (R-Tenn.) and Susan Collins (R-Maine); then-Sen. Strom Thurmond (R-S.C.) U.S. Reps. JoAnn Davis (R-Va.) and Larry Combest (R-Texas). Marcus S. Owens, an attorney with the Washington, D.C., firm Caplin & Drysdale, and the NAACP's representative during the audit, said he's still perplexed about the IRS's rationale for the audit and the investigation's timing.

"I find it extremely unusual, the circumstances under which the audit was begun – the timing of it, the nature of the allegations," said Owens, who led the IRS's exempt organizations division for 10 years.

While conservative organizations like the Heritage Foundation and the American Enterprise Institute were "pumping out press releases" in support of the president's policies during the 2004 election season, Owens said, the NAACP was singled out for an audit.

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