Ehrlich on Washington column, March 30, 1997

MEWS FROM Robert L. Ehrlich, Jr. Second Congressional District of Maryland 1 407 York Road, Suite 304 3 1 5 Cannon House Office Building Lutherville, Maryland 21093 Washington, D.C. 205 1 5 EHRLICH ON WASHINGTON Week of March 30, 1997 By Congressman Robert L. Ehrlich, Jr. IRS WAGING A BATTLE AGAINST VETERANS Imagine yourself in the following scenario: a number of years ago, the IRS initiated a thorough and extensive audit of your tax records. Upon completing the audit, the IRS gave you a clean bill of health. Since you believed you were behaving in accordance with the Internal Revenue Code, you continued going about your business as always. Suddenly, a number of years after the initial audit, the IRS is again at your door. This time, despite the fact you have kept the same records in the same manner and have not substantially altered your methods of operation, the second audit yields totally different results. At the completion of this audit, you are assessed a tremendous amount of alleged past-due taxes, harsh penalties, and accruing interest. Unfortunately, the above scenario is not purely hypothetical. A number of veterans’ organizations, specifically Veterans’ of Foreign Wars (VFW) and American Legion (AL) posts, are today facing a similar situation. The change in the IRS’s behavior dates back to 1993, when the IRS’s Exempt Organization (EO) Division, Mid-Atlantic Regional Office, began assessing various VFW and AL posts past-due taxes, penalties, and interest for a number of newly identified violations resulting from unrelated business income (such as through bull roasts, crab feasts, and hall rentals open to the public); unpaid excise taxes (from tip jars, pull tabs, poker machines); and