New York Times on Al Sharpton’s Nonprofit

In As Sharpton Rose, So Did His Unpaid Taxes, the New York Times has presented quite a few details concerning the “more than $4.5 million in current state and federal tax liens against [Al Sharpton] and his for-profit businesses.”  What is worthy of noting on this blog is what the story has to say about the nonprofit that Mr. Sharpton founded, the National Action Network, a section 501(c)(4) organization (according to the entity’s donation webpage).  This nonprofit, says the Times, “appears to have been sustained for years by not paying federal payroll taxes on its employees.”   Here are some of the most troubling excerpts:

With the tax liability outstanding, Mr. Sharpton traveled first class and collected a sizable salary, the kind of practice by nonprofit groups that the United States Treasury’s inspector general for tax administration recently characterized as “abusive,” or “potentially criminal” if the failure to turn over or collect taxes is willful.

 

Mr. Sharpton and the National Action Network have repeatedly failed to pay travel agencies, hotels and landlords. He has leaned on the generosity of friends and sometimes even the organization, intermingling its finances with his own to cover his daughters’ private school tuition. …

 

Even though state law prohibits nonprofits from making loans to officers, Mr. Sharpton said National Action Network had also once lent him money to cover his daughters’ tuition. …

 

With the National Action Network’s finances always tenuous, that year it quietly paid $70,000 toward the judgment against one of Mr. Sharpton’s co-defendants in the case, Alton H. Maddox Jr., a lawyer who was suspended for refusing to cooperate with a grievance committee investigating his conduct in the Brawley case. Mr. Sharpton acknowledged the payment in an interview last week, saying the nonprofit’s board had supported the idea that Ms. Brawley deserved to be represented.

 

With Mr. Sharpton focused on the 2004 presidential race, National Action Network’s finances were reaching crisis levels, tax documents and other public records show. The group’s revenues totaled just over $1 million in 2004, about half of what they had been two years earlier. Nevertheless, it picked up expenses from Mr. Sharpton’s presidential bid: $181,115 in consulting and other costs that should have been charged to his campaign, the Federal Election Commission later found. …

 

In 2009, when the group still owed $1.1 million in overdue payroll taxes, Mr. Sharpton began collecting a salary of $250,000 from National Action Network. …

 

These excerpts raise issues that, if factually based and resolved against the nonprofit, could suggest grounds for revocation of its federal income tax exemption.

Mr. Sharpton is not taking the story passively.  His response to the piece, also in the Times, appears here – along with rebuttals from the Times.

JRB