Opinion Page: Without federal audits, tax scammers and nonprofit cheats would go undetected

March 17, 2023

From the St. Louis Dispatch, January 14, 2023:

“Examples of abuses by just a few St. Louis-area federally registered nonprofits underscore why the Internal Revenue Service and other federal agencies deserve to be fortified with funding and staffing rather than weakened, as Republicans in Congress would like to see. Nonprofit status allows people to avoid paying taxes, ostensibly because they are performing a function serving the public interest. But all too often, nonprofit status serves more to line directors’ own pockets at public expense.

As the Post-Dispatch’s Jacob Barker reports, one St. Louis-area nonprofit, Sister of Lavender Rose, launched a food-preparation company called Food For All to take advantage of federal funding to feed school kids. When Missouri inspectors arrived at the company’s University City registered address, what they found was Elmo’s Love Lounge. That was only one of multiple warning signs that something was seriously amiss. State officials directly say the nonprofit, founded in 2017 by Cymone McClellan, submitted false or fraudulent documents and claimed thousands of dollars for meals it never provided.

Nonprofits must submit an IRS Form 990 annually, outlining revenues and expenditures. McClellan’s last publicly available filing was in 2018, when she listed a $30,651 salary and $191,122 in revenues. But deep down in the filing is a notation for $120,045 for unspecified and unexplained “contract workers” — a red flag for potential donors trying to verify that money is going to good causes instead of wasteful overhead. The USDA child-feeding program paid out $20.6 million to New Heights Community Resource Center in St. Charles. The founder, Connie Bobo, used some of the nonprofit’s money to purchase a $975,000 house in St. Charles.

That’s just two cases in the microcosm of the St. Louis area. Thousands more exist across the country, and that’s the gargantuan task facing IRS auditors as they ferret out nonprofit cheaters along with hundreds of other important functions the agency performs. It takes lots of human and computing power, which requires funding to expose waste and abuse.

Republicans say they want to reverse provisions of the Inflation Reduction Act that will boost the IRS budget by $80 billion so it can hire thousands more agents in hopes of clawing back $180 billion from scofflaws and tax cheats over the next decade. It’s people like McClellan, Bobo and West who could benefit if the GOP succeeds, allowing them to rest easy in the assurance that no one will catch up to any new legally dubious programs they might be hatching.”

darryll jones