An HSUS chapter in IRS scandal

Jun 10, 2013

While the ongoing spectacle of the IRS scandal—or “IntimiGate,” as it’s been labeled on Twitter— has been the focus of citizen outrage, some details of interest to the ag community have been left largely unmentioned.

In addition to targeting certain groups for greater scrutiny, some have speculated the IRS was shielding other groups from investigation. In this case, the Humane Society of the United States (HSUS) and its questionable level of political involvement given its tax-exempt status seem to reside in the IRS’ blind spot.

Following the mid-May revelation by the IRS that it had been using “absolutely inappropriate” criteria to target conservative political non-profit groups, Rep.

Blaine Luetkemeyer, R-MO, sent letters to the secretary of the U.S. Department of Treasury and to the inspector general for Tax Administration. Luetkemeyer requested both organizations investigate the IRS’ lack of action on his yearsearlier request that the IRS review the legitimacy of HSUS’ tax-exempt status.

“In light of recent reports including the IRS’ admission of targeting conservative non-profit organizations, I write to bring your attention to my past efforts to provide the IRS with information concerning the activities of HSUS and its continued tax-exempt status and to formally request an investigation of the handling of my requests.”

Luetkemeyer explained he had sent a number of letters and “countless documents” to the IRS over the years and that he had received little more than decline-to-comment responses. He said at the time he had been frustrated by the lack of information, but assumed the IRS was taking the matter seriously. However, the apparent politically-motivated recent actions of the IRS have made him question that earlier assumption.

“I have serious doubts about the extent to which my requests for an investigation of HSUS’ tax-exempt status, a left-leaning non-profit organization, were given due consideration. Adding to my skepticism, I recently became aware that Ms. Lerner is herself an active member of HSUS and has spoken at HSUS events.”

According to her biography posted on, Lois Lerner—then and current (but on leave) director of the IRS’s tax-exempt organizations division—is an “active member” of HSUS. This was a point of much concern for Luetkemeyer.

“While it is disconcerting to think that Ms. Lerner, who oversees tax-exempt organizations for the IRS, may have disregarded my request for an investigation due to her own political beliefs or those of her staff, in light of the recent revelations about the activities of Ms. Lerner’s office and the absence of any other explanation from the IRS, many Americans will arrive at this very conclusion.”

Luetkemeyer reiterated his request for a speedy and thorough investigation into the handling of his earlier requests to the IRS, saying anything less would undermine the good work of ruleabiding non-profits and lead to Americans losing faith in “our democracy.”

As recently as Tuesday, June 4, Luetkemeyer told a local Missouri paper that the situation is a suspicious one.

“Come to find out, while they were dragging their feet, Lois Lerner, who has admitted that she targeted conservative groups, is a member and huge supporter of the Humane Society,” Luetekemeyer told the Quincy Journal. “It’s pretty obvious from that situation that she was not investigating and enforcing the law against liberal organizations.”

Devilish details

HSUS is a 503(c)(3) nonprofit organization. There is a long list of conditions required for an organization to qualify as 503(c)(3) taxexempt, but the most central include:

Must pursue an exempt purpose – Groups must pursue charitable, religious, educational, scientific, or literary interests; test for public safety; foster national or international amateur sports competition; and/or prevent cruelty to children or animals.

Earnings may not benefit individuals – The organization may not be created to benefit, nor can the earnings benefit an individual or private party.

It may not be an “action organization” – Groups cannot involve themselves with political campaigns for candidates at all and may not “attempt to influence legislation as a substantial part of its activities.”

Lobbying is defined by the IRS as “attempting to influence legislation.” It notes that “An organization will be regarded as attempting to influence legislation if it contacts, or urges the public to contact, members or employees of a legislative body for the purpose of proposing, supporting, or opposing legislation, or if the organization advocates the adoption or rejection of legislation.”

As HSUS heralds its annual “Lobby Days” and frequently congratulates itself on “legislative victories,” the concern of Luetkemeyer and his constituents is easy to understand. Additionally, the HSUS website has an entire section dedicated to the group’s political efforts, has an “Advocate Toolkit” with numerous tip sheets on how individual citizens can more effectively lobby, and emails and blog posts coming from HSUS often en courage subscribers/readers to take action. These details only muddle the waters all the more when taking the above definitions of lobbying into account.

However, the issue of what constitutes a “substantial part” of a group’s lobbying activities has been a source of contention for a long while. That seemingly semantic matter is the issue at hand for Luetkemeyer and others.

According to the IRS website, there are two main ways to measure lobbying activity in 503(c)(3) nonprofit organizations: the “Substantial Part” test and the “Expenditure” test. The public details on the “Substantial Part” test are somewhat vague, but the “Expenditure” test is a bit more direct. There are set ranges of allowable lobbying expenditures and a cap for lobbying expenditures each year over the course of four years dependent on the size of the organization.

According to HSUS’ publicly-available 990 tax forms, the organization did not elect to use the “Expenditure” test in 2011 (most recent available). It listed its “Political Campaign and Lobbying Activities” (Schedule C) expenditures as $2.57 million.

HumaneWatch, a watchdog group specifically dedicated to tracking HSUS and an affiliate of the Center for Consumer Freedom (CFTC), points to HSUS’ $62.9 million “Advocacy and Public Policy” expenditures as a curious detail when compared to the group’s stated lobbying spending.

WLJ reached out to HumaneWatch to shed some light on the massive difference between those numbers. Will Coggin, senior research analyst for CFCT, said that “Advocacy and Public Policy” spending isn’t the same as lobbying spending, but the size raises some questions.

“Advocacy can be something like an awareness campaign,” he explained. But he pointed out that, “they have such a robust fund for Advocacy and Public Policy. We’re just trying to raise questions.”

On the specific topic of HSUS’ lobbying expenditures, he still mentioned it was sizable.

“If you look at their schedule C [of tax form 990]… compared to other non-profits of a comparable size, they still spend more on lobbying.”

In a comparison chart compiled by CFTC of similarly-sized 503(c)(3) charitable organizations and their Schedule C expenses, HSUS’ reported lobbying was the largest at 2 percent of its total budget. Ducks Unlimited, the American Society for the Prevention of Cruelty to Animals, and Trust for Public Land were the closest organizations in terms of budget size to HSUS, and they spent 0.7 percent, 0.3 percent, and 0.6 percent of their overall budget on lobbying, respectively.

Coggin did stress, however, that it is the purview of the IRS to establish what is and isn’t lobbying, and what is or isn’t too much lobbying.

Wayne Pacelle, CEO of HSUS, in his May 31 blog post had some choice words for Luetkemeyer and Rick Berman of HumaneWatch and CFTC on the matter of Luetkemeyer’s renewed efforts with the IRS over HSUS’ lobbying.

“For a couple of years now, a few congressmen, led by a little-known three-term lawmaker named Blaine Luetkemeyer, R-MO, have been regurgitating the Berman claptrap and saying that the Internal Revenue Service should investigate The HSUS.”

What followed was a string of ad hominem attacks—direct and indirect— on both Luetkemeyer and Berman with no address of the underlying issue of potential excessive lobbying or the need for IRS oversight. Entertainingly, Pacelle accused Berman of being everything HumaneWatch accuses him of being—a PR front-man for a shadowy agenda to deceive consumers who only uses his organizations as a means of personal enrichment without regard for animals or people—and ended in suggesting Luetkemeyer redirect his concern over tax code abuse onto Berman.


Doubt regarding HSUS’ tax-exempt status in the face of its lobbying is nothing new and the paper trail of requests for IRS investigation of HSUS is long.

As a small example, Luetkemeyer contacted IRS Commissioner Douglas Shulman in March 2010 after a number of constituents expressed concern that HSUS was abusing its taxexempt status. In his letter, he presented a number of pieces of evidence, asked specific questions, and requested an investigation be conducted. A later letter to Lerner mentioned her being “not at liberty to comment on any potential IRS actions” regarding HSUS.

A month later, Rep. Peter Visclosky, D-IN, contacted Shulman also on the behalf of a concerned constituent. A year later still, six members of Congress addressed the same concerns on the part of their constituents and referenced the lack of relevant response to Luetkemeyer’s request for an investigation.

In documents requiring less political niceties than his official letters, Luetkemeyer has called the IRS’ treatment of his requests for investigation into HSUS “stonewalling” and a travesty. — Kerry Halladay, WLJ Editor