Nevada County Tea Party leadership flap touches on national IRS scandal (VIDEO)
As a national controversy over IRS scrutiny of Tea Party groups’ taxes unfolds, representatives of a Nevada County chapter said interpretations of its own financial filings played a part in a leadership shakeup.
Depending on who tells the story, T. Michael Walker was either the interim president of the Nevada County Tea Party Patriots or the actual president.
Walker said he was asked in early January to replace president Nancy Garcia, as she suffered from severe pneumonia.
Garcia, who took over the presidency in January 2012 from cofounder Stan Meckler, said that Walker was aware from the beginning that his role was on an interim basis, as she retained full presidency. However, it was implied that if Walker managed the position on top of his personal professional duties and if the board were satisfied, he could ascend to full presidency, Garcia said.
“I wasn’t the interim president. I was the real president,” said Walker. “This interim president situation is disingenuous.”
Agendas from Tea Party meetings in the last six months refer to Garcia as “outgoing” and Walker as president, as does a California Secretary of State informational filing from April. Whatever his title, what is indisputable is that Walker was stripped of his leadership role and removed from the board when its members voted May 20 to reaffirm Garcia’s presidency.
“We are a grassroots group. You may be the president, but you have the same power as everyone else,” Garcia said. “Mike being leader was stressful to the board … He was working top down and that was causing friction.”
Tensions ran so high that after Walker’s last board meeting May 9, when he addressed what he described as “some serious financial irregularities,” five board members approached Garcia about resigning, she said.
The Nevada County Tea Party has a state franchise board lien of $2,250 against it for the 2010 and 2011 tax years, according to the Nevada County Clerk Recorders Office.
While Walker, a private investigator and certified insurance fraud examiner, alleges this amount stems from malfeasance, Garcia said the lien can be attributed to the Internal Revenue Service failing to certify the organization’s tax exemption for more than a year.
“Getting a tax letter from the IRS … it generally is a four- to six-month wait,” said Bill Neff, chairman of the board of the Center for Nonprofit Leadership, adding that a certification process taking more than a year is “way out of profile.”
The Nevada County Tea Party is not on the California Secretary of State’s list of tax-exempt organizations, which was last updated May 15.
Instead, it is still listed as a corporation, subjected to the $800 minimum franchise tax fee that all non-tax-exempt corporations incorporated or qualified in California are required to pay.
When that fee was not paid, further fines compiled and led to the lien, Garcia said.
On the same day that Walker was banished from acting president of the Nevada County Tea Party, Mark Meckler and the NorCal Tea Party Patriots filed the first class-action lawsuit against the IRS arising out of the national scandal that has embroiled the tax agency. On Tuesday, the Nevada County Tea Party board voted to join the lawsuit as well, Garcia said.
The IRS scandal erupted when the agency revealed in early May that agents assigned to a special team in Cincinnati had targeted the Tea Party and other conservative groups for additional, often burdensome scrutiny when they applied for tax-exempt status. The targeting lasted more than 18 months during the 2010 and 2012 election campaigns, hindering the groups’ ability to raise money, according to a report by the agency’s inspector general.
Since then, two top IRS officials have lost their jobs, and a third has been placed on paid administrative leave. Investigations by Congress and the Justice Department have begun.
The IRS was screening the groups’ applications because agents were trying to determine their level of political activity, its leaders have said. IRS regulations note that 501(c)4 tax-exempt social welfare organizations, such as Tea Party groups, may engage in some political activity, but such endeavors cannot be their primary mission.
It is a vague standard that agents struggled to apply, according to the inspector general’s report. Lawmakers in both parties have complained for years that overtly political groups on the left and the right have taken advantage of the rules to claim tax-exempt status and hide the identities of their donors, the Associated Press reported.
Garcia claims without the IRS tax exemption, California tax agencies would not recognize the Nevada County Tea Party Patriots’ nonprofit status.
That IRS tax exemption was granted in November, after first applying more than a year earlier, Garcia said.
Indeed, a search of the IRS’ tax-exempt list online includes the Nevada County Tea Party Patriots. But Northern California spokesman Richard Panic said verification of the date that the request was first submitted could only be ascertained through a Freedom of Information request.
“To hear stories of a couple years (to get a tax exemption) is way outside the norm,” Neff said. “I suspect, if the IRS doesn’t roll back these penalties, Congress will do it for them.”
However, Walker alleges that the Nevada County Tea Party’s tax woes cannot be solely blamed on IRS scrutiny.
“(T)he problem has been under way for over 28 months without a satisfactory resolution,” Walker said in a May 19 letter to Garcia and the Tea Party that went on to indicate that the organization filed financial records “incorrectly, purposefully misstating the actual yearly gross income of the organization to avoid paying the correct initial filing fee.”
In the letter, Walker said that previous presidents’ and financial officers’ purposeful omission of relevant financial facts and related actions has caused irreparable harm to the local Tea Party, an allegation Garcia denies.
“You have also tarnished my professional reputation and standing in the business community,” Walker wrote. “This is an unforgivable act … Your actions are a stunning example of greed, selfishness and unsustainable shameless ambition.”
After his banishment, Walker said he plans to remove his name from any official government documents that list him as a Tea Party officer.
“By taking me off the board, they have done me a favor,” Walker said. “Being voted off the board might be the best thing that could have happened.”
It is worth noting that the Nevada County Tea Party’s financial treasurer, Jodi Davis, resigned in June 2012, according to financial filings, as did Stan Meckler and his wife, Elaine Meckler, both in January 2012, according to Tea Party meeting agendas. Of the nine board members who ousted Walker, only one had been with the organization since its 2009 infancy, Garcia said.
After an initial anti-tax protest in 2009, Stan Meckler worked with his son, Mark Meckler, to build the local organization that helped launch a nationwide movement now boasting more than 20 million members, Stan Meckler previously told The Union.
Garcia acknowledges that when the local Tea Party began to take form, missteps may have occurred. For one, Garcia said that in early 2010, a man with the Redding Tea Party took on the role of filing for tax exemption for the Nevada County group.
“That never happened,” she said, noting the group later realized the problem after waiting for paperwork.
“He may have started filing, but we never got any paperwork. We basically had to start from scratch again.”
The California Franchise Tax Board lists the Nevada County Tea Party Patriots as not tax-exempt, that it is “active and in good standing” with the agency, said spokeswoman Denise Azimi, who added that it would not be in good standing if a lien was exercised against the organization. Azimi would not disclose if there was any pending investigation on its tax exemption.
But Garcia said that with the IRS exemption, the lien has been put on a 60-day review. The lien was still listed as active at the Nevada County Clerk Recorders Office as of Thursday.
“I know there are some things that did not get filed the way they were supposed when they were supposed to,” Garcia said. “But it was not that people were trying to hide anything. We’re all volunteers here.”
For his part, Walker said his mistake was agreeing to take the reins in January without properly vetting the organization’s finances first.
“I made that mistake,” he said. “I thought they had integrity.”
To contact Staff Writer Christopher Rosacker, email email@example.com or call 530-477-4236.
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