The Association of Community Organizations for Reform Now, or ACORN, is fast becoming radioactive to any organization contemplating doing business (or further business) with it. Federal agencies are no exception to the growing list of entities that recently have dropped their ties to the New Orleans-based nonprofit network. The Internal Revenue Service announced yesterday that it no longer would include ACORN as a partner in its Volunteer Income Tax Assistance program. The action comes in the wake of the House and Senate last week overwhelmingly voting to cut off federal funds to the group; the Census Bureau’s announcement that it would not include ACORN members as enumerators for next year’s Census of Population; and the Justice Department’s announcement of plans to review its grants to the organization. ACORN’s efforts at damage control, which now includes a lawsuit, can’t hide its looming implosion.
The IRS’ Volunteer Income Tax Assistance (VITA) program offers free advice to low- and moderate-income households in preparing tax forms. This year, the program helped about 3 million tax filers, some 25,000 of whom used ACORN. Granted, that’s less than one percent of the total. But the IRS, though belatedly, has come to understand that as too much. The nonprofit group last year had been rocked by revelations that founder-chief organizer Wade Rathke, likely with the help of the ACORN executive board, hid thefts totaling nearly $950,000 a decade earlier committed by his brother and chief financial officer, Dale Rathke. One of its affiliates, ACORN Housing Corp., has received $53.6 million in grants from the U.S. Department of Housing and Urban Development over the last 15 years, $27.8 million during last year alone, little more than a “counseling” boondoggle for people to receive mortgage loans based on highly questionable risk evaluation standards.
The group’s reputation, such as it was, went into the tank earlier this month with the public release of undercover videos showing employees of ACORN offices in Baltimore and other cities giving tax and mortgage loan advice to James O’Keefe and Hannah Giles, two young conservative activists posing as a pimp and a hooker, on how to legally open a brothel housing fictional underage illegal immigrant prostitutes from El Salvador. The undercover sting (see video) has proven enormously embarrassing to the entire ACORN organization, so much so that even partisan Democrats on Capitol Hill such as Rep. Barney Frank, D-Mass., now want little to do with the group. ACORN, rather than own up to its flouting of the law, responded yesterday by announcing it had filed a lawsuit in Maryland district court in Baltimore against Mr. O’Keefe (among other parties), and would file a similar action in California next week.
The Internal Revenue Service, fearing bad publicity, announced on September 23 that it no longer would include ACORN as a VITA program participant. “It is absolutely critical that taxpayers have trust in our Volunteer Income Tax Assistance program partners,” read a prepared IRS statement. “In light of recent events, the IRS has decided to terminate its relationship with ACORN.” ACORN already had anticipated such action. Its CEO and chief organizer, Bertha Lewis, sent IRS Commissioner Douglas Shulman a letter dated September 21 indicating her group’s temporary withdrawal from the program. She wrote:
As you know, ACORN has been the target of a sustained attack from conservative forces for a number of years. Recent videos generated by conservative activists, including one from our tax clinic in Baltimore, Md., have raised questions about our service programs. That is why I have suspended new clients into our service programs and am naming an independent review (sic) of these programs. Today I want to notify you that for the 2009 tax season, I am suspending all ACORN tax preparation services. It is clear that our the (sic) independent review will not be complete in time to allow these tax clinics to adequately prepare for the upcoming tax season. Upon completion of this review, we will revisit our participation in the process.
The latter sentence proved presumptuous. Two days later, the IRS pulled the plug. ACORN’s suit in Maryland against O’Keefe and others that same day showed how disingenuous its “concerns” over employee malfeasance really are.
But the IRS’s decision to break off its relationship with ACORN goes beyond the organization’s caught-on-candid-camera hijinx. As it turns out, ACORN owes a cartload of back taxes. Bertha Lewis told a “Fox News Sunday” audience on September 20 that her group “absolutely pays its taxes.” Let’s put that claim to the test. According to a Louisiana free-market think tank, the Pelican Institute for Public Policy, the IRS during the past year slapped a $548,213.25 tax lien against ACORN, while Louisiana tax officials imposed another $334,121.43 in liens. Pelican Institute researcher Steve Beatty visited the Orleans Parish Clerk of Courts office and discovered a September 3, 2009 IRS filing showing that an ACORN affiliate-alter ego, Elysian Fields Corporation, Inc., skipped five Social Security and Medicare tax payments between Third Quarter 2005 and First Quarter 2008. Moreover, ACORN made no federal unemployment insurance contributions for the Fourth Quarters of 2007 and 2008. This is on top of $1 million bill for back taxes that the IRS already had handed ACORN. The feds since have placed liens on two ACORN office buildings located at 2609 Canal Street and 2610 Iberville Street in New Orleans.
As for state taxes, ACORN hasn’t fared too well either. The Louisiana Department of Revenue last November 24 notified the nonprofit empire that it owed $26,036.01 for nine state withholding contributions due during June 30, 2007-May 31, 2008. An ACORN affiliate, Citizens Consulting, Inc., was assessed with a state lien on October 29, 2008 covering 66 unpaid withholding payments worth $306,702.73 over the course of December 31, 2002 through June 30, 2008. And the Louisiana Workforce Commission this July 2 notified ACORN that it had failed to make state unemployment insurance contributions last year totaling $1,382.69. Tammi Arender, a spokesperson for Louisiana Democratic Attorney General Buddy Caldwell, is determined to recover this and possibly other money. She noted: “We have a full-scale investigation into ACORN and all of its subsidiaries. No stone will be left unturned. We’re still looking into their recent activities.”
What makes ACORN’s status as a tax scofflaw doubly irritating is that the group professes to serve as an advocate for “the poor.” It is low-income persons who bear the brunt of ACORN skipping out on Social Security, unemployment and other contributions. The group’s defenders minimize this factor. Joe Conason, writing in Salon magazine, opined that “ACORN’s troubles should be considered in the context of a history of honorable service to the dispossessed and impoverished.” Arthur Schwartz, general counsel for ACORN and various labor unions, likewise accused the O’Keefe-Giles video-sting duo of “trying to destroy an organization whose principal purpose is to help poor people.” And ACORN’s Bertha Lewis on September 12 denounced the group’s critics for trying “to destroy the largest community organization of black, Latino, poor and working-class people in the country.” In other words, tax evasion, immigrant smuggling and other offenses shouldn’t be cause for public concern so long as the offender’s intentions are good.
ACORN claims to seek internal reform, hiring former Massachusetts Attorney General Scott Harshbarger to conduct a full-scale audit of the organization’s activity. But Harshbarger, as National Legal and Policy Center recently noted, is anything but an impartial investigator. And while Bertha Lewis has called the behavior of certain ACORN employees “indefensible,” her organization somehow has found the time to sue the people involved with the making and blog posting of the O’Keefe-Giles video, which probably has done more to serve as a prod to reform than any congressional investigation thus far.
The White House doesn’t seem overly eager to take action. “Frankly, it’s not really something I’ve followed closely,” President Barack Obama told host George Stephanopolous on ABC’s “This Week” on September 20. Yet back in November 2007, Obama, who during the mid-Nineties represented ACORN in court, noted on his campaign website, “I’ve been fighting alongside ACORN on issues you care about my entire career…even before I was an elected official.” His IRS commissioner, thankfully, has different ideas.
Now it’s time for corporations and philanthropies to follow suit. An affiliate of ACORN, the ACORN Institute, has been a participant in the IRS tax assistance program. The institute prides itself as a one-stop shopping service for low-income households seeking free benefits. In addition to tax preparation, it also provides information on how to secure government aid and to prevent mortgage foreclosure. Among the ACORN Institute’s partners are Citigroup, H&R Block and the Marguerite Casey Foundation. If even many Democrats in Congress are embarrassed by their history of support for ACORN, surely these entities can be as well.