The American Legion claims it has been unfairly targeted by the Internal Revenue Service after the IRS accused some Legion posts of using non-regulation record-keeping methods for validating veteran status.
The IRS requires veterans service organizations operating as 501(c)(19) charities to retain a copy of a member's DD-214 separation document to prove veteran’s status.
But Legion Legislative Director Louis Celli said the official handbook for veterans' groups published by the IRS makes no mention of 214s, and that the agency has never required them in the past.
"We don't understand why there is now this intense need to validate [status with DD-214s]," he told Military.com on Wednesday. "Even if we had them on file, we wouldn't turn them over to the IRS … they include Social Security numbers, dates of birth, place of birth. Sometimes they include medical information -- you don't want to give that to the IRS."
The IRS, in a statement released on Tuesday, said it could not comment on specific organizations or individuals, but denied veteran service organizations are being targeted.
"There is no special enforcement effort underway regarding 501(c)(19) organizations, just regular compliance activity," the statement said.
The IRS said that for a VSO to retain its status as a veteran's charity at least 75 percent of a group's members must be active-duty troops or veterans, and that at least 97.5 percent of total membership -- including auxiliaries -- must be made up of active-duty servicemembers, vets, cadets, or have some other close relationship to servicemembers.
For veterans -- which make up the bulk of the Legion and other VSOs -- a copy of a member's DD-214 is supposed to be kept on file, according to the IRS.
Celli said that since the IRS began looking at Legion posts' records some in Texas have been fined. In one case, he said, a post had to come up with $1,000 a day over the 11 days it took for it to put its records in order in accordance with IRS requirements.
Celli said that every dollar taken by the IRS in fines from a Legion post is money that will not go toward scholarships for servicemember families, for programs to aid wounded and sick veterans, or camp and sports programs funded by the Legion.
"Are you [the IRS] saying that you've got nothing better to do during the sequester, when the Defense Department is asking civilian members to donate 11 days of pay back to the government?" Celli asked. "You’ve got so much time on your hands that you can pick through [Legion post] books to find them not in compliance with their non-profit status?"
The Legion's claim that it is being targeted comes months after Congress began looking into claims made by conservative groups that the IRS was unfairly scrutinizing and delaying decisions on applications for tax-exempt status. During hearings called by Rep. Darrell Issa, R-Calif., chairman of the House Oversight and Government Reform Committee, Republicans framed the IRS actions as a White House-led attempt to intimidate conservatives.
Much of the steam went out of the GOP claims after it was learned that the same IRS offices giving special attention to conservative sounding groups also sought out organizations with liberal and progressive sounding titles.
But in a statement released Aug. 28, Rep. Jeff Miller, R-Fla., who chairs the House Veterans Affairs Committee, sought to link the IRS's review of Legion record-keeping to the earlier scandal, suggesting it proved "the IRS is completely out of control."
"After illegally targeting innocent groups solely on the basis of their political beliefs, the IRS now appears to have America's veteran service organizations in the crosshairs," Miller said. "Allegations that VSOs are now being unfairly targeted by the very government they sought to protect and defend are nothing short of unacceptable to me."
For his part, Celli is not offering any particular motivation for the IRS's decision to focus on the Legion.
Spokesmen for the Veterans of Foreign Wars and the Disabled American Veterans said they are not also being looked at by the IRS.
"We're probably not affected by it," said Dave Autry of the DAV. "I think it's specifically the Legion."
VFW national spokesman Joe Davis said he is not aware of any new IRS guidance that would warrant a change in how the VFW maintains its records, "[but] we are investigating this further and will stand firm in insisting that any guidance implemented by the IRS does not impose any new or unfair burden on any veterans' organization."
Celli said Legion officials will be on Capitol Hill next week, when Congress returns to session, to present its legislative agenda for the coming year. The IRS issue was not among the list of topics initially, he said, but "it's likely to come up."
After the round of meetings with lawmakers, he said the Legion will seek a meeting with the IRS.
"We have remedies available to us," he said. "One is to work it out amicably with the administration. If that doesn’t work … there’s a legislative fix."
He said the Legion would prefer to work things out rather than work through Congress to resolve it.