WASHINGTON — The Internal Revenue Service revoked the nonprofit status of the veterans benefit organization that hosted and sold tickets to a foreign policy speech by Republican presidential candidate Donald Trump aboard a retired U.S. battleship, The Associated Press has learned. The group's endorsement of Trump at the event also could raise legal problems under campaign finance laws.
Trump's campaign did not respond to questions from the AP about whether it was aware that the IRS had revoked the nonprofit status of the Veterans for a Strong America, which sold tickets to Trump's event for up to $1,000 as a fundraiser. The IRS issued its decision Aug. 10, citing the group's failure to file any tax returns for three consecutive years, according to IRS records reviewed by the AP.
The group's chairman, Joel Arends of Sioux Falls, South Dakota, said the organization was appealing the IRS decision. He would not provide AP with copies of any tax returns, which would show how much money the group has collected over the years and how it spends its money. By law, such records are supposed to be available to the general public for inspection.
"We disagree with the IRS determination letter," Arends told the AP in an interview. He appeared alongside Trump on Tuesday night on the ship.
Regardless of its legal status as a nonprofit, Veterans for a Strong America's endorsement of Trump on the deck of the USS Iowa may also raise campaign finance questions. Under federal law, corporations are restricted to donating $2,700 either in cash or in-kind contributions to a campaign. But the event, which Veterans for a Strong America paid for, involved 850 attendees, putting the cost at roughly $11,000.
U.S. law also generally prohibits candidates from coordinating their campaign activities with outside groups, and prohibits corporations from spending more than a minimal amount announcing their endorsements.
"You can do what you want so long as you're independent. But if the FEC finds coordination, a whole lot of rules kick in," said Kenneth Gross, a former Federal Election Commission attorney who now works for Skadden, Arps, Slate Meagher & Flom LLP in Washington.
The event was advertised differently than Trump's regular campaign events. His campaign didn't distribute the usual media advisory with details, but did include it in his upcoming campaign schedule. Reporters were instructed to contact the veterans group to obtain credentials to attend, and Trump's campaign separately urged supporters in a mass email how to obtain tickets to the event.
"You know, Joel and the group called and they said, 'Would you come over and speak?'" Trump said at the event, noting he was in California for Wednesday night's presidential debate. "I got here and they asked a couple of days ago would it be possible to come over and say a few words. An endorsement from your group, with so many veterans, hundreds of thousands of veterans, I really appreciate that, Joel. I did not expect it. I didn't expect it, I didn't ask for it. I will say this: I am with the veterans, 100 percent. They're our greatest people."
The group had told ticket buyers that all proceeds would be used to pay for the event "and helping out Vets for a Strong America carry out its mission of helping America's vets."
Arends and Trump's campaign dismissed questions about whether the event was legal.
"The FEC has ruled that a candidate may attend, speak at, and be a featured guest at such events," the Trump campaign said in a statement to the AP.
"We've got top national election law attorneys that advise and consult with us,"Arends said. He said any restrictions on nonprofits' endorsements of political candidates would be moot given changes in election law following the Supreme Court's ruling in the campaign finance case known as Citizens United.
The head of the USS Iowa Museum said the group received a preferential rate for nonprofits, which are billed $13 a head for large gatherings such as the one hosted by Veterans for a Strong America.
"As far as we knew, this was a nonprofit that supports veterans and we were unaware of who their speaker was until after it was booked," said museum chief executive John Williams. He said the museum relies on such groups' self-characterization as nonprofit organizations to determine pricing.