A pair of Republican lawmakers on the House Ways and Means Committee plan to formally request an IRS investigation of the AARP’s tax-exempt status, accusing the group of profiting from its health insurance business.
At a joint hearing of the Ways and Means Health and Oversight Subcommittees on Friday to examine AARP and its affiliates, revenue, charitable giving, boards of directors, and lobbying expenditures, an expert on not-for-profit entities called for additional investigation of AARP.
William “Bill” Josephson, who was appointed as the Assistant Attorney General-in-Charge of the New York State Law Department’s Charities Bureau in April 1999 under then Attorney General Elliot Spitzer, said, “…further investigation is warranted by (a) the Committee, (b) the Internal Revenue Service which has in the past had concerns about AARP as set forth in the Investigative Report and (c) the Government Accountability Office.”
Josephson also serves as a member of the Expert Advisory Group to the Independent Sector’s Panel on the Nonprofit Sector.
Immediately following the hearing, Ways and Means Health Subcommittee Chairman Wally Herger, R-Calif., and Ways and Means Oversight Subcommittee Chairman Charles Boustany, R-La., confirmed they would formally request an IRS investigation. “Today, AARP had the opportunity to refute the findings of our report,” they said. “They did not do so. However, what we did learn is AARP is making even more money than we originally thought by selling insurance—potentially as much as $90 million more a year. This only adds to our concerns that insurance profits may be driving policy decisions at AARP, rather than the best interest of seniors. As such, we will be formally requesting the IRS review AARP’s operations.”
Herger said he had been investigating AARP for 18 months already. “The facts show AARP no longer operates like a seniors’ advocacy organization; instead it more closely resembles a for-profit insurance company,” he said. “In 2009, AARP raised 46 percent of its revenue from royalty payments, versus just 17 percent from membership dues. While questions have indeed been raised in the past about AARP’s reliance on royalties, the amount of these payments has nearly tripled just over the past decade.”
Democrats on the committee accused Republicans of targeting AARP because of the organization’s pivotal support for the health care reform law.
“This is nothing more than a political witch hunt to punish an organization that spoke out in favor of health reform,” said Rep. Pete Stark, D-Calif., the ranking member of the Ways and Means Health Subcommittee. “An organization that could stand in the way of their goal to privatize Social Security and end Medicare and turn senior citizens over to the mercy of the private health insurance industry.”
Rep. John Lewis, D-Ga., the ranking member of the Ways and Means Oversight Subcommittee, accused Republicans of carrying out a witch hunt.
“I am mindful that the Majority wants to cut Social Security,” he said. “They want to cut Medicare. They want to cut programs that help the poor. I can only surmise that true intent of this hearing is to harm the reputation of AARP or to silence their voice as we move closer to this debate. If there was a plan to provide real oversight today, we would have before us other organizations who share the same tax status as AARP, like Sixty Plus. We would have more organizations like Tea Party Patriots, American Crossroads GPS, and American Action Network. They all share the same tax status as AARP and played a major role in the elections. If there was a real plan today, we would have before us a $2.2 billion a year race track and casino operating in Iowa under the same tax-exempt status as AARP. I find this unreal. It is unbelievable. If oversight was the true goal, we would look at the compensation paid by other tax-exempt organizations, including those that opposed health reform, like the Chamber of Commerce, AHIP, and NFIB. All pay their executives well, and more than AARP. Based on all of this, I believe that there is no plan for oversight today. We have before us a single witness, a biased report, and the use of Committee resources to settle a score. This is nothing other than a political witch hunt.”
