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Senior Citizen Politics

Republican Congressmen Launch Attack on AARP, Challenge Non-Profit Status

House Ways & Means members release investigative report, send letter to IRS

April 11, 2011 - Three Republican members of the House Ways and Means Committee have launched an attack on AARP, including the release of a report focusing on the massive amount of money the organization earns from insurance companies, and sending a letter last Friday to the Internal Revenue Service asking for an investigation of AARP’s non-profit tax status.

The investigative report, "Behind the Veil: The AARP America Doesn’t Know,” was prepared by Ways and Means Health Subcommittee Chairman Wally Herger (R-CA) and Rep. Dave Reichert (R-WA) a member of Ways and Means. Joining them in signing the letter to IRS Commissioner Douglas H. Shulman was Ways and Means Oversight Subcommittee Chairman Charles Boustany (R-LA).

“As the facts set forth in this report reveal, AARP is not simply a non-profit entity claiming to advocate on behalf of America’s seniors,” the report says. “AARP is in fact a large, complex and sophisticated organization with over $2.2 billion in total assets and had revenues in excess of $1.4 billion in 2009 alone.

“When measured by the products it endorses and profits it derives from those deals, AARP is one of the nation’s largest insurance companies and by far the largest provider of Medicare plans to seniors. AARP is also one of the most powerful and active lobbying groups (in terms of dollars spent) in the country.”

In a news release issued by the three Congressmen on Friday they described their report as, “exposing the conflict between AARP’s drive for profits at the expense of the best interests of its members and the organization’s activities that call into question its tax-exempt status.  The facts in the report conclude that AARP stands to make upwards of one billion dollars over the next ten years as a result of the new health care law through the sale of AARP endorsed-Medicare insurance products.”

 

Story Update

 
 

Senior Citizen Politics

AARP Offers Detailed Response to Republicans’ Questioning of Non-Profit Tax Status

GOP trio on House Ways and Means see ‘conflict between AARP’s drive for profits, the best interests of its members’ - see video response

May 11, 2011

 
 

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In the letter to the IRS, they said about the report, “This information gave rise to a number of serious concerns regarding AARP’s organizational structure and activities, and it raised questions about whether AARP, Inc. continues to qualify as a tax-exempt organization under Internal Revenue Code section 501(c)(4). Therefore, we ask that the Internal Revenue Service review the report and the issues raised therein.

They note, too, “the attached report raises concerns regarding various issues including the organization’s substantial revenues, limited charity work, and generous executive compensation. For instance, AARP, Inc., has experienced tremendous revenue growth in recent years from its contracts with business partners. Its revenue from for-profit businesses, derived primarily from insurance companies selling products with the ‘AARP’ name, nearly tripled between 2002 and 2009, reaching $657 million.”

They add that the AARP Foundation “enjoyed increased taxpayer funding, including at least $18 million in “stimulus” funding and a total of $314 million in federal grants from taxpayers between 2009 and 2010.”

The letter requested that the IRS examine:

   ● Whether the operational activities of AARP, Inc. and its affiliates are primarily motivated by political or profit interests, instead of by service to the community;

   ● The separateness of federal grant cash and lobbying activities between AARP’s Internal Revenue Code (IRC) 501(c)(3) charitable organizations and its IRC 501(c)(4) advocacy organization;

   ● Whether it is appropriate to continue characterizing AARP Inc.’s revenue generated from insurance products as royalty income that is exempt from Unrelated Business Income Tax (UBIT);

   ● Due to evidence suggesting AARP, Inc. asserts control over its affiliates, whether the activities of its affiliates should be attributed to the tax-exempt parent, AARP, Inc.

The Congressman point out in their executive summary of the report, “AARP, formerly known as the American Association of Retired Persons, is a tax-exempt non-profit membership organization for those aged 50 years and older. As such, AARP has long been regarded as a protector and advocate of the nation’s senior community.

“What is less known is the extent to which AARP operates as a massive for-profit enterprise and how that conflicts with its legal requirements to “primarily operate to promote the common good and social welfare of a community of people.”

“This report highlights AARP’s increasing reliance on the ‘for-profit’ sale of insurance, particularly health insurance, and the underlying implication for this storied ‘non-profit’ organization.”

>> Click for pdf copy of report, "Behind the Veil: The AARP America Doesn’t Know

>> Click for pdf copy of letter to IRS, Click Here

 

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