IRS after NHRA
A political action committee looking to replace the BCS bowl system with a playoff filed a complaint with the IRS last year, claiming three bowls were in violation of their tax-exempt status.
Now the National Hot Rod Association is facing a similar accusation, though not from a political group.
It's from one of the organization's members.
A longtime NHRA member filed an anonymous complaint with the IRS, claiming the drag racing organization has been operating more like a commercial business instead of furthering the sport and serving the 80,000-or-so members it represents as a nonprofit group.
"It appears to be operated for the benefit of those who run the show, much the way a business is operated for the people who own the business," said Marcus S. Owens, senior member of the law firm Caplin and Drysdale, which filed the complaint.
The complaint compares the NHRA to NASCAR and the International Hot Rod Association, both for-profit auto racing organizations.
Hand-delivered on Jan. 12 in Washington, D.C., it contends the majority of the NHRA's revenue - roughly $122 million in 2008 - is derived from nontraditional sources for a trade association. Instead of representing the sport in Congress and before the government, the complaint argues the NHRA puts most of its focus on holding public, televised events - in other words, races.
It also maintains that compensation for the organization's management is out of whack with heads of similar tax-exempt associations. That includes a salary of $771,632 for president Thomas Compton in 2008 and $319,073 for one hour of work per week for board chairman Dallas Gardner, which the complaint says is well beyond industry standards.
The complaint also contends the NHRA is run by a select group of individuals rather than its members, which don't have voting rights.
The NHRA denied it operates as a for-profit business and has been compliant under section 501(c)(6) of the Internal Revenue code for years. Daytona Beach News Journal/AP