Teacher Union Accused of Tax Evasion

Published November 1, 2003

Despite budgeting more than $70 million a year in recent years to maintain an ongoing nationwide organization of more than 1,800 paid political organizers and lobbyists, the National Education Association (NEA) since 1994 has reported to the Internal Revenue Service (IRS) that it spends nothing on political activities.

Drawing on earlier complaints filed with the IRS and U.S. Department of Labor, Landmark Legal Foundation on September 8 formally called on the IRS and the U.S. Department of Justice to initiate criminal action against the NEA for violating federal laws that address the filing and reporting of information about the union’s spending on political activities.

“Politics is one of the teachers’ union’s primary functions–and yet the union tells the government that it spends absolutely nothing on campaign activities,” declared Landmark President Mark R. Levin, saying it was time for union officials to be held “accountable.” Landmark Legal Foundation is a nonprofit public interest law firm.

As a tax-exempt organization, the NEA is not required to pay taxes on the dues it receives from members–unless the funds are spent to influence the election or defeat of candidates. If tax-exempt funds are spent on political activities, the amounts must be reported to the IRS and are subject to taxation.

After examining the NEA’s tax returns and analyzing internal planning and budget documents, Landmark concluded the teacher union had concealed from the IRS political expenditures involving tens of millions of dollars of tax-exempt dues.

“The complaints we filed today show, in meticulous detail, how the nation’s largest, most powerful and most political union has flagrantly ignored its tax obligations,” explained Levin. “We have given the IRS and the Justice Department a step by step roadmap to investigate the NEA and, where warranted, pursue criminal charges.”

National Network

The Landmark complaint points out the NEA makes substantial outlays–$73.7 million in 1998-99 and $76.4 million in 1999-2000–to support a national network of some 1,800 local administrators. That network provides the teacher union’s national office with a link to its 13,000 local affiliates and the ability to coordinate political activities into an integrated and unified operation that reaches every congressional district in the country. Although these local administrators, called UniServ directors, are employed by a local NEA affiliate, they are selected, trained, and funded primarily by the NEA.

“The NEA UniServ funding agreements between the NEA and the state associations, and between the state and local associations, emphasize the political responsibilities of UniServ directors. These responsibilities include directing local association political activities …” explained Education Policy Institute Chairman Myron Lieberman in his 1997 book, The Teacher Unions.

“NEA-PAC guidelines also recommend that UniServ directors participate in the interview of candidates for elective office,” Lieberman continued. “Because of their training, longevity, and the fact that they are the custodians of the union’s political memory, the UniServ directors play a major role in all political activities at the local level.”

Lieberman’s view is underscored by a statement from the NEA’s federal policy manager, Randall J. Moody, who told political workshops at the union’s 2003 national convention: “Politics move our policy. We work through UniServ.”

Coordinated Political Campaign

Landmark contends that in the 1996 campaign cycle the NEA engaged in a coordinated political campaign to elect specific Democratic candidates, working with various political organizations including the Democratic National Committee. Although a nonprofit organization can be active in get-out-the-vote campaigns, such activities must be strictly nonpartisan. They violate the IRS code when they are specifically identified with a particular candidate or party, as the NEA activities were.

Another example of an unreported political expenditure cited by Landmark is $9.6 million in the NEA’s 1996 Strategic Focus Plan to “build bipartisan constituencies among those running for and elected to public office …”

Some of the activities funded by that appropriation included “screening candidates for federal office; … mobilize members and other resources … to support the election of pro-education candidates and ballot measures; provide technical assistance, surveys and training in political campaign work to affiliates and members at all levels; identify and evaluate new/innovative ways to effect election results …”

George A. Clowes is managing editor of School Reform News. His email address is [email protected].

For more information …

Landmark has filed earlier complaints about the NEA’s unreported political expenditures with the U.S. Department of Labor, the Internal Revenue Service, and the Federal Election Commission.

“Union Hid Political Spending, Suit Charges,” School Reform News, July 2002, http://www.heartland.org/Article.cfm?artId=881.

“Union Called Shots on Democrats’ Agenda,” School Reform News, September 2001, http://www.heartland.org/Article.cfm?artId=10190.

“Teacher Union Denies Political Activities to IRS,” School Reform News, September 2000, http://www.heartland.org/Article.cfm?artId=10924.