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Alleged hate groups get tax breaks as registered charities

CBS News logo CBS News 12/2/2020 Kristin Steve, Megan Towey
a group of people walking down a street next to a car: ap-17224684369015.jpg © Ryan M. Kelly/The Daily Progress via AP ap-17224684369015.jpg

Three years after the deadly Unite the Right rally in Charlottesville, Virginia, one of the groups allegedly involved in inciting violence at the event has been granted tax-exempt status as a charity. And it's not the only organization viewed by some as a hate group that is receiving financial benefits from the federal government in the form of an IRS tax exemption, a CBS News investigation uncovered.

A CBS News search of IRS tax-exempt charities revealed that 90 white supremacist, anti-immigration, anti-Muslim and anti-LGBTQ groups are registered as tax-exempt charities with the IRS. This includes groups such as the one formerly known as Identity Evropa and others associated with the Unite the Right rally, as well as the Council of Conservative Citizens, which inspired white supremacist Dylann Roof to open fire on a Charleston church in 2015, killing nine Black church members.

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That day in Charlottesville still haunts Liz Sines, who narrowly escaped injury when a car deliberately plowed into a crowd of counter-demonstrators, killing Heather Heyer.

"I don't think I'll ever not be scared," Sines told CBS News Chief Investigative Correspondent Jim Axelrod. "I heard screams. I heard this awful sound. I don't know how I got out of the way."

Sines is now the lead plaintiff in a federal lawsuit filed by Integrity First for America against the rally's organizers. Some of those organizers belong to groups designated as hate groups by the Southern Poverty Law Center, a civil rights advocacy group.

"I think Charlottesville is one of the clearest examples we have that this extremist violence that we're witnessing is organized. It's planned. It's organized hate crimes," Sines said.

This year, the majority of terrorist attacks in the U.S. were committed by white supremacists and like-minded groups. The FBI's most recent statistics on hate crimes, released this month, show 2019 was the deadliest year on record. 

"When we hear that term charitable, we think good," said Phil Hackney, a former IRS attorney who is now an Associate Professor of Law at the University of Pittsburgh. But he told CBS News that, for all practical purposes, IRS tax exemption is a form of governmental endorsement. "They're endorsing hate groups with dollars."

When the IRS designates an organization as a charity, the group doesn't have to pay federal taxes and, in many cases, property taxes. Contributions from donors are also tax-deductible. During the last decade, these 90 SPLC-designated hate groups that are also registered as charities received more than $1 billion in tax-deductible donations.

"When you're able to take a charitable contribution deduction for a certain activity, you are taking your tax dollars out of the common pot and putting it into your own private purpose, in this case one of hate," Hackney said.

Becoming a charitable organization isn't especially difficult. According to IRS data, more than 100,000 applications were filed by organizations seeking tax exemption. Just 66 were rejected.

Less than one-tenth of 1% of applications denied means "that system is kind of, I don't want to say a fraud, but it's not working," Hackney said.

After surviving the Pulse nightclub shooting in 2016, Brandon Wolf became an LGBTQ advocate. Last year, he testified in a Congressional hearing that the tax code subsidizes hate.

"If the IRS were able to begin to scratch the surface, they would see that there's a whole lot of things going wrong here," Wolf told Axelrod.

In the past, the IRS has revoked tax-exempt status for things like practicing segregation or promoting acts of violence, but the IRS cannot take away status solely on the basis of a group's viewpoint.

"What happens when these groups actually do incite violence?" Wolf asked. "Who's checking on that? The answer today is no one."

What happened at Pulse nightclub makes this a deeply personal issue for Wolf.

"When you choose to write hate a blank check in the United States of America instead of exercising oversight over it, you get communities torn apart. You get people grieving and mourning. This is the human cost to hatred," Wolf said.

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