Sharpton, his civil rights organization facing tax issues

Troubles continue to mount for the Reverend Al Sharpton, both personally and for his civil rights organization.

The Internal Revenue Service filed in late September a tax lien against Sharpton in the amount of $538, 652 with the New York City Register’s Office relating to taxes assessed in 2009.
Sharpton’s attorney, Michael Hardy, said he was confused by the filing of the lien because Sharpton was granted an extension to file his 2009 tax return by October 15, according to The Detroit News. Hardy told reporters that the amount of the lien was based on estimated assessed income.
“It’s kind of odd,” Hardy said. “I totally don't understand why they would file a lien on taxes that are technically not due yet. He is going to file his 2009 taxes and pay in full, whatever it may be.”
There was no mention of whether Sharpton had attempted to pay any of the tax that would have been due by the April 15, 2010, deadline.
A personal tax burden of more than a half a million dollars is enough to give any taxpayer a headache. But that’s not Sharpton’s only tax woe. His civil rights organization, the National Action Network (NAN) is in far deeper trouble. An internal audit of the agency’s 2008 books turned up a debt of more than $1.3 million in back taxes and penalties, according to the New York Post.
NAN hired Manhattan-based accounting firm KBL to conduct the audit last April.
"The organization has suffered recurring decreases in net assets – and has been dependent upon advances from related parties and the nonpayment of payroll tax obligations – to maintain continuity," the audit stated. "These circumstances create substantial doubt about the organization's ability to continue." Auditors added that it was difficult to reach a definite conclusion "because of inadequacies in the organization's accounting records."
NAN spokeswoman, Rachael Noerdlinger told Post reporters: "We determined not to file bankruptcy but to make NAN solvent, which we clearly have done and will be reflected in [upcoming reports]. By the end of the calendar year 2010, there will be no tax liabilities as per our agreement in '08 with tax authorities."
This is just the latest controversy involving Sharpton and NAN. In 2008, NAN was the subject of a criminal investigation concerning its finances. The probe was dropped when Sharpton agreed to pay overdue taxes of more than $2 million.
In April 2009, the Federal Election Commission fined NAN $285,000 for violations committed during Sharpton’s 2004 presidential campaign, according to the National Legal Policy Center. The violations included transferring NAN money to his campaign account. In 2004, the FEC forced the campaign to return $100,000 in federal matching funds, and to forgo an additional $79,709 for which he qualified.
The KBL audit conducted this year indicated that NAN is a currently a defendant in five lawsuits, which include:
  • The historic Peabody Hotel in Memphis, where the annual NAN convention was held in 2008, is suing for a $70,000 unpaid tab. NAN is challenging the suit.
  •  A Madison Avenue travel agency, Alpha International Travel, filed a lawsuit in 2003 for an unpaid tab of $50,000. NAN claims it has settled the case.
  • The landlord of the Arizona chapter of NAN in Phoenix accuses the group of skipping out on rent. NAN disputes the claim.
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