NY AG Seeking Dissolution of NRA, Removal of and Restitution From Directors

Published date01 October 2020
Date01 October 2020
Bruce R. Hopkins’ Nonpr ofit Counsel DOI:10.10 02/n pc
than some prior grants, there are no relationships
between the two charities and their managers.
The IRS determined that this grant will be from a
disinterested party, was attracted by reason of the
grantee’s publicly supported nature, and will (if taken
into account in determining public charity status)
adversely affect the grantee’s public support ratio
(Reg. §§ 1.170A-9(f)(6)(ii), 1.509(a)-3(c)(4)). The IRS
found this proposed grant to be an unusual grant
because the foundation is winding down its opera-
tions and setting up the endowed funds (Priv. Ltr. Rul.
202031009). [12.3(b)(i), (iv)]
A nonprofit corporation sought recognition of tax
exemption as a charitable and educational entity,
with its objective being continuation of the “long-
standing tradition” of the “Western Way” of life.
The organization sponsors “rough-stock” events,
such as barrel racing, rodeo, greased pig and goat
races, and dummy roping. Expenses are primarily
for operations, primarily prizes. The IRS declined to
recognize exemption in this instance, concluding
that this organization is organized and operating
principally for social and recreational purposes (Priv.
Ltr. Rul. 202031011). [4.5(a)]
The Legion of Christ, a tax-exempt religious corpora-
tion, in late 1996, purchased two parcels of real estate
within the town of Mount Pleasant, New York. The Le-
gion applied for a real property tax exemption for one of
these parcels, which was denied by the town’s assessor.
Litigation in state court ensued, which has lasted many
years. This lawsuit was filed in 2018 in state court; the
defendants removed the action to federal court.
The Legion asserted several claims, including dep-
rivation of due process and equal protection rights,
stemming from the town’s alleged abuse of its taxing
authority. The defendants claimed that these causes
of action are barred from federal court review because
they pertain to state tax proceedings and plaintiffs have
adequate means for seeking legal redress in state court.
They invoked the Tax Injunction Act and the principle
of comity. The Legion claimed the federal court has
jurisdiction because it is “asking for monetary damages
for years of discriminatory practices by the Town and its
officials.” The court sided with the defendants, finding
that it does not have subject matter jurisdiction over the
Legion’s federal claims (The Legion of Christ, Inc. v. Town
of Mount Pleasant (S.D.N.Y. (July 27)).
The court recited the Tax Injunction Act, which pro-
vides that the district courts “shall not enjoin, suspend
or restrain the assessment, levy or collection of any tax
under State law where a plain, speedy and efficient
remedy may be had in the courts of such State.” The
court quoted a Second Circuit opinion that this law “has
its roots in equity practice, in principles of federalism,
and in recognition of the imperative need of a State to
administer its own fiscal operations.” A US Supreme
Court opinion states that the “comity doctrine applica-
ble in state taxation cases restrains federal courts from
entertaining claims for relief that risk disrupting state tax
The court noted that, while the Legion is not asking
it to order the defendants to refund the Legion’s tax
payments, it seeks a “ruling passing judgment on the
constitutionality of the town’s applications of its taxing
authority.” This, wrote the court, is “precisely the type
of determination that would ‘disrupt’ New York State’s
tax administration.” The court ruled that the relief the
Legion is pursuing is barred by the principle of comity
and the Act inasmuch as there is a “procedurally ade-
quate state alternative procedure for challenging the
The court also declined to exercise supplemen-
tal jurisdiction over the Legion’s remaining state law
The attorney general of New York, on August 6, filed
a lawsuit in the Supreme Court of New York, seeking
removal of certain executives of the National Rifle As-
sociation and restitution by them, as well as dissolution
of the NRA (People of the State of New York v. National
Rifle Association et al.).
The complaint states that the NRA has operated as
a New York not-for-profit “charitable membership cor-
poration” for 149 years, is a “New York charity,” and is
“legally required to serve the interests of its membership
and advance its charitable mission.” (In fact, the NRA
is tax-exempt as a social welfare organization (an IRC §
501(c)(4) entity).)
The complaint further states that, for nearly three
decades, Wayne LaPierre has served as the NRA’s chief
executive officer, and in doing so has “exploited the
organization for his financial benefit, and the benefit of a
close circle of NRA staff, board members, and vendors.”
It is said that he has “undertaken a series of actions to
consolidate his position; to exploit that position for his

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