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NHRA being Investigated by the IRS
- Thread starter SundayNiagara
- Start date
Paul
Nitro Member
One thing I discovered when digging into the NHRA's past is that their particular type of non-profit designation has been challenged by the IRS and they were forced to change it (I'm running on memory on this, I think it happened twice, but definitely at least once).
As far as I know they never told their members or the public that these challenges and changes had occurred, so its not surprising if they don't make any mention of the current challenge.
Their final landing place was the current 501(c)6 "business league" designation. I'm assuming they chose the business league designation because it is probably the largest stretch of the non-profit concept towards a for-profit company.
But even with that, as I stated in an earlier post on this thread it doesn't appear to me that they are in compliance with the business league requirements. Too much money is flowing directly through their hands, a true business league is supposed to facilate revenue generation and business growth for their members, not for the non-profit company itself. Also the business league members are generally expected to have ultimate control of the non-profit through voting rights.
How much the IRS really cares about this and what steps they take against companies out of compliance is something I guess we're going to find out.
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mick
Nitro Member
this morning was watching a Monster Energy AMA Supercross race on CBS;
watching i noticed how similar their broadcast program
was to the NHRA Full Throttle national events.
the similarities led to a web search on AMA; found this interesting article
on their history.........towards the bottom it addresses items
such as the sale of the supercross series (in quotes) and also the
tax exempt status granted to their AMAH.
thought it was interesting; a virtual parallel to the NHRA
The History of the AMA
noticed watching supercross program that Monster allows
competing brands in their series.......rockstar notably.
watching i noticed how similar their broadcast program
was to the NHRA Full Throttle national events.
the similarities led to a web search on AMA; found this interesting article
on their history.........towards the bottom it addresses items
such as the sale of the supercross series (in quotes) and also the
tax exempt status granted to their AMAH.
thought it was interesting; a virtual parallel to the NHRA
The History of the AMA
noticed watching supercross program that Monster allows
competing brands in their series.......rockstar notably.
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Tim5636sc
Nitro Member
I can NOT speak for Asher....but I tend to believe it will be a cold day in H.E. Double-Hockey sticks before the 'ASSOCIATION' addresses this situation with the "MEMBERSHIP".... the "MEMBERSHIP" is nothing more but a paying fan-club of NHRA anymore which allows racers to race, to get mailed ND and fans to get certain discounts or listen to audio-cast....
At least at COSTCO or SAMS CLUB your membership gives you savings and benefits you can see in your pocket book....
Don't see too many benefits anymore of being an NHRA member. I let my competition license expired, I have no race car and no intention of racing or going to the NHRA National Event races any time soon.... ....so what is the benefit of membership anymore?
This lawyer definitley spread the word about the IRS's stand on non-profit entities.http://http://motorsportsnewswire.wordpress.com/2010/06/08/signs-point-to-higher-scrutiny-of-nonprofit-sponsorships-by-irs-0608103/
Now why would he take a small measly fee for generating a 9 page letter for some sportsman racer? The firm could have easily gave this to some associate to do that...But Mr. Owens is a Senior member of a prestigious D.C. law firm(Law firms LLC staus of senior partner). So is it possible he is the "strong arm" of the IRS and NHRA is now a postor child to the rest of these non-profit entities? There has to be some sort of compensation to this firm for them to turn NHRA in. Jon, maybe you're right about the press release benifiting the firm, maybe some way of "ambulance chasing." Maybe they get compensation from the IRS for the penalties they assess to these organizations? What is the benefit of this firm who specalize in protecting these Non-profits from the exact thing that just happened?
http://http://www.capdale.com/mowens/?services=e1a0e9ef-0bec-40b2-be60-424768b53544 Helluva resume......
Now why would he take a small measly fee for generating a 9 page letter for some sportsman racer? The firm could have easily gave this to some associate to do that...But Mr. Owens is a Senior member of a prestigious D.C. law firm(Law firms LLC staus of senior partner). So is it possible he is the "strong arm" of the IRS and NHRA is now a postor child to the rest of these non-profit entities? There has to be some sort of compensation to this firm for them to turn NHRA in. Jon, maybe you're right about the press release benifiting the firm, maybe some way of "ambulance chasing." Maybe they get compensation from the IRS for the penalties they assess to these organizations? What is the benefit of this firm who specalize in protecting these Non-profits from the exact thing that just happened?
http://http://www.capdale.com/mowens/?services=e1a0e9ef-0bec-40b2-be60-424768b53544 Helluva resume......
Jeremy Gutierrez, I once again disagree with part of what you wrote, and here’s why. You provided a link to the law firm’s resume of Marcus Owens and called it “Helluva resume…”
First of all, any company-produced resume is naturally going to read like a Nobel Peace Prize winner’s bio. They’re not going to include the time he may have been censured by the legal establishment for unethical practices, nor are they going to include his four DWIs.
Please, I’m not accusing Owens of EVER having done anything wrong, I’m just talking about the resume itself and the way it’s worded and its purpose. In some respects a corporate-produced resume is like National Dragster. It’s a kind-of “house organ” designed to make the firm look as good as possible.
Does anyone really believe the bios NHRA produces about its executives are totally true? If so, you are more naïve than I would have guessed.
Unbeknownst to the rest of you, Jeremy e-mailed me in the background, and without revealing a single thing he told me, let me just say this: Jeremy, in your field of endeavor your resume is every bit as impressive as Marcus Owens’.
Certainly the press release, which has received wide distribution, could potentially benefit the firm by attracting new clients. For all we know, that might have been their primary motivation – although I doubt it.
I’m going to wait for someone else to answer Tim Charlet’s question: “…so what is the benefit of membership any more?”
As far as I can see, what you get is Dragster, some discount coupons to the races, and some excess insurance coverage that, from EVERY report I’ve heard on this subject, you’d have to fight tooth and nail to collect.
I feel an Up Front coming on…..
Jon Asher
Senior Editor
CompetitionPlus.com
First of all, any company-produced resume is naturally going to read like a Nobel Peace Prize winner’s bio. They’re not going to include the time he may have been censured by the legal establishment for unethical practices, nor are they going to include his four DWIs.
Please, I’m not accusing Owens of EVER having done anything wrong, I’m just talking about the resume itself and the way it’s worded and its purpose. In some respects a corporate-produced resume is like National Dragster. It’s a kind-of “house organ” designed to make the firm look as good as possible.
Does anyone really believe the bios NHRA produces about its executives are totally true? If so, you are more naïve than I would have guessed.
Unbeknownst to the rest of you, Jeremy e-mailed me in the background, and without revealing a single thing he told me, let me just say this: Jeremy, in your field of endeavor your resume is every bit as impressive as Marcus Owens’.
Certainly the press release, which has received wide distribution, could potentially benefit the firm by attracting new clients. For all we know, that might have been their primary motivation – although I doubt it.
I’m going to wait for someone else to answer Tim Charlet’s question: “…so what is the benefit of membership any more?”
As far as I can see, what you get is Dragster, some discount coupons to the races, and some excess insurance coverage that, from EVERY report I’ve heard on this subject, you’d have to fight tooth and nail to collect.
I feel an Up Front coming on…..
Jon Asher
Senior Editor
CompetitionPlus.com
JRX
Nitro Member
Jon your are absolutely right their is no define benefits in being an NHRA member because you have no voting rights. I think that is the sole issue that should govern whether or not you become member. AAA gives you a plastic card, pay $52 dollars, get car towed, get your car opened after locking the keys inside, jumpstart, and discounts with a number of merchants. I don't see why you have to be a member to race, tell me up front, I want $70 so you can race, plus entry fee. I would feel like customer then and I could make determination that am I getting good value for the money. This membership thing is a farce an everybody should know that is the case in regards to the NHRA.
Other than a subscription to a weekly rag and a decal to put on your car, nothing. I let my NHRA membership expire after 31 years; the only recognition I received from NHRA was a sticky note on the cover of my final ND telling me "THIS IS YOUR LAST ISSUE". That's it. At least Sam's Club and Costco will politely ask you to reconsider should you let your membership lapse.
If I want to support NHRA drag racing, I'll support my local track by attending as many weekend races as I can. Maybe that's the wrong attitude, but that's the way it works here. And as for the IRS investigation, the elections are in 2012 and the campaigning has already begun in earnest. Unemployment stands at 9.4%. I can't imagine the current administration allowing the IRS to shutter the NHRA which directly and indirectly would cost thousands of jobs.
I also can't imagine Compton giving up a $700K salary. He's not stupid. It'll work out in the end.
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vegasnitro
Nitro Member
No matter the outcome of this letter (remember, there is no investigation yet, it's just a letter), the NHRA will not be shuttered, it may or may not exist in it's current guise, but it is not going away.
Secondly, if you think the NHRA would be a campaign point for 2012, or if you think the current administration knows or cares about drag racing in general or the NHRA in particular you really should get out more.
Joe I believe you. If the Board of Directors was not such a puppet bunch of cronies getting rich off the backs of others they could search for a quality executive who would remain faithful to the traditons of the organization and not run it like it is your own private kingdom.
mick
Nitro Member
really bruce? with a statement like that you do nothing to lend credibility
to the nhra fan base, much less this web forum.
like it or not - the present board of directors are likely closer to the roots
of drag racing than any other qualified group that might replace them.
the HD Partners sale from a couple years ago might have worked, but then
again it might have not.
In my post yesterday about the AMA you'll read how the AMA sold it's pro
division to DMG........a little more online research about this topic will reveal
decisions being made about series by DMG are not universally liked.
The NHRA is profitable and stable - things could be a lot worse; and i agree
there is always room for improvement, but change for change's sake is
IMO misguided thinking.
none
Nitro Member
Joe, I think something not mentioned is that the same group running the organization now, with checks and balances MAY repeat MAY do a better job. There would be an incentive to listen to complaints and suggestions if they know their jobs and salaries depended on the "membership" voting on raises, bonuses, and continued employment............
Ok Mike, a little harsh, I guess a guy who gets paid $331,000 for 1 hour week is a great way to reward a person doing the job of insuring the CEO is doing his job. Now mind you this is not Microsoft, GE, GM, or any other major coporation in America. What was brought in all the hearings during this economic downturn is that executive compensation was way outline. So my expectations are that people are paid good salary for a fair days amount of work. Now you may see it differently. That's cool. The bottom line is that do you believe that NHRA is be run the most efficeint way for all the stakeholders in the organization.
What I stated didn't come out exactly how I intended. I know what I meant, and I understand what you're saying, too. We'll leave it right there.
And you're probably right. The IRS isn't much interested in unemployment numbers, the NHRA, or anything else other than generating revenue.
Paul
Nitro Member
Joe, I think something not mentioned is that the same group running the organization now, with checks and balances MAY repeat MAY do a better job. There would be an incentive to listen to complaints and suggestions if they know their jobs and salaries depended on the "membership" voting on raises, bonuses, and continued employment............
I agree with Mel's general feelings on this.
Many are convinced that having the racers have signficant input to the operation of the NHRA would be a disaster, but that would only be the case if it was done stupidly.
I agree that having a bunch of racers argue about every decision would be a nightmare, but nobody sets up a large organization that way.
The way the NHRA was set up in the original incorporation papers was pretty reasonable. The board of directors did totally control the organization, as is the case now.
But there was a huge difference. The board members were subject to regular elections by the members, which from memory I think was every 3 years.
With this structure the board members are empowered with a reasonable time period to set directions and make some effective decisions for the organization, but on the flip side if they end up doing a poor job over that 3 year period they can be booted out via a member vote.
I think that could work reasonably well.
The issue of who could actually have voting rights is complicated though.
With the current 501(c)6 business league designation, only individuals who are operating legitmate business activities are allowed to be full members with voting rights. Others could be allowed to be affiliate members, but not with those voting rights.
This is all assuming that the NHRA gets forced to be in compliance with their business league designation, which I realize is a long distance from how they are operating now. I guess we'll see how seriously the IRS takes these compliance rules.
Paul I don't the votings rights issue is complicated at all. In order to vote you should a competition number, race at three races in the year, and a paid up member in good standing. If you have skin in the game you are more likely to vote with some kind thought process that would benefit you and the people you race with. The voting rights issue is the biggest issue to me. I have research the subject and whether it be for profit (shareholders) or Non Profit (members) each instance it clearly indicates that accountability rest with the shareholders/members. We have none of that with the NHRA. All we do is pay ana listewn to what they tell us they are doing for the sport. No annual statements and no reports on how well or bad their are doing. I know of no other businneses that are publicly held or a non profit that does not the keep their shareholders/members in the loop.
