September 2, 2013

IRS rule could cause problems for veterans

Misty Watson

— An Internal Revenue Service policy mandating nonprofit veteran’s organizations keep documents proving members served in the military isn’t going to be easy for the Dalton American Legion to follow, according to its commander.

The policy was published in January 2011 in an IRS manual chapter dealing with tax-exempt veteran’s groups, but it seems to have just received attention from the groups it affects, according to an article on

The guidelines require the organizations keep proof of each member’s eligibility. Without it, the groups could face a $1,000 fine each day they aren’t in compliance, and they could lose their nonprofit status.

“A fine of $1,000 a day would bankrupt any post really quickly,” said Dewey Moss, commander of American Legion Post 112 in Dalton.

He also said he hadn’t heard of the policy until recently when the media began reporting on it.

In order to become a member of the American Legion, veterans must prove they were in military service during wartime by showing a copy of their discharge papers, DD Form 214.

“To be a member you have to have served during a wartime period,” Moss said. “The government specifies what dates those are. To prove eligibility you have to have DD Form 214. What the IRS is saying is that if we don’t have a copy of that on file then basically there’s no proof that member is eligible to join, and our nonprofit status is dependent on it being an all-veteran organization. It could very well affect us.”

The American Legion in Dalton doesn’t currently keep copies of the documents on file because they contain so much personal information, including a veteran’s Social Security number, he said.

Several members of the Dalton post have been involved for at least 40 years and don’t even have their copy of the document, Moss said.

The American Legion’s National Convention was last week in Houston, and Moss said he’s sure the policy would be discussed. The Daily Caller reported that Legion members would decide on resolutions recommending action by the Legion allowing them to lobby for a change.

Larry Morrison, commander of American Legion Post 167 in Chatsworth, said his post keeps many of the required forms on file with the Social Security number blacked out to prevent violating a person’s privacy. But the post doesn’t have the document for each member.

“It won’t affect us in any way,” he said of the policy. “We’ve never been approached by the IRS to provide documentation to them physically. We have never been approached by anyone with the IRS requesting documentation for us to keep on file. ... We haven’t had any instructions by state, local or federal government to change our policy.”

Morrison said the post makes sure they stay in compliance.

“We don’t want any IRS people coming in there sniffing around,” he said. “I think it’s a non-issue myself.”