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Refile Reversal

- November 4, 2015

Amid Scrutiny, The Clinton Health Access Initiative Is Forced To Refile Erroneous Tax Filings

TOP TAKEAWAYS

  • Despite acknowledging errors months ago on how it reported government grants, including from foreign governments, yesterday, the Clinton Health Access Initiative (CHAI), the largest arm of the Clinton Foundation, said it would not amend its tax filings.
  • However, amid scrutiny and the RNC's call for an IRS audit of the group, CHAI quickly reversed itself, and pledged to amend its tax filings.
  • This follows a pattern for the organization, which violated a 2008 ethics agreement between the Clintons and the Obama Administration that paved the way for Hillary Clinton to serve as Secretary of State.
  • In 2008, the Clinton Foundation pledged to annually disclose all donors and submit new and increased foreign government donations for independent ethics vetting. But CHAI failed to make annual disclosures for most of Clinton's tenure at State, and failed to submit a single foreign government donation for ethics vetting.
  • Given the organization's track record on transparency, and its potential for conflicts of interest, only an independent audit of its finances can show the American people that the Clinton Foundation does not continue to misreport foreign government funding that would pose even greater conflicts.

DESPITE ACKNOWLEDGING ERRORS, AN ARM OF THE CLINTON FOUNDATION ONLY DECIDED TO REFILE ITS TAX RETURNS AMID MOUNTING PRESSURE

Yesterday, Months After Conceding Erroneous Tax Filings, The Clinton Health Access Initiative (CHAI), Said It Would Not Amend Or Refile Its Returns

The Clinton Health Access Initiative Originally Said It Was Refiling Tax Forms, But This Week They "Decided Against Refiling" Despite Previous Reporting Errors. "The Clinton Health Access Initiative (CHAI) originally said it was amending the forms, known as form 990s, after Reuters discovered the errors in the spring. This week, CHAI said it had decided against refiling … While it is not unusual for charities to refile a form 990 on occasion and that doing so is not evidence of wrongdoing, several tax experts told Reuters it was odd for a charity to make large mistakes several years in row. CHAI had previously refiled its 2010 and 2011 tax returns after over-reporting the amount it received from government grants by tens of millions of dollars" (Johnathan Allen, "Republicans Ask IRS To Audit Clinton's Charity Finances,"Reuters , 11/4/15)

The Announcement Contradicted A "Highly Publicized News Report Earlier This Year…" "An organization spun off from the Clinton Foundation has no plans to refile its tax returns due to mistakes in prior years, an official said, contradicting a highly-publicized news report earlier this year. … An April 2015 Reuters story reported that Clinton Health Access Initiative spokeswoman Maura Daley conceded that the nonprofit organization made errors reporting the amounts of government grants on its 2012 and 2013 tax filings and said the group planned to refile those returns with the Internal Revenue Service. … However, in a recent exchange with POLITICO, Daley denied the initiative ever committed to refiling and said no revised forms are being prepared." (Josh Gerstein, "Clinton Foundation Spin-Off Won't Refile Tax Returns," Politico, 11/2/15)

But Today, Amid Calls For An IRS Audit, CHAI Quickly Reversed Course

Amid Pressure, CHAI Reversed Course And Agreed To Amend Its Tax Returns. "The Bill, Hillary & Chelsea Clinton Foundation's flagship health project changed its mind again on Wednesday on the matter of its erroneous tax returns, saying it would refile them with the U.S. Internal Revenue Service after all." (Jonathan Allen, "Clinton Charity, Under Pressure, Will Amend Tax Return Errors," Reuters , 11/4/15)

Reuters Headline: "Clinton Charity, Under Pressure, Will Amend Tax Return Errors" (Jonathan Allen, "Clinton Charity, Under Pressure, Will Amend Tax Return Errors," Reuters , 11/4/15)

TOO BAD THIS ISN'T THE FIRST TIME…MISREPORTING AND VIOLATING RULES HAS BECOME A HALLMARK FOR THE NON-PROFIT

The Clinton Foundation Has Admitted Its Transparency Failures

CNN Headline: "Clinton Foundation: 'Yes, We Made Mistakes'" (Dan Merica and Theodore Schleifer, "Clinton Foundation: 'Yes, We Made Mistakes,'" CNN, 4/27/15)

  • Clinton Foundation CEO Maura Pally Wrote: "Yes, We Made Mistakes, As Many Organizations Of Our Size Do, But We Are Acting Quickly To Remedy Them…" "In a blog post out Sunday, Foundation acting CEO Maura Pally reaffirmed its commitment to transparency, but nevertheless said some errors had occurred. 'Yes, we made mistakes, as many organizations of our size do, but we are acting quickly to remedy them, and have taken steps to ensure they don't happen in the future,' Pally wrote." (Dan Merica and Theodore Schleifer, "Clinton Foundation: 'Yes, We Made Mistakes,'" CNN, 4/27/15)

These Failures Make CHAI "A Prominent Symbol Of The Broken Political Promise And Subsequent Lack Of Accountability Underlying The Charity-Related Controversies That Are Dogging Clinton As She Embarks On Her Campaign For President." "The failures make the Clinton Health Access Initiative, which is headquartered on Dorchester Avenue in South Boston, and goes by the acronym CHAI, a prominent symbol of the broken political promise and subsequent lack of accountability underlying the charity-related controversies that are dogging Clinton as she embarks on her campaign for president." (Annie Linskey, "Clinton Charity Never Provided Foreign Donor Data," The Boston Globe , 4/30/15)

The Clinton Health Access Initiative Failed To Disclose Donors For Most Of Clinton's Tenure As Secretary

In November 2008, Bill Clinton Agreed To Publicly Disclose Clinton Foundation Donors As Part Of An Accord With Then-President-Elect Obama That Cleared That Way For Hillary Clinton To Become Secretary Of State. "Former President Bill Clinton has agreed to disclose publicly the names of more than 200,000 donors to his foundation as part of an accord with President-elect Barack Obama that clears the way for Senator Hillary Rodham Clinton to become secretary of state, Democrats close to both sides said on Saturday." (Peter Baker, "Clinton To Name Donors As Part Of Obama Deal," The New York Times, 11/30/08)

The Agreement Required The Foundation To Release The Full Names Of All Donors By December 2008, Which Would Then Be Divided In Categories Giving The General Level Of Contributions Rather Than The Precise Dollar Amount. "To eliminate any concerns, Mr. Clinton turned over to Mr. Obama's team the names of all 208,000 individuals and organizations that have given money since 1997. The agreement will ensure that the foundation releases the names to the public as well by the end of December. The names will be divided into categories giving the general level of contributions rather than the precise dollar amount." (Peter Baker, "Clinton To Name Donors As Part Of Obama Deal," The New York Times, 11/30/08)

CHAI Has Not Disclosed A Complete List Of Donors, Including Foreign Governments, Since 2010, Violating Clinton's Ethics Agreement. "But officials at the Clinton's charities told Reuters last month that key parts of the agreement were broken a year into her four-year tenure. No complete list of donors to Clinton charities has been published since 2010, and new donations from foreign governments were never submitted to the State Department for an ethics review." (Jonathan Allen, "Clinton Foundation to limit donations from foreign governments,"Reuters , 3/19/14)

CHAI Failed To Submit Foreign Government Donations For Ethics Vetting During Clinton's Tenure As Secretary

The Clinton Foundation Pledged To Allow The State Department To Review Any New Or Increased Donations From Foreign Governments. "The Reuters inquiries also raised questions about a second assurance Hillary Clinton made to the Obama administration: that the State Department would be able to review any new or increased contributions to CHAI by foreign governments while she served as the nation's top diplomat. The Clintons said the pledge was intended to defuse accusations that foreign governments might use such donations to earn favors." (Jonathan Allen, "Exclusive: Despite Hillary Clinton Promise, Charity Did Not Disclose Donors," Reuters, 3/19/15)

But "The Clinton Health Access Initiative Never Submitted Information On Any Foreign Donations To State Department Lawyers For Review During Clinton's Tenure From 2009 To 2013…" "The Clinton Health Access Initiative never submitted information on any foreign donations to State Department lawyers for review during Clinton's tenure from 2009 to 2013, Maura Daley, the organization's spokeswoman, acknowledged to the Globe this week." (Annie Linskey, "Clinton Charity Never Provided Foreign Donor Data," The Boston Globe , 4/30/15)

The Foundation Also Failed To Properly Report Government Donations On Its Tax Returns

Clinton's Charities Will Refile At Least Five Tax Returns After Errors Were Found "In How They Reported Donations From Governments" And More Audits On Other Clinton Foundation Returns May Come. "Hillary Clinton's family's charities are refiling at least five annual tax returns after a Reuters review found errors in how they reported donations from governments, and said they may audit other Clinton Foundation returns in case of other errors." (Jonathan Allen, "Exclusive: Clinton Charities Will Refile Tax Returns, Audit For Other Errors," Reuters, 4/23/15)

  • "The Charities' Errors Generally Take The Form Of Under-Reporting Or Over-Reporting, By Millions Of Dollars, Donations From Foreign Governments, Or In Other Instances Omitting To Break Out Government Donations Entirely…" "The charities' errors generally take the form of under-reporting or over-reporting, by millions of dollars, donations from foreign governments, or in other instances omitting to break out government donations entirely when reporting revenue, the charities confirmed to Reuters." (Jonathan Allen, "Exclusive: Clinton Charities Will Refile Tax Returns, Audit For Other Errors," Reuters, 4/23/15)

"For Three Years In A Row Beginning In 2010, The Clinton Foundation Reported To The IRS That It Received Zero In Funds From Foreign And U.S. Governments…" "For three years in a row beginning in 2010, the Clinton Foundation reported to the IRS that it received zero in funds from foreign and U.S. governments, a dramatic fall-off from the tens of millions of dollars in foreign government contributions reported in preceding years." (Jonathan Allen, "Exclusive: Clinton Charities Will Refile Tax Returns, Audit For Other Errors," Reuters, 4/23/15)

Charity Law And Tax Experts Have Said "For A Large, Global Charity To Refile Three Or Four Years In A Row Was Highly Unusual." "Some experts in charity law and taxes said it was not remarkable for a charity to refile an erroneous return once in a while, but for a large, global charity to refile three or four years in a row was highly unusual." (Jonathan Allen, "Exclusive: Clinton Charities Will Refile Tax Returns, Audit For Other Errors," Reuters, 4/23/15)

  • "I've Never Seen Amendment Activity Like That," Said Bruce Hopkins, A Kansas City Lawyer Who Has Specialized In Charity Law For More Than Four Decades, Referring To The CHAI Filings." (Jonathan Allen, "Exclusive: Clinton Charities Will Refile Tax Returns, Audit For Other Errors," Reuters, 4/23/15)

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