NEW YORK / FoxBusiness / Personal Finance / April 18, 2011
Three Republican congressmen are asking the IRS to investigate whether AARP, the powerful senior lobby and health care reform supporter, should be stripped of its tax-exempt status.At issue is whether there's a conflict of interest between the group's mission to advocate for seniors and the money it makes from endorsing insurance products.
As a result of provisions in the health care reform law, AARP stands to make an additional $1 billion through royalties on insurance products branded with the organization's name over the next 10 years, according to a 29-page report released March 30 by Republican members of the U.S. House Ways and Means Committee.
"AARP enjoys a privileged tax-exempt status, but in many cases AARP resembles a for-profit entity," said Ways and Means Oversight Subcommittee Chairman Charles Boustany of Lousiana in a statement.
Wally Herger of California, chairman of the Ways and Means Health Subcommittee, and Rep. Dave Reichert of Washington prepared the report.
AARP Counters Criticism
In an April 1 joint hearing of the Ways and Means Health and Oversight Subcommittees, AARP CEO Barry Rand said the organization was disappointed in the substance and title of the report, "Behind the Veil: The AARP America Doesn't Know."
"There is no veil," Rand told subcommittee members. "Quite frankly, we disagree with each of the conclusions drawn in this one-sided report."
Democrats said the report was politically motivated, noting that Republicans lauded AARP's endorsement of the Medicare Modernization Act of 2003, which created a private Medicare drug benefit.
"But now, since AARP worked to help enact health reform and will surely oppose Republican plans to convert Medicare to a voucher, privatize Social Security and block grant Medicaid, Republicans want to bring them down," said Health Subcommittee Ranking Member Pete Stark of California in a statement.
AARP, which had revenues of $1.4 billion in 2009, makes money from royalty payments for products it endorses, membership dues, publication advertising and grants, and uses the proceeds to support its lobbying efforts and programs, such as free tax counseling for seniors. The Republican report takes issue with the organization's reliance on royalty income from insurers, which it says comprised almost 46 percent of AARP's revenue in 2009, and its support of health care reform, which could add to profits for the group.
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Seniors World Chronicle quotes the following from the website of the giant "non-profit"
Founded in 1958, AARP is a nonprofit, nonpartisan membership organization that helps people 50 and over improve the quality of their lives. AARP has offices in all 50 states, the District of Columbia, Puerto Rico and the U.S. Virgin Islands. As a social welfare organization, as well as the nation’s largest membership organization for people 50+, AARP is leading a revolution in the way people view and live life.
Our take is that American Association of Retired Persons, generally known as AARP, is more a diversified corporate than a social welfare body, comments Seniors World Chronicle Editor Ravi Chawla.