ACORN Report Finds No Illegal Conduct
Zachary Roth |
ACORN employees caught in those undercover videos advising a couple posing as a pimp and a prostitute on how to break the law acted unprofessionally and inappropriately, but did nothing illegal, a report commissioned by ACORN and conducted by an independent investigator has found.
The report, by former Massachusetts Attorney General Scott Harshbarger, recommends nine steps for ACORN to take in order to regain public trust in the wake of the scandal, including that it return to its “core competency – community organizing and citizen engagement empowerment, with related services.”
On the key question of potential illegal conduct, it finds:
While some of the advice and counsel given by ACORN employees and volunteers was clearly inappropriate and unprofessional, we did not find a pattern of intentional, illegal conduct by ACORN staff; in fact, there is no evidence that action, illegal or otherwise, was taken by any ACORN employee on behalf of the videographers.
Harshbarger also notes that the videos were sometimes less than perfect representations of the events they depict. He writes:
The videos that have been released appear to have been edited, in some cases substantially, including the insertion of a substitute voiceover for significant portions of Mr. O’Keefe’s and Ms. Giles’s comments, which makes it difficult to determine the questions to which ACORN employees are responding. A comparison of the publicly available transcripts to the released videos confirms that large portions of the original video have been omitted from the released versions.
In the wake of the scandal, Congress voted to cut off all federal funds from ACORN. In response, the group is suing the US government, arguing that the measure is a bill of attainder, and therefore unconstitutional.
Robert Borosage, of the progressive Campaign for America’s Future, responded to the report’s findings by declaring that “an organization that has done remarkable work organizing and empowering the poorest Americans was targeted and slurred by a right-wing hit team, then persecuted by legislators who should have known better.”
The Senate dealt a blow to ACORN Monday evening, voting to deny the Department of Housing and Urban Development from granting funds to the community organization. Sen. Mike Johanns’s (R-Neb.) amendment to the appropriations bill providing funding to the department passed in a bipartisan, 83-7 vote. It’s the latest in a series of recent setbacks for ACORN, which has come under increasing fire from conservative activists and lawmakers.
Over the last several weeks, the organization has seen employees in Florida arrested for allegedly taking part in voter registration fraud and has watched as the Census Bureau decide to sever its ties with the group. And in an embarrassing turn of events, Acorn employees were caught on hidden camera divulging advice to actors portraying a prostitute and her pimp on how to file tax forms. “With so much in the air about the need for bipartisanship, I’m very glad my colleagues rose above partisan differences to say ‘no’ to sending more tax dollars to ACORN-whose employees have multiple convictions of undermining our democratic process, our laws, and our good faith,” Johanns said in a statement.
Only a handful of Democrats sided with Acorn on the vote: Illinois Sen. Roland Burris, Pennsylvania Sen. Bob Casey, Illinois Sen. Dick Durbin, New York Sen. Kirsten Gillibrand, Vermont Sen. Patrick Leahy, Vermont Sen. Bernie Sanders, and Rhode Island Sen. Sheldon Whitehouse. In a statement, ACORN CEO Bertha Lewis said: “We’re disappointed that the Senate took the rare and politically convenient step of supporting eliminating some federal funding for a single organization, one that has been the target of a multi-year political assault stemming variously from the Bush White House, Fox News, and other conservative quarters.”
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How Do Prostitutes Pay Their Taxes?
With 1040 Schedule C, of course.
By Brian Palmer
Posted Monday, Sept. 21, 2009, at 6:29 PM ET
ACORN, the community organizing group and Republican cause célèbre, lost its federal funding last week after some of its employees were captured on video telling people they thought were prostitutes how to manipulate tax laws. How do real prostitutes go about paying their taxes?
They report their income on IRS Form 1040 Schedule C (PDF) and pay self-employment tax in addition to ordinary income taxes. Sex-worker advocacy organizations regularly receive requests for tax advice. Some prostitutes, for example, might need help with the first line on the form—which asks the filer to identify her profession and service offered. It turns out that the Fifth Amendment privilege against self-incrimination permits a prostitute to leave this line blank or provide a vague answer like “sale of leisure services.” The form also requires the filer to select a code for line of business. The ACORN employee recommended 711510 (“independent artists, writers, and performers”), but 713900 (“other amusement and recreation services”) and 812990 (“all other personal services”) would have been equally appropriate.
Successful prostitutes may claim to be working in a related field, like nursing or psychology. There are some powerful incentives for these women to file: If a high-earning prostitute wants to buy a house or a car or sign up for a credit card, she’ll need to report some income. One way to do that is to get a degree or license of some kind and then claim income for a related service—for example, therapy. For high-end prostitutes, the fear of being caught evading taxes has more to do with reputational damage and harm to their business than legal penalties.
The IRS also receives tax forms from sex workers with no interest in houses or AmEx cards. That’s because the penalty for tax evasion is stiffer than most states’ sentences for prostitution. In Maryland, where the first ACORN video was filmed, the maximum sentence for prostitution is one year in prison and a $500 fine. (Maryland is relatively heavy-handed. Arizona’s prison term for first-time prostitutes is just 15 days.) Tax evasion, on the other hand, can get you five years in jail and a $100,000 fine, plus unpaid taxes and interest. A prostitute who never files can also be prosecuted for evasion by a state government.
Congress has established something of a safe harbor for people reporting income from illegal activities. The IRS may not disclose tax returns to law enforcement authorities unless the individual in question is already under investigation for wrongdoing. In other words, police can use a tax return in their investigation, but it can’t be the initial tip. The opposite is not true: Local police can, and do, notify the IRS that they have uncovered a prostitute or ring of prostitutes who may have violated the tax laws.
Many prostitutes who have been prosecuted for tax evasion have argued that the payment was, in fact, a nontaxable gift unconnected to the sexual relationship. In legal terms, a gift from a lover is made out of “affection, respect, admiration, charity or like impulses,” while taxable income is the direct exchange of money for sex in a quid pro quo relationship. This argument rarely succeeds in court (PDF).
Prostitution has raised a number of peripheral tax issues as well. Last week, for example, the U.S. Tax Court ruled against a tax attorney who tried to write off $100,000 in payments to prostitutes as deductible health care expenses.
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