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For the IRS, one tax-exempt group comes served on a platter

By   /   June 19, 2013  /   News  /   4 Comments


TAX EXEMPT: The Restaurant Opportunities Center and its multi-state affiliates allegedly violate their tax exempt status. Will the IRS investigate?

By William Patrick | Florida Watchdog

TALLAHASSEE — The Restaurant Opportunities Center has slipped IRS scrutiny, and critics of the nonprofit are asking why.

A complaint filed by a coalition of restaurant owners with the federal tax authority alleges the 501(c)(3) labor nonprofit has received special treatment.

Florida Watchdog has obtained a copy of ROC’s tax exempt acceptance letter, dated June 1, 2010, and approved by Robert Choi, director of exempt organizations at the Cincinnati office of the Internal Revenue Service.

The Cincinnati office is blamed for much of the harassment and delay tactics incurred by conservative groups applying for similar tax exempt treatment, which is no fault of ROC.

What is of concern, according to a coalition of restaurant owners and workers calling itself the Restaurant Opportunities Center Exposed, is the multi-state “union front” continues to slip by the watchful eye of the IRS.

“It does raise the question of whether they’re receiving a pass because they’re ideologically in line with the administration. But we’ll have to see if the IRS will now investigate. We’ve presented them with some pretty strong documentation of lobbying and we’ve juxtaposed that with filings the IRS already has in their possession,” said Mike Paranzino, communications director for ROC Exposed.

The complaint alleges 13 instances of lobbying, including attempts by a Miami affiliate to influence Florida lawmakers into passing paid sick leave legislation for restaurant workers.

Read the full complaint here.

The Restaurant Opportunities Center and its tax exempt Miami office maintain they engage in “issue advocacy,” a legitimate exercise of their 501(c)(3) status.

According to its website, the mission of the ROC is to improve wages and working conditions for restaurant workers.

Under IRS code, providing educational resources and workforce training is a legitimate exercise of the 501(c)(3) tax exempt designation.

An example is the 2011 report released by ROC Miami, “Behind the Kitchen Door: The Social Impact of Inequality in Miami’s Growing Restaurant Industry.”

But heightened restrictions on lobbying and political activities also apply, and ROC Exposed says the labor group knowingly exceeds its “public charity” status doing both.

What’s more, ROC Exposed alleges the worker-center receives taxpayer funding and deductible donations for its legitimate and politically natured activities while denying any form of lobbying on its annual IRS Form 990.

Jean Souffrant, research and policy director for ROC Miami, told Florida Watchdog in a phone interview: “The Restaurant Opportunities Center is a nonprofit that advocates for the rights of restaurant workers. In that arena, we of course have been advocating for restaurant workers’ rights to legislators. Just like I as a regular citizen go to my state legislator and tell them I would like to have better benefits.”

“We are on the forefront of talking to legislators and doing grassroots lobbying that allows us to speak up for restaurant workers. This is a very large industry, a multi-billion dollar industry, where restaurant owners have a very loud voice,” Souffrant said.

That may be true, though it seems to leave open the question of whether ROC is “substantially” exceeding 501(c)(3) limits on influencing legislation, a critical threshold under IRS code.

According to an IRS compliance guide, public charities are not allowed to “contact, or urge the public to contact, members of a legislative body for purposes of proposing, supporting or opposing legislation.”

The penalty for such violations could include the revocation of tax exempt status and payment of excise taxes.

“It seems pretty clear the IRS should investigate this now,” said Paranzino. “But the question will remain as to why the IRS didn’t investigate this sooner.”

Contact William Patrick at [email protected]


William Patrick is Watchdog.org’s Florida reporter. His work has been featured by Fox News, the Drudge Report, and Townhall.com, as well as other national news and opinion websites. He’s also been cited and reposted by numerous state news organizations, including Florida Trend, Sunshine State News and the Miami Herald, and is a member of Investigative Reporters and Editors and the Florida Press Association. William’s work has impacted discussions on education, privacy, criminal justice reform, and government and corporate accountability. Prior to joining Watchdog, William worked for the James Madison Institute in Tallahassee, Fla. There, he launched a legislative news website covering state economic issues. After leaving New York City in 2010, William worked for the Florida Attorney General’s Office where he assisted state attorneys general in prosecuting Medicaid Fraud. William graduated magna cum laude from Hunter College, City University of New York. He lives in Tallahassee with his wife and three young children.

  • selfstarter

    Because they are a UNION, (read Democrat) that is why.

  • Jim McCormack

    UNION= Exempt from all laws, freedom to beat up Tea Party and Gop Members, and Exempt from Obama care. Also get money from GM investors as in “steal “

  • Denise

    I have a sense this points to SEIU and and the arms of nefarious operations there too.

  • Brenda

    We shouldn’t’ pay tax any more never again if you think our government whats to give us back our money then you are crazy our money the government wants it all or blood to !We are fucked in this USA.