STATE OF NEW YORK OFFICE OF THE ATTORNEY GENERAL 28 LIBERTY STREET NEW YORK, NEW YORK 10005 BARBARA D. UNDERWOOD DIVISION OF SOCIAL JUSTICE Attorney General CHARITIES BUREAU James G. Sheehan, Bureau Chief June 14, 2018 The Honorable David J. Kautter Acting Commissioner Internal Revenue Service 1111 Constitution Ave., NW. Washington, DC. 20224 Re: Referral for Donald J. Trump Foundation (EIN 13-3404773) Dear Commissioner Kautter: The Charities Bureau of the New York State Attorney General?s Of?ce is responsible for regulating New York State charitable organizations, ensuring their compliance with governing rules and law, and representing the interests of charitable bene?ciaries. On June 14, 2018, the OAG ?led a petition for involuntary dissolution against the Donald J. Trump Foundation (the ?Foundation?), a New York not-for-pro?t corporation, in New York State court. The petition and accompanying papers set forth facts that the OAG uncovered during the course of an investigation of the Foundation with respect to potential violations of New York law governing related party transactions, the administration of charitable assets, and the management and oversight of the not?for-pro?t corporations (the As detailed in the petition, the Charities Bureau has concluded that the Foundation and its directors and of?cers violated multiple sections of New York State law, including provisions that prohibit foundations from engaging in self-dealing, from wasting charitable assets, and from violating the Internal Revenue Code (?Code?) by, among other things, making expenditures to in?uence the outcome of an election. I write to refer to the Internal Revenue Service evidence of 1 A copy of the Petition and the Af?rmation of Assistant Attorney General Steven Shiffman (?Shiffman and the Memorandum of Law are attached hereto. The Honorable David J. Kautter June 14, 2018 Page 2 possible violations of the Code by the Foundation and by Mr. Trump uncovered by the Investigation. Speci?cally, and as detailed in the attached IRS Form 13909, the Investigation found that: (1) the President of the Foundation?s board, Mr. Trump, used Foundation assets for personal gain; (2) the Foundation imperrnissibly intervened in a political campaign by, among other things, attempting to in?uence the outcome of the 2016 presidential election; (3) the Foundation failed to report excise tax liability properly; and (4) the Foundation engaged in deceptive and/or improper fundraising practices.2 The Investigation further found that the Foundation engaged in impermissible political activity and a related-party transaction during the 2016 presidential Trump Campaign, as well as on one occasion in 2013.3 The Investigation also revealed that the Foundation entered into at least six related-party transactions that directly bene?tted Mr. Trump or entities that he controlled, and in some instances failed to properly report excise tax liability with the IRS. Set forth below is the factual background uncovered by the OAG Investigation, as well as the analysis that led us to conclude that the Foundation may have violated provisions of the Internal Revenue Code. FACTUAL BACKGROUND The Foundation is recognized as tax-exempt under Section 501(c)(3) of the Internal Revenue Code and is classi?ed as a private foundation under Section 509(a) of the Code. As such, it may not ?participate in, or intervene in (including the publishing or distributing of statements), any political campaign on behalf of . . . any candidate for public of?ce.?4 In accordance with the Code and New York State law, the Foundation?s certi?cate of incorporation provides that part of the property . . . of the corporation shall be diverted in any manner directly or indirectly or otherwise inure to the bene?t of any member, trustee, director or of?cer of the corporation or any private individual.?5 The certi?cate of incorporation further provides that part of the activities of the corporation shall be . . . participating or intervening in (including the publication or distribution of statements) any political campaign on behalf of any candidate for public of?ce.?6 2 The OAG received documents from the Foundation and certain other third parties during the course of its investigation, but did not request or receive documents directly from the Trump Campaign. 3 See completed IRS Form 13909, which this letter is intended to supplement. 4 See 26 U.S.C. 501(c)(3); see also IRS Revenue Ruling 2007-41, 2007-25 I.R.B. (June 18, 2007), available at 5 Shiffman Aff., Ex. 2, Donald J. Trump Foundation Certi?cate of Incorporation, dated February 2, 1987 (?Certi?cate of Incorporation?), at Section Sixth; N-PCL 406 515(a). 5 Shiffman Aff., Ex. 2, Certi?cate of Incorporation at Section Seventh; 406. The Honorable David J. Kautter June 14, 2018 Page 3 Facts Supporting Determination that the Foundation Intervened in a Political Campaign in an Attempt to In?uence the Outcome of the 2016 Presidential Primary Election, and that the Foundation Engaged in Deceptive or Improper Fundraising Practices The OAG Investigation obtained compelling evidence that the Donald J. Trump for President, Inc.7 (the ?Trump Campaign?) extensively directed and coordinated the Foundation?s activities in connection with a nationally televised ?mdraiser for the Foundation in Des Moines, Iowa on January 28, 2016 (the ?Iowa Fundraiser?), including the timing, recipients, and amounts of disbursements of the proceeds from that event. As was well?publicized at the time, the Investigation con?rmed that then-candidate Trump decided to hold the Fundraiser at the same time as a televised debate of the Republican presidential candidates, in which Mr. Trump declined to participate.8 The events took place less than one week before the February 1, 2016 Iowa caucuses. According to its ?ling with the Charities Bureau, the Foundation ?held [the] nationally televised fundraiser in Iowa to raise funds for veterans? organizations . . . [and] created a website to allow donors to make charitable contributions online.?9 The Investigation found that, in fact, the Iowa Fundraiser was planned, organized, and paid for by the Trump Campaign, with administrative assistance from the Foundation. The event was billed as the ?Donald J. Trump Special Event for Veterans,? and the website through which the public could get tickets for the event listed a Campaign staffer the Iowa Deputy State Director for Donald J. Trump for President, Inc. as the event ?Organizer.? Brad Parscale, a Trump Campaign consultant who eventually became the Trump Campaign?s digital media director (and is now Mr. Trump?s re- election campaign manager), created the event website, located at DonaldTrumpForVets.com, which featured the name of the Foundation at the top of the home page and informed visitors that ?the Donald J. Trump Foundation is a 501(c)(3) nonpro?t organization.?10 Executives of the Trump Organization, including Allen Weisselberg, its Executive Vice President and CFO, and Jeff McConney, its Senior Vice President and Controller both of whom regularly performed tasks for the Foundation took direction from Mr. Parscale on the proj ect.11 At the televised fundraising event, the podium was decorated with a sign that used Campaign themes and slogans, displaying the Foundation?s DonaldTrumpForVets.com website 7 Donald J. Trump for President, Inc., EC Form 1, Statement of Organization, June 29, 2016, available at 8 See, e. ?Trump Campaign Statement on Fox News Debate,? Donald J. Trump for President website, Jan. 26, 2016, hgpz/lgoogUSRth g; Philip Rucker, Dan Balz, and Jenna Johnson, Trump Says He Won ?t Participate in GOP Debate on Fox News, WASH. POST, Jan. 26, 2016, available at 16/ 0 1/26/ 5 8fa0b26-c490-1 1 e5 -a4aa- f25866ba0dc6 9 Shiffman Aff., Ex. 10, 2016 Form CHAR410-A, Part G, Line 10 Shiffman Aff., Ex. 7, Transcript of Jeff McConney at 134-35. Shiffman Aff., Ex. 6, Transcript of Allen Weisselberg at 36-37. In addition, on the day of the Iowa Fundraiser, January 28, 2016, Mr. Weisselberg and Mr. McConney ?ew to Des Moines, Iowa, to be present with the Foundation?s checkbook at the Fundraiser in case Foundation grants were to be disbursed that night. See Shiffman Aff., Ex. 6, Weisselberg Tr. at 29-32, 36-37, 39-40; Shiffman Aff., Ex. 7, McConney Tr. at 128?30. Mr. McConney understood that he was attending the Fundraiser on behalf of the Foundation. McConney Tr. at 133; Weisselberg Tr. at 29-32. The Honorable David J. Kautter June 14, 201 8 Page 4 on a blue placard with a red border identical to Mr. Trump?s standard Trump Campaign sign, along with Mr. Trump?s name in capital letters and the Trump Campaign?s trademarked slogan, Make America Great Again! 12 The Fundraiser reaped approximately $5.6 million in tax-free donations, some of which went directly from the private donors to veterans charity groups. Of that total, $2.823 million was deposited into the Trump Foundation account.l3 Following the Fundraiser, senior Trump Campaign staff dictated the manner in which the Foundation would disburse those proceeds, including the timing, amounts, and recipients of the grants. The Investigation found that Trump Campaign staff instructed the Foundation to make at least four grants in Iowa right before the February 1, 2016 Iowa caucuses, the first nominating contest of the presidential primaries for the 2016 presidential election. On January 29, 2016, Corey Lewandowski, then Mr. Trump?s campaign manager, emailed Mr. Weisselberg, to ask, ?Is there any way we can make some disbursements [from the proceeds of the fundraiser] this week while in Iowa? Speci?cally on Saturday [January Mr. Weisselberg, who testi?ed that he understood that Mr. Lewandowski ?wanted some checks with him when he went [to wrote back to Mr. Lewandowski asking the Trump campaign manager ?to put together a list of the Iowa veterans organizations you have in mind along with dollar [Will] give them to the boss.?16 Later that same day, Mr. Lewandowski emailed Mr. McConney a list of veterans organizations, created by Trump Campaign staff and approved by Mr. Trump, that should receive the grants from the Foundation.? The Foundation then permitted the Trump Campaign to exhibit and award enlarged presentation copies of supposed Foundation checks to grant recipients at Trump Campaign rallies for the political bene?t of Mr. Trump in his campaign for President. Mr. Trump held several such rallies in Iowa in the days leading to and including the day of the Iowa caucuses, February 1, 2016. During those campaign appearances, Mr. Trump personally distributed the presentation copies of Foundation checks to Iowa veterans groups in his capacity both as Foundation president and presidential candidate. The Foundation?s name and address were printed on the enlarged presentation checks, along with the Trump Campaign?s slogan, ?Make America Great Again!? Mr. Trump?s name in large letters, with a smaller reference to the DonaldTrumpForVets.com website.18 12 Mr. Trump received a trademark for the well-known Make America Great Again slogan in 2013. See US. Patent and Trademark Of?ce, Trademark Electronic Search System Entry for ?Make America Great Again,? available via 13 See Shiffman Aff., Ex. 14, Document entitled Veterans Fundraiser January 28, 2016. ?4 Shiffman Aff., Ex. 15, Email exchange between Allen Weisselberg to Corey Lewandowski dated January 29, 2016. 15 Shiffman Aff., Ex. 6, Weisselberg Tr. at 133. 16 Id. 17 Shiffman Aff., Ex. 16, Email from Corey Lewandowski to Jeff McConney dated January 29, 2016. 18 See (photograph of Mr. Trump and presentation check at campaign event at Orpheum Theatre in Sioux City, Iowa on January 31, 2016); (photograph of Mr. Trump and presentation check at campaign event at Adler Theater in Davenport, Iowa on January 30, 2016). The Honorable David J. Kautter June 14, 2018 Page 5 On January 29, 2016, at a Trump Campaign rally in Council Bluffs, Iowa, Mr. Trump delivered an enlarged presentation copy of a $100,000 check to Partners for Patriots.19 Jerry Falwell, Jr., making a campaign appearance with Mr. Trump, touted Mr. Trump as a candidate, stating, mean, how often do you see a presidential candidate giving money away instead of taking it. I think that is wonderful.? Mr. Falwell went on, ?we have got a group here today that is going to receive the second disbursement of that six million dollars that was raised the other night. If that group would come on the stage now, it?s called Partners for Patriots.? At the time that Mr. Trump gave the check copy to Partners for Patriots, however, the Foundation was still unaware that the Trump Campaign had selected Partners for Patriots to receive the funds.20 The actual payment was requested by the Trump Campaign and issued by check from the Foundation?s account only on February 10, 2016.21 On January 30, 2016, at a Trump Campaign event in Davenport, Iowa, the Campaign staged the disbursement of a presentation check for $100,000 to the Puppy Jake Foundation, another veterans? charity. Video of the event shows Mr. Trump presenting an enlarged copy of the check to the recipient foundation and receiving a round of applause from the audience for doing so.22 The pattern repeated the next day, January 31, 2016, when Mr. Trump announced at a Trump Campaign rally in Sioux City, Iowa a Foundation grant of $100,000 to Support Siouxland Soldiers, again presenting an enlarged promotional version of a supposed Foundation check emblazoned with his campaign slogan.23 On February 1, 2016, Mr. Trump awarded another enlarged presentation copy of a $100,000 check to the Mulberry Street Veterans Shelter at a Trump Campaign rally in Cedar Rapids, Iowa. During the rally, Mr. Trump himself drew a connection between the distribution of checks and his political polling numbers: In lieu of the [Republican presidential primary] debate, I said let?s have a rally for the veterans. . . . At that rally, we raised in one hour six million dollars. . . . So what we did, we raised this money, and we are giving it out, and we just gave out a check for a hundred thousand dollars a little while ago, and we are giving out another check, and they can bring it up and we are going to deliver it right here . . . We have so many of these checks. They are all over the place. We are giving them out. This was in lieu, and, by the way, the poll numbers just came down from New Hampshire, I went through the roof. I think they respect the fact that I, that we stand up for our rights . . . . So, congratulations to Mulberry Street.24 19 See ?403 93 2? Shiffman Aff., Ex. 26, Email exchange between Corey Lewandowski and Jeff McConney dated February 8, 2016. 21 Shiffman Af?, Ex. 22, Document entitled Donald J. Trump Foundation Inc. List of Contributions to Veterans 2016 and accompanying check images. 22 See 5vu?BU. 23 See ai1.co.uk/news/ article-34265 62/Even-Melania-cam ai ns-Donald-Trurn 24 See ?uses?famil - The Honorable David J. Kautter June 14, 2018 Page 6 From the beginning, the Foundation and the Trump Campaign communicated about the handling of disbursements from the Fundraiser, and continued to do so for months after. Throughout, records obtained from the Foundation re?ect that the Foundation ceded control over the distribution of its charitable funds to senior staff of the Trump Campaign. For example, at the outset of the Iowa campaign events that featured the Foundation disbursements, Mr. Weisselberg of the Foundation asked Mr. Lewandowski, the campaign manager, to ?start thinking how you want to distribute the funds collected for the Vets 3?25 In the ensuing email exchange, as noted above, Mr. Lewandowski made it clear that he wanted the ?rst disbursements to be made ?while in Iowa? on the Saturday before the Iowa caucus.26 Similarly, on February 16, 2016, Mr. McConney wrote Mr. Lewandowski on behalf of the Foundation seeking further direction from the Trump Campaign concerning the Foundation?s fundraising activities and charitable disbursements: ?Do you have a list of which veterans charities you want these funds sent to and how much for each charity?? . . . Lastly, how much longer do you want to keep the TrumpForVets website up and running??27 On May 31, 2016, after press reports about the Foundation?s failure to disburse all of the charitable funds it had received during the Iowa fundraiser, 28 the charitable giving of the Foundation again became the centerpiece to a Trump Campaign political event at which Mr. Trump promoted his candidacy in announcing additional grants of Foundation money to veterans groups. At that event, Mr. Trump discussed the presidential campaign while identifying the groups to receive those residual funds.29 And as with the Iowa events, the Trump Campaign?s slogan was prominently displayed in connection with the announcement of Mr. Trump?s charitable giving.30 Mr. Trump also challenged the press to compare his efforts to those of his political opponent: ?When I raise money for the veterans, and it?s a massive amount of money, ?nd out how much Hillary Clinton?s given to the veterans. Nothing.?31 At the press conference, Mr. Trump invited 25 Shiffman Aff., Ex. 15, Email exchange between Allen Weisselberg and Corey Lewandowski dated January 29, 360,23 27 Shiffman Aff., Ex. 19, Email from Jeff McConney to Corey Lewandowski, copy to Allen Weisselberg, dated February 16, 2016. 23 David Fahrenthold, Trump said he raised $6 million for veterans. Now his campaign says it was less. David Fahrenthold, WASH. POST, May 21, 2016, available at 127a8-1d1f?1 1e6-b6e0- 8643; Four months after fundraiser, Trump says he gave $1 million to veterans group, WASH. POST, May 24, 2016, available at 1 5 97aab8 29 David Fahrenthold, ramp said he raised $6 million for veterans. Now his campaign says it was less. David Fahrenthold, WASH. POST, May 21, 2016, available at ai n?sa 053b7ef63b45 storv.html?utm term=.aa7lf0258643; Four months after fundraiser, Trump says he gave $1 million to veterans group, WASH. POST, May 24, 2016, available at term=.0e2 15 97aab8f 30 David ahrenthold and Jose A. DelReal, rump Rails Against Scrutiny Over Delayed Donations to Veterans Groups, WASH. POST, May 31, 2016, available at l/trumn? term=.ctbdetb8845e. 31 at 14:00 The Honorable David J. Kautter June 14, 2018 Page 7 a veteran, Al Baldasaro (a Republican member of the New Hampshire state legislature who worked on the Trump campaign during the primary), to address the reporters. During his speech, Mr. Baldasaro applauded Mr. Trump?s fundraising efforts for the veterans charities, and repeated his endorsement of Mr. Trump? 5 candidacy.32 That same month, the Trump Campaign uploaded to its website a chart identifying the recipients of the charitable, tax-free contributions received during the ?Donald J. Trump Veteran Fundraiser? in Iowa ?ve months earlier.33 All of the grants issued by the Foundation from the proceeds of the Iowa Fundraiser which did not include any funds donated by Mr. Trump personally were selected by the Trump Campaign, with the only approval by the Foundation coming from Mr. Trump (who served as president of the Board and signed each check distributing the proceeds from the Fundraiser), whose political campaign both controlled and bene?tted from the manner in which the grants were disbursed. The Foundation Board never met to discuss the Foundation?s involvement in the Fundraiser or any of the Trump Campaign events at which the proceeds from it were disbursed. Nor did the Board ever approve the grants that were made from the proceeds. And as a consequence, the Trump Campaign coopted the bene?t of a tax-free, charitable giving process to its political ends.34 The Foundation engaged in unlawful political activity on at least one other occasion. On September 9, 2013, the Foundation issued a check in the amount of $25,000 to ?And Justice for All,? a Florida political organization that supported the re-election of Pam Bondi to the position of Florida Attorney General. On March 23, 2016, the day after a Washington Post story revealed some of the details of the transaction and reported that a government watchdog group had ?led a complaint about the contribution, the Foundation ?led an IRS Form 4720 disclosing the transaction, and Mr. Trump paid the applicable excise tax. Facts Supporting OAG Determination that the Foundation Was Engaged in Self-Dealing Transactions for the Bene?t ofIts President and Companies He Controlled, and that the Organization Failed to Report Excise Tax Liability Properly In addition to the political activity described above, the OAG Investigation revealed other instances of the unlawful conduct by the Foundation that form the basis for this referral. Speci?cally, the Investigation revealed that the Foundation entered into at least ?ve self?dealing transactions that directly bene?tted Mr. Trump or for-pro?t entities that he controlled: 0 On September 11, 2007, the Foundation made a $100,000 payment to the Fisher House Foundation, a charitable organization, to settle legal claims against Mar-A-Lago, LLC, 32 Id. at 18:40. 33 (archive copy of May 30, 2016 Trump Campaign webpage featuring chart of Foundation grants); see also (archive copy of May 24, 2016, Trump Campaign webpage featuring CBS press report on statements of Mr. Lewandowski regarding Mr. Trump?s contributions to veterans groups). 34 In fact, at the time of the Fundraiser, Mr. Trump had a signi?cant ?nancial stake in the prosperity of his presidential campaign committee, having already provided $17.5 million in personal loans toward his public promise to self-fund all the most reason to spend tax-exempt charitable donations of others, rather than his own campaign funds, on costly political gestures. The Honorable David J. Kautter June 14, 201 8 Page 8 LC an entity in which Mr. Trump has a 99.99% ownership interest, by the City of Palm Beach; 0 On February 14, 2012, the Foundation made a $158,000 payment to the Martin B. Greenberg Foundation, a charitable organization, to settle legal claims against The Trump National Golf Club, which is owned by DJ Holdings, LLC, an entity that is directly and indirectly owned by Mr. Trump, and other defendants by Martin B. Greenberg; 0 On November 5, 2013, the Foundation made a $5,000 payment to the DC Preservation League, a charitable organization, for promotional space featuring Trump International Hotels in charity event programs. This payment was made for the benefit of Trump International Hotel Management, LLC, an organization controlled by the directors of the Foundation; 0 On March 20, 2014, the Foundation made a $10,000 payment to the Unicorn Children?s Foundation, a charitable organization, for a painting of Mr. Trump purchased at an auction for that charity and displayed at Trump National Doral Miami, an entity owned by Trump Endeavor 12 LLC, which is owned by Mr. Trump; and On December 14, 2015, the Foundation made a $32,000 payment to the North American Land Trust, a charitable organization that preserves natural resources, in connection with a pledge by Seven Springs, LLC, an entity that is owned by DJ Holdings, LLC, to fund the management of a conservation easement. None of these transactions were approved by the oundation?s Board. Among those other transactions, on February 14, 2012, the Foundation made a $158,000 payment to the Martin B. Greenberg Foundation, a charitable organization, to settle legal claims against The Trump National Golf Club a Trump-owned business entity) and other defendants by Martin B. Greenberg. Under the terms of the settlement, TNGC agreed to pay $158,000 to settle Mr. Greenberg?s claim that he had been improperly denied a prize for shooting a hole-in-one at a charity golf tournament. Not only did TNGC not pay the settlement money itself, the Trump Organization raised the $158,000 payment by auctioning off a lifetime membership in Mr. Trump?s golf courses on the website Charitybuzz.com, claiming that the auction would bene?t the Trump Foundation. The Investigation concluded that the Foundation improperly used the funds it received from the auction to satisfy the obligations of the TNGC, and constituted improper self- dealing. To date, it is the understanding that no excise taxes have been paid on this transaction. The Foundation paid excise taxes on the other self-dealing transactions that were the focus of the OAG Investigation, with the exception of one transaction the payment to the Fisher House Foundation in settlement of legal claims against Mar-A-Lago that appears to be outside the statute of limitations. The Trump Foundation later filed IRS Form 47203 for four of these transactions, but has never done so with respect to the Fisher House Foundation or the Greenberg Foundation payments. The OAG mentions all of these transactions here, however, because they support our conclusion that the Foundation has a history of failure to adopt procedures adequate to comply with IRS law and rules. The Honorable David J. Kautter June 14, 201 8 Page 9 LEGAL ANALYSIS Section 501(c)(3) prohibits tax-exempt not-for-pro?t organizations from participating or intervening in ?any political campaign on behalf of . . . any candidate for public of?ce.? This is an absolute prohibition there is no such thing as a de minimis violation of this rule and it applies to both private foundations and public charities.35 A communication that ?explicitly advocates the election or defeat of an individual to public of?ce? unquestionably is political campaign activity}6 The IRS has not de?ned ?explicitly advocates,? but the Federal Election Commission has de?ned the parallel term ?expressly advocating? the election or defeat of a candidate. Under that de?nition, express advocacy includes ?communications of campaign slogan(s)? which in context ?can have no other reasonable meaning than to urge the election or defeat of a candidate.?37 Section 4945 of the Internal Revenue Code imposes excise taxes on expenditures that are made to ?in?uence the outcome of any speci?c public election,? and Section 4955 impose excise taxes to be imposed on any organization manager who agreed to an expenditure knowing that it was a political expenditure.38 The disbursement of checks from the Iowa Fundraiser proceeds by the Foundation and Mr. Trump seem to meet both of these standards. In addition, other conduct by a section 501 organization is evaluated using a facts and circumstances test to determine whether it constitutes political participation or intervention}9 In one ruling from 2012, the IRS determined that when a tax-exempt organization was founded and controlled by a political ?gure who recently ran for of?ce, the organization?s activities that ?coincide with [the founder?s] political interests? were political activity.40 This suggests that when a political candidate also controls a tax-exempt organization, the organization?s activities that support the candidate?s campaign can constitute political activity. Here, the OAG Investigation revealed clear coordination between the Trump Campaign and the Foundation, which appears to amount to impermissible political participation or intervention by the Foundation. These violations may have been knowing and willful given Mr. Trump?s awareness of the well-established prohibition on political activity in support of a candidate by not-for?pro?t organizations,? as well as the central role played by Mr. Trump in distributing Foundation grants at his campaign events in Iowa. The Foundation assisted in setting up the website to use for the Iowa Fundraiser, permitted donors to the Fundraiser to take advantage of its tax-exempt status, staff were sent to Iowa with the Foundation checkbook, they followed up with Trump Campaign staff about where Foundation money should go after the event, and the Foundation was featured prominently at Trump Campaign events after the fundraiser. This 35 See IRS Revenue Ruling 2007?41, available at See also 26 U.S.C. 501(c)(3). 36 IRS Revenue Ruling 2004?06. 37 11 38 See 26 U.S.C. 4945(d)(2), 26 U.S.C. 4955(d)(1). See also 26 CPR. 53.4955-1. 39 Rev. Rul. 2004-06; Rev. Rul. 2007-41. 40 PriV. Ltr. Rul. 201224034. 41 Shiffman Aff., 11 43. The Honorable David J. Kautter June 14, 2018 Page 10 demonstrates not only close coordination between these entities, but also reveals that the Trump Campaign was using the Foundation?s assets both its checkbook and its personnel to assist the Trump Campaign. For these reasons, the OAG has concluded that the Trump Foundation violated its New York State charter, the New York Not For Pro?t Law and engaged in impermissible political activity and improperly attempted to in?uence the outcome of the 2016 presidential election in violation of section 501(c)(3). As the attached petition lays out in detail, it is for all of these reasons that the OAG moved under Article 11 of the NPCL to dissolve the Foundation. If the IRS determines that a not-for-profit organization engaged in prohibited political activity, it may revoke the organization?s tax exemption, impose excise taxes, or both.42 CONCLUSION The OAG Investigation revealed several instances of close coordination between the Trump Campaign and the Foundation with respect to the Iowa Fundraiser and the distribution of grants from it, as well as use of the Foundation?s assets both its checkbook and its personnel to assist it in the 2016 presidential campaign. This impermissible political activity by a tax exempt foundation, combined with its pattern of engaging in self-dealing transactions that benefitted Mr. Trump and/or his business entities, led the OAG to seek involuntary dissolution of the Foundation and other equitable state law remedies against its directors, and to conclude that a referral to your agency was appropriate. If you have any questions, please contact me at (212) 416-8401. WW9 SQ ere/9s Jam 3 G. Sheehan cc: IRS E0 Classi?cation, via email to eoclass@irs.gov US. Treasury Inspector General for Tax Administration Cheryl A. Teser, Senior Program Analyst to the Director, E0 Examinations, via email Richie Heidenreich, IRS Referrals Unit Enc. 42 See IRS Fact Sheet 2006-17; 26 U.S.C. 4945, 4955. As you are aware, federal law prohibits executive branch interference with any audit or investigation you may conduct in response to this referral. See 26 U.S.C. 7217. In addition, Section 4941 of the Code imposes an excise tax on certain transactions (acts of self-dealing) between a private foundation and disquali?ed persons. The Iowa Fundraiser and the other transactions described above appear to fall within this prohibition. See 26 U.S.C. 4941.