House GOP Members Call on IRS to Investigate AARP Tax-Exempt Status

House Republicans have called on the IRS to reexamine how the nonprofit seniors group AARP is able to retain a tax-exempt status despite being in contract with private insurance companies who pay AARP royalties in return for an endorsement, while holding a considerable authority over the structure of the plans it endorses. 

Three House Republicans on the Ways and Means Committee sent a letter to the Internal Revenue Service last week asking the agency to take a closer look at AARP contracts with two specific businesses that suggest the nonprofit group's relationship is much more than an agreement to license the AARP name. The Republican lawmakers allege that the seniors' group effectively holds "day-to-day control" over private firms with the AARP stamp of approval, yet shields millions of dollars from tax levies thanks to their nonprofit status:

"AARP has extensive decision making authority and is deeply involved in United's business operations. The ARRP relationship with both United and Hear USA seems to suggest a pattern of business partnerships and activities that permit AARP to engage in for-profit businesses under the cover of its tax-exempt status."

One of the three Ways and Means Republicans writing to the IRS, Washington Rep. David Reichert, tells Fox News that AARP uses their brand to sell everything from health insurance to hearing aids netting huge profits for the tax-exempt seniors' group:

Fox News reports that Republicans point to AARP's income from United HealthCare alone which has skyrocketed from 2007 to 2009 in the midst of the recession, leaping from $284 million to $427 million during that time, a 50 percent jump. In 2010 those revenues soared to $670 million.

AARP has responded to the renewed Republican criticism of its business practices, claiming that GOP House members are attacking quality control practices that benefit consumers by allowing the organization to provide oversight for AARP-branded products. The Hill reports: 

"AARP said it’s 'confusing' that the lawmakers would target 'some of the clearest examples of how AARP’s work to influence the private sector has helped create stronger consumer protections and options in markets where too many seniors had previously been left behind.'

The group’s agreement with United, for example, requires that AARP review such plan changes as potential premium increases.

'AARP takes seriously our commitment to making sure AARP-branded products are consistent with our social advocacy mission, and in doing so we’ve helped millions of older Americans get help that was previously kept out of reach,' the group said. 'We are disappointed that this work should be the subject of Congressional criticism.'”

AARP makes the majority of its revenues from supplemental insurance policies to seniors. The seniors' group has supported the Obama administration's new health care law, which calls for $500 billion in cuts to Medicare, and FOX News notes critics say makes it more likely people would need supplemental insurance.