Senate candidate’s ex-charity did not report back-pay vow
Disclosing it would have meant hefty tax bill for Moore.
The Alabama charity once led by Senate candidate Roy Moore did not report to the Internal Revenue Service that in 2011 it guaranteed him $498,000 in back pay, according to an income report provided to The Washington Post by the charity itself.
Five tax law and accounting specialists said it appears the guaranteed payment should have been reported as compensation, a disclosure that would have triggered a federal tax bill of more than $100,000.
Moore and his campaign have not responded to questions about whether he paid the taxes, or to requests that he release his income tax returns.
John Bentley, a board member and former chairman of the charity, the Foundation for Moral Law, said Moore once told him that he had sought advice on the financial arrangement from an accountant. Moore said he was told the compensation was not taxable until he cashed in on the promised back pay, Bentley said. Moore has not yet done so, he said.
The tax issue is the latest in a series of questions over Moore’s financial ties to the Alabama charity where he worked after he was ousted from the state Supreme Court in 2003 for refusing to remove a Ten Commandments monument from a public building.
Moore, 70, a Republican, is the front-runner in the race to fill the U.S. Senate seat vacated by Attorney General Jeff Sessions.
Moore served as president of the charity from 2007 to 2012, working 20 hours a week, tax filings show. The charity agreed to pay him a $180,000 annual salary in a deal that was not publicly disclosed until a news account by The Washington Post last week. The group also said if it could not afford his full salary in a given year, it would make up for the shortfall when it was able to do so, documents show.
In 2011, the charity gave Moore promissory notes worth $498,000 for unpaid salary in previous years, backing them up with a second mortgage on the group’s historic building in Montgomery, Ala. The note entitles Moore to demand payment at any time or claim an equal stake in the building, which serves as the group’s headquarters.
David Walker, a tax law professor at Boston University, said IRS rules for compensation are complex. But he said that it appears Moore’s financial transaction with the charity became taxable the moment he was given the right to demand payment or foreclose on the group’s building.
“It’s a significant possibility,” Walker said.
Walker was one of five tax law and accounting specialists who reviewed IRS filings and other documents at The Post’s request.
Jane Searing, an accountant and nonprofit tax specialist in Washington state, said Moore did not have to be paid in cash to be taxed on the future proceeds.
“Compensation can be anything. It can be chickens. It can be property. It can be cash,” Searing said. “It doesn’t make any sense to me why they’re not reporting it as taxable income.”
In a statement issued to Alabama reporters last week, Moore’s campaign chairman, Bill Armistead, denounced The Post’s reporting and said the story on Moore’s compensation it published last week was distorted. He cited no specifics.
“The story was full of all of the same distortions and innuendos that characterized past political attacks on Judge Moore,” the statement said. “Voters in Alabama can see through the sleazy tactics of the Washington Post who are trying to discredit Judge Moore.”
The Foundation for Moral Law, now led by Moore’s wife, initially provided an array of documents in response to questions from The Post. Those documents include IRS income reports for Moore known as 1099 forms, which show he was paid as an independent contractor while serving as president of the foundation.
The 1099 forms show the total compensation paid to an independent contractor each year. Employers provide copies of the forms to contractors and to the IRS annually.
Moore is the front-runner for Sessions’ seat.