A member of a conservative group that describes itself as a “statewide grassroots alliance” has submitted complaints to the New Mexico Office of the Attorney General as well as the Internal Revenue Service alleging that the prominent environment and consumer advocacy group New Energy Economy illegally claimed donations were tax deductible during a time when the tax exempt status had been revoked.
Larry Sonntag with the group Better Together New Mexico submitted the letters, alleging that NEE’s executive director Mariel Nanasi sent out more than 30 appeals asking for donations and saying that the donations were tax deductible between May and December of last year.
Better Together New Mexico is not connected to the Better Together New Mexico program which began during the pandemic as part of the New Mexico Department of Health’s efforts to help New Mexicans get vaccinated against the virus.
The IRS placed NEE on a revocation list for tax exempt status in May of last year after NEE failed to file its 2019 taxes, but the non-profit status was reinstated once the group submitted the filing.
Non-profit status can be revoked if three years of taxes are not filed. NEE received an extension for tax years 2020 and 2021.
Nanasi told NM Political Report that she never received any notice from the IRS informing her of this. Instead, she learned of the revocation from a donor and started taking steps to address it.
While looking into the issue, she learned that an accountant NEE hired to file its taxes may have failed to do so following the death of a relative in 2020, who died of complications related to COVID-19. The IRS reinstated NEE’s non-profit status and backdated it to May 2022. Nanasi provided NM Political Report with documentation showing that NEE is tax exempt and that the exemption was backdated. Because it was backdated, Nanasi said there was no lapse in NEE’s nonprofit status.
Better Together New Mexico acknowledges this, but claims that Nanasi and NEE could not have known that the nonprofit status would be reinstated during the time that it was actively fundraising.
But Nanasi said that NEE was told by the IRS that if it filed the taxes, the nonprofit status would be reinstated backdated to the time of revocation.
She said NEE contacted the IRS after a donor brought it to NEE’s attention. The IRS informed NEE that it had not received the 2019 tax filing.
This surprised NEE, as the accountant had mailed and emailed the organization copies of the 2019 filing.
Nanasi provided NM Political Report with a copy of a letter the organization sent to the IRS along with the 2019, 2020 and 2021 filings and requesting retroactive reinstatement of the nonprofit status. The letter is dated Oct. 21, 2022.
The letter states that NEE filed extensions for 2020 and 2021 “due to delays with our audits
caused by our auditing firm’s merger prompted by the pandemic.”
In the letter, NEE also explained that the accountant had led them to believe that the 2019 taxes had been filed.
“We had no reason to believe otherwise. We submitted the copy of the filing that he provided to us with our annual NM state filings,” the letter states. “We are still not clear if perhaps our 2019 was filed but due to an error on his part or otherwise, did not get processed by the IRS. In the last two years we have not received a single notification from the IRS stating that our 2019 had not been received. We did close down our physical offices in 2020 due to the pandemic but we had mail forwarding and received mail throughout the year at our forwarding address.”
The letter explains that a different funder in the summer requested a statement from the IRS affirming the tax exempt status and that a letter dated June 10, 2022 indicated that NEE was in good standing with the IRS.
It was not until months later when another funder informed NEE that it was on the revocation list that Nanasi said the organization learned of the issues.
The allegations come amid the legislative session when the Legislature is considering the Local Choice Energy Act.
In a press release about NEE’s fundraising, Better Together New Mexico highlights Nanasi’s push for local choice energy. The press release states that Nanasi has “led a targeted political attack for years against publicly traded utility companies under the guise of a charitable mission, pushing for their closure and replacing them with government-controlled utilities.”
While Nanasi will not be serving as an expert witness, she said that NEE has provided expertise and input into past iterations of the bill and members will be speaking in support of the legislation during public comment this year.
Better Together New Mexico opposes the Local Choice Energy Act, which would allow municipalities, Tribes or counties to essentially form local utilities to serve residents.
Larry Sonntag and his wife, Carla Sonntag, are also involved in the New Mexico Business Coalition, which ProPublica included in a list of organizations that have accepted dark money through the Koch Brothers network. The New Mexico Business Coalition has also fought against incentives to promote renewable energy development. Carla Sonntag, who is also involved in Better Together New Mexico, serves as president of the New Mexico Business Coalition.
Carla Sonntag said that the decision to ask the New Mexico attorney general and the IRS to look into NEE’s fundraising was not politically motivated.
“We have very clear and strict rules that we should all be following as nonprofits,” she said.
Better Together New Mexico says that NEE should have ceased fundraising during the time when the nonprofit status was in question or should have informed donors of the revocation.
“For Nanasi, who often touts accountability for others, to continue fundraising under false pretenses is inexcusable,” the press release states.
Carla Sonntag said if NEE collected donations under false pretenses it may need to be returned to the donors.