Group Aiding Contras Has Tax-Free Status

A leading group raising funds for Nicaraguan contras obtained federal tax-exempt status three years ago after pledging never to provide “materiel or funds” to insurgents, according to Internal Revenue Service documents.

Now, however, the group, the U.S. Council for World Freedom, claims credit for funneling tens of thousands of dollars in aid to the rebels fighting to overthrow Nicaragua’s leftist government.

Retired Maj. Gen. John K. Singlaub, council chairman, said this week that he was not familiar with the commitment made to the IRS by the group’s treasurer. “I suppose I should be,” he said.

Singlaub and other council officials say funds collected in the United States were used only to buy the rebels non-lethal supplies to avoid violating U.S. neutrality and arms export laws. Money to buy weapons for the rebels was raised elsewhere, they said.

Could Be Revoked

IRS spokesman Wilson Fadely said privacy laws prevent him from commenting on any possible review of the council’s tax-exempt status, but he noted that the exemption could be revoked if a group is “not carrying out the tax-exempt purpose.”

The Arizona-based U.S. Council for World Freedom is the American chapter of the World Anti-Communist League. It received tax-exempt status on Oct. 14, 1982. That means U.S. taxpayers who donate to it can deduct that amount from their taxable income.

On Aug. 14, 1982, in response to a question from IRS headquarters in Washington, the council’s treasurer, Albert T. Koen, wrote the IRS that “at no time will the USCWF ever contemplate providing materiel or funds to any revolutionary, counterrevolutionary or liberation movement.” In the letter, the words “at no time” are underlined.

The Associated Press obtained the documents under IRS disclosure rules.

Asked this week about his 1982 letter to the IRS, Koen said he considered the pledge against providing “materiel” to apply only to the shipment of weapons to insurgent groups, not to sending non-lethal supplies.