FOR IMMEDIATE RELEASE
January 20, 2011

CONTACTS: Heather Maurer: (202) 862-7857
Ufuoma Otu: (202) 449-9804


Washington, D.C. – The IRS has recently received an anonymous complaint, challenging the tax-exempt status of the National Hot Rod Association (NHRA). The complaint contends that the drag racing organization’s activities mimic those organized by for-profit automobile entertainment companies.

“Public information reveals that the NHRA operates like a commercial business by providing specific services to its members – whether in the form of prize money to winners or payments to race track operators or other private groups benefiting from the racing events,“ said Marcus S. Owens, former director of the exempt organizations division at the IRS and now a senior member in the Washington law firm Caplin & Drysdale.

Owens, who wrote the complaint on behalf of his client that wishes to remain anonymous, also noted that a large portion of NHRA’s revenue, totaling approximately $122 million in 2008, is derived through cash received at drag racing events, activities normally organized by for-profit entities such as NASCAR or the International Hot Rod Association (IHRA).

The letter further identifies other issues, including questionable governance structures and compensation practices. Though the Association boasts an 80,000 member roster, members do not possess voting rights to elect an independent Board of Directors to approve compensation and other matters pertaining to its Officers and Directors.

At present, compensation is determined by a “personnel committee”, who are likely to be selected and paid by NHRA officials. Based on NHRA’s 2008 tax filings, two of the Association’s executives received compensation well beyond industry standards. Thomas Compton, the Association’s President and Board Member, received $771,632 in total compensation. Dallas Gardner, Chairman of the NHRA Board, received $319,073 for one single hour of work per week. Comparable data indicates that average total compensation paid to CEOs at the ten largest trade associations in the United States was $642,447 in 2006 for full-time positions*.


* See ASAE, Association Compensation & Benefits Study (2006) at 27, T.20. Each of these organizations had more than 100 employees.


About Caplin & Drysdale
Caplin & Drysdale provides a full range of tax and legal services to companies, organizations, and individuals throughout the United States and around the world. The firm also provides exempt organization counseling, political activity law counseling, complex litigation services, employee benefits counseling, private client services, corporate law counseling, and white collar defense. For more information, visit www.caplindrysdale.com.

Compton and Gardner ....must be nice ...

Is Wally's wife still getting a check tooooo ?

BTW ...what ever happened to that suit filed by the Pro Stock truck racers ?

I love it.Make them hurt and pay like the rest of us out here.I hope this bumps NHRA from the high horse.

About time this happened......

so eventually when they arent a "non profit" company, they'll raise the prices of everything, you think its bad now with all the complaining of certs and 2 year belt replacements, entry fees blah blah and all the stuff NOW... imagine when they have people to answer to.

No matter what changes will take place as a result of the law suit.. you know it wont benefit us racers..

I don't think they can afford to raise fees too much more or too soon. The IHRA is right on their heals now,taking over more and more tracks and racers!

Guess I did not know they were tax exempt? Seems to me they would easily fall into a taxable category.

Damon

well this could be a very very bad deal,
on 3 fronts
1 off they should have been taxable,,
2 look at the rate of pay these guys get
3 this could ultimatly end drag racing
as we know it !!
they should never have been tax exempt
the fines will most likely put nhra out of busness
as we know
just thinking long term here

I can not imagine that a hefty-CHECK every year would go to at-least one DIRECT family-member of the Parks family FOREVER !

In the south NHRA has been out for some 20years.The IHRA runs most of the tracks around here.The IHRA is 100 times better to the racers the the NHRA has ever been.
Once again I hope it puts them in the poor house.

We can do with out NHRA,NHRA can't do without racers.

Bring back the AHRA! Raced B/HR for couple years with my RR. Never had a problem.

This is not good for us sportsman racers,because we will be the ones who have to pay.