By Krissah Thompson
Washington Post Staff Writer
Wednesday, September 8, 2010; A2
The Rev. Al Sharpton's civil rights organization, National Action Network, said Tuesday that it is putting its deep financial difficulties behind it.
The statement came in response to a news report providing details about the organization's shaky financial footing at the end of 2008. Tax records show it was constantly in debt and owed nearly $2 million in back taxes.
Those liabilities are being settled, said Rachel Noerdlinger, Sharpton's spokeswoman.
"The organization's tax liabilities were reduced in 2009 by over 50 percent and will be probably reduced to zero by the end of the calendar year 2010," Noerdlinger said. "In fact, Reverend Sharpton himself has loaned a lot of resources to the organization to lead the way toward its present health."
Noerdlinger's comments came in response to an article in the New York Post that quotes an audit by the firm KBL of National Action Network's 2008 financial status. Auditors found that the organization had "suffered recurring decreases in net assets" and "been dependent upon advances from related parties and the nonpayment of payroll tax obligations to maintain continuity."
The organization also released a letter from KBL on Tuesday saying that since 2008 there have "been significant improvements in their financial reporting and record keeping" and that National Action Network is using the payroll company ADP to keep it current on payroll taxes.
An IRS spokesman declined to comment.
Sharpton also agreed to return $100,000 in public funds related to his 2004 campaign for the Democratic presidential nomination because he exceeded the personal contribution limit. The Federal Election Commission later investigated whether Sharpton had improperly mixed donations to National Action Network with his campaign funds, some of which paid for rooms at hotels with rates topping $1,000 a night. The FEC settled with Sharpton last year for $285,000 in civil penalties.
The financial troubles of both the organization and Sharpton were widely reported at the time. Since then, National Action Network has grown in prominence, as has Sharpton's political profile. He has met with President Obama and was enlisted by the Education Department as part of a nationwide education reform tour.
After the National Action Network's problems became public in 2008, Sharpton met with its board and decided not to declare bankruptcy. This year, the group held a fundraiser featuring Bill Cosby and Mariah Carey that raised more than $7 million for National Action Network, Noerdlinger said.
The group's 2009 tax statements are not yet available.