IRS to examine operations at Evergreen Aviation, Space Museum

Evergreen Aviation and Space Museum in Yamhill County, March 20, 2014. (KOIN)
Evergreen Aviation and Space Museum in Yamhill County, March 20, 2014. (KOIN)

MCMINNVILLE, Ore. (KOIN) – Findings from a public audit and investigation into the Evergreen Aviation and Space Museum in Yamhill County prompted Attorney General Ellen Rosenblum on Thursday to ask the IRS to look into whether the museum’s operations are consistent with its tax exempt status under the federal law.

The state Department of Justice’s (DOJ) Chartable Activities Section also identified significant concerns regarding the governance of the museum and made several recommendations for improvement, some of which the museum has already agreed to adopt.

The DOJ’s investigation began after a whistleblower reported concerns that the museum had transferred more than $700,000 to a for-profit Evergreen International Aviation company.  Although the money was repaid with interest shortly after DOJ’s inquiry began, the department had already identified additional areas of concern and the investigation continued.  One of the most significant concerns relates to the operation of a popular waterpark under the auspices of the nonprofit museum.

In addition, the department flagged the significant interrelationships between the museum and Evergreen companies controlled by Delford Smith, the primary benefactor of the museum, as problematic.  DOJ said it found that a number of museum board members were affiliated with Evergreen companies and concluded that at least some of the board members had likely violated their duties to the museum by failing to pursue the best interests of the museum.

The department also identified a handful of questionable financial transactions between the museum and various Evergreen enterprises.  Evergreen’s for-profit enterprises are now engaged in bankruptcy proceedings.

“Charities are subsidized by taxpayers and depend on public trust,” Rosenblum said. “That trust is shaken when nonprofits stray from their charitable purposes, and when charitable assets are used to benefit affiliated for-profit companies.”

DOJ will refer to the IRS its concerns about the waterpark and other operations that seem incompatible with the museum’s tax exempt status.  Whether the museum, or its income from those activities, should be subject to tax is a federal question for the IRS to answer.

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