Federal prosecutors declined to file tax-related charges in their probe of the Southern Poverty Law Center’s (SPLC) paid informant program after IRS legal experts determined the program’s structure complied with tax laws, sources familiar with the matter told CBS News.
What happened
Between 2019 and 2020, IRS Criminal Investigation agents examined shell bank accounts opened by SPLC’s former chief financial officer (CFO) to pay informants who provided intelligence on hate groups. Authorities investigated whether SPLC unlawfully failed to file tax returns for those payments.
IRS lawyers subsequently advised against pursuing indictments on tax grounds, citing a Treasury Department regulation that exempts 501(c)(3) nonprofit organizations from filing tax returns related to informant payments for criminal activity information. The decision effectively prevented tax charges from being brought in the case.
The DOJ obtained an 11-count wire and bank fraud indictment against SPLC in April 2026, focused on allegations that the nonprofit defrauded donors and banks by using shell accounts to channel money to insiders affiliated with hate groups. The indictment does not include tax offenses.
SPLC denies all wrongdoing and has pleaded not guilty. IRS Criminal Investigation assisted the FBI in the probe, but IRS representatives declined to comment on the investigation.
The tax investigation began during the Trump administration as an expansion of an FBI probe into whether the former CFO embezzled money from the nonprofit. IRS agents interviewed informants and examined bank records but did not bring charges after concluding the payment structure did not violate tax laws.
Why it matters
The case underscores legal boundaries surrounding nonprofit organizations’ informant programs and the tax obligations tied to such payments. The IRS’s interpretation of Treasury regulations protects certain nonprofit activities from being construed as taxable or fraudulent, shaping how federal investigators assess similar cases in the future.
The unresolved nature of the case and the criminal indictment on non-tax grounds also highlight challenges prosecutors face in proving bank fraud and donor deception when investigatory findings complicate claims of intentional misconduct.
Background
The investigation originated with allegations against SPLC’s former CFO, who controlled the organization’s banking activities. Initial FBI inquiries focused on potential embezzlement, later expanding to include tax-related issues linked to the informant payments.
Despite active investigation during the Trump administration, the tax component yielded no charges. The case remained largely dormant until its reopening in 2025 under the Biden administration, coinciding with broader DOJ reviews of nonprofit organizations connected to domestic terrorism funding.
The indictment charges SPLC with fraud but not tax violations, and the former CFO, now retired, faces no criminal charges. The Justice Department continues to investigate, with possible future legal actions anticipated.
Sources
This article is based on reporting and publicly available information from the following source:
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