by Charles M. Pickett
As we sign up new members for the forming VFW New Haven post, I continue to learn about different facets of recruiting and validating service. Validating service includes looking at Defense Department form 214 (DD-214) to see if an applicant meets the membership criteria of the VFW.
Validating service and capturing total service dates is also important to meet the stringent IRS requirements as set forth the Audit Technique Guide (ATGs) for Exempt Organizations > Veterans’ Organizations. In a nutshell, the IRS can audit a post to make sure they are obeying the law and following the tax code and not running a commercial venture.
That said, in 2013 a number of American Legion posts were audited by the IRS. The agents wanted to inspect membership records–specifically DD-214s of members–at the start of the investigation. Considering those documents contain social security numbers and may have some have health information on them, most posts do not keep these documents.
While the IRS should audit (appropriately) tax-exempt organizations, their requesting DD-214s at the outset of an audit for statutory membership tests caused one post to be fined $1,000 a day until they could produce documents they did not keep on file. This practice has been walked back (http://www.legion.org/documents/legion/pdf/dd214irs.pdf) but it is up to the agent’s discretion if and when to request this sensitive document.
In an email exchange with the VFW membership department, it was explained that:
The dates-of-service requirement on the VFW application is mostly for accountability purposes should the Post ever undergo an IRS audit. Because of out 501(c)19 status as a nonprofit veterans’ organization, the IRS has a regulation that says 75 percent of an 501(c)19 organization’s members must be veterans and they want to know the veteran’s dates of service to verify that. I honestly don’t know why that’s the specific information they ask for in an audit, but when they went through a number of American Legion Posts back in 2012-2013, it became relevant.
So, at a minimum, the post has to capture the data on the DD-214 in block 12a and b (date entered and separation date).
However, discharged National Guard service members would tender their NGB-22 as evidence of their total record of service. They get a DD-214, but it only reflects their federal service time from when they were deployed.
While there are a lot of reasons for retaining copies of these forms (including verification for officer elections and for death benefits), I would not want to have to explain to an entire post of trained killers they need to get credit monitoring because the membership book was stolen.
Perhaps the best compromise is to retain the records but redact any biometric or Personally Identifiable Information (PII); specifically, the social security number.