A Hilton Head Island man has filed a whistle blower complaint against the Myrtle Beach Area Chamber of Commerce saying it has violated tax laws regulating nonprofit agencies, and announced an anti-chamber rally in Myrtle Beach this May to draw attention to what he calls “abusive and unfair business practices.”
Skip Hoagland – whose stopchamberabuse.com group is co-sponsoring the rally – said he wants the IRS to enforce its laws and stop the chamber from leveraging tax dollars to unfairly compete with local companies.
David Slough, a spokesman for the chamber, said the chamber is not aware of Hoagland’s complaint. The IRS does not notify groups or individuals about complaints unless action is taken. Slough said the chamber “fully adheres to all local, state and federal laws as well as all regulations set forth by the IRS.”
Hoagland’s whistle blower complaint, filed last year, alleges the chamber is using tax dollars to subsidize an Internet-based marketing business that sells advertisements and makes millions of dollars for a group that pays no taxes.
The chamber is a 501-C6 not-for-profit organization, a designation for groups “promoting the common economic interests of all commercial enterprises in a trade or community,” according to IRS regulations. IRS regulations state that such organizations are “not to engage in a regular business of a kind ordinarily carried on for profit.”
Lev Glikman, the IRS analyst in charge of investigating Hoagland’s complaint, could not be reached for comment.
Hoagland issued details of the complaint on Tuesday. He and others say they want to draw attention to the issue through a rally, tentatively scheduled for Mother’s Day weekend. Hoagland said he expects regional Tea Party groups and the national sumofus.org group – a self-described movement of consumers and workers seeking to counterbalance the growing power of large corporations – will participate, along with concerned citizens. A specific site or time has not been announced.
“Chambers should not be in any business,” Hoagland said. “Competing with local media members is abusive and violates the chamber’s mission and charter and original intent, which is to be a business organization designed to help members prosper in the community.”
Hoagland said the Myrtle Beach chamber’s use of tax dollars to promote its web site and marketing efforts gives it an unfair advantage over private media groups. The Myrtle Beach chamber received the bulk of its $36.6 million in revenues from public funds including a Myrtle Beach tourism tax during 2012, the most recent tax return available. He said the chamber should not be allowed to sell ads on its web site, but should use the site to promote this area.
Chamber executives “actually think they are running their own for-profit business and are empowered and entitled to compete and try to put their media members out of business,” Hoagland said. “They have become self-serving and out of control with excessive salaries and overhead.”
Hoagland pointed to salaries at the Myrtle Beach chamber as an example. Brad Dean, the chamber’s president, was paid $353,138 in 2012 and three other chamber executives had salaries that topped six figures that year. Dean’s compensation has more than doubled since 2008, the year before the city’s tourism tax was approved.
David Hucks – owner of the Myrtle Beach Hotels LLC marketing group and a critic of the chamber’s use of tax dollars – said he is helping Hoagland raise money for the rally. Two years ago, the Myrtle Beach chamber attempted to shut down a Facebook page Hucks uses to market his company. Earlier this year, the chamber filed a federal complaint seeking to revoke Hucks’ company trademark after Hucks complained that one of the chamber’s largest members – Brittain Resort Management – was using it without authorization.
“We were surprised when this chamber went after our small business,” Hucks said. “While we are personally facing the unlimited tax resources of this chamber in court, it appears their actions have now set a certain tide in motion locally and nationally. I hope people become aware of what is going on here.”
Hoagland – who owned a brochure distribution business before investing in domain names and starting Domain New Media LLC – also is suing the Hilton Head Island-Bluffton Chamber of Commerce over access to that group’s financial information.
Hoagland claims that chamber, which also receives tax dollars, unfairly competes with its own members and wastes taxpayer money by paying exorbitant salaries. The lawsuit is pending. If Hoagland is successful, it would open the door for greater access to financial records at chambers statewide, including Myrtle Beach.
Hoagland has fought with Myrtle Beach officials in the past. In December 2001, the city filed a complaint over Hoagland’s ownership of the myrtlebeach.com Internet domain name. Myrtle Beach officials claimed the city was the rightful owner of that name and wanted the domain transferred to the city. Hoagland, who purchased the domain name for $10,000 in 1997, won the case and eventually sold the name to a Myrtle Beach marketing group for $6.5 million.