John Podhoretz Flouts Tax Code, Misleads IRS, Makes $382,567
My quest to view Commentary Magazine’s latest tax return (and what it says)
John Podhoretz didn’t want me to see Commentary Magazine’s 2021 tax return. When I asked him to send me a copy in late March, he refused—violating the rules under which the 501(c)3 non-profit he runs remains tax exempt.
Four months earlier, Podhoretz had attested to the Internal Revenue Service “under penalties of perjury” that Commentary would provide the return—also known as a Form 990 filing—to members of the public upon request.
Instead, it took three conversations with tax professors, two visits to the magazine’s offices, and one lecture from a Commentary staffer to finally get my hands on a copy. Reading the return, I didn’t understand the fuss; it made Podhoretz look okay.
My interest in the 2021 tax return and initial attempts to access it
Last year, I wrote about how under Podhoretz’s stewardship Commentary has hemorrhaged money at a pace that could bankrupt the organization in the next decade. To cover its losses, the magazine liquidated its endowment, all the while rewarding the uncompetitively-hired1 Podhoretz with upwards of four hundred thousand dollars a year in compensation, an amount exceeding nearly every other non-profit magazine editor’s pay.
Starting in January of this year (2023), I sought copies of Commentary’s 2021 non-profit financial disclosures. I wanted to see whether a follow-up piece was worth writing.
Commentary’s deadline to submit its 2021 tax return to the IRS was November 16, 2022.2 The magazine does not publish its return on its own website as many other organizations do on theirs, so I attempted to obtain the disclosure from other sources.
I periodically checked New York State and the IRS’s non-profit disclosure databases, as well as similar databases maintained by Guidestar and ProPublica, for the 2021 return, but I didn’t find it. By mid-March, the tax return remained unavailable (and still wasn't, as of May 8).3
Delaware denied my FOIA request on the grounds that I was “not a citizen of the State of Delaware.” The New York Charities Bureau told me that its systems had not recorded Commentary’s annual filing as “received,” but that it might just have not been processed. Most frustratingly, the IRS ultimately mailed me a letter telling me to visit its website.5
A Tripartite Epistolary Episode
On March 28, I decided to directly ask Commentary for its tax return. As is further outlined below, nonprofits are required to provide certain documents upon request to members of the public. I sent the following email to Podhoretz and Carol Moskot, Commentary’s publisher:
Dear Ms. Moskot and Mr. Podhoretz,
Could you kindly send me a copy of Commentary's 2021 Form 990 filing and financial statements. I would also be interested in copies of any governing documents and conflict of interest policy you have.
Thanks very much,
I decided which documents to request in addition the Form 990 by lifting from Commentary’s past tax returns, which have stated that “governing documents, conflict of interest policy, and financial statements are available to the public upon request.” (As I was to find, Commentary had made the same representation in its 2021 tax return.)
Three days later, on March 31, after not getting a response, I sent an email following up:
Hi Ms. Moskot and Mr. Podhoretz,
I just wanted to follow up. I understand that these are records that you attest to providing to the public upon request in your federal non-profit filings.
Thanks so much,
John Podhoretz then finally got back to me. He wrote:
All Commentary documents available to you and anyone else in search of them they [sic] have been filed with authorities are available online through relevant suppliers. This is the last email you will receive from me or anyone else at the institution.
(There was no salutation or signature.)
The last email you will receive from me or anyone else at “the institution”
I was surprised by Podhoretz’s email. Beyond its syntax not exactly bespeaking a former student of Allan Bloom, it seemed that in sending it the non-profit’s president had broken the rules.
A key condition of tax-exempt status set out in the Internal Revenue Code is that organizations make annual returns available for public inspection. “There are certain documents you must disclose to the public upon request,” says Leagle, the StayExempt Eagle, in an IRS training video.
I contacted multiple professors specializing in non-profit tax law, three of whom kindly reviewed my correspondence and spoke with me on the phone. I was curious about what Podhoretz’s refusal meant legally and what steps I could take to view the documents I sought.
They told me that generally tax-exempt organizations must provide their returns within 30 days of a request, but that not providing them is not "breaking the law”; rather, it is a violation or breach of the conditions of tax-exempt status.
But everyone I spoke to also pointed out an important exception to the provision-of-documents-on-request requirement. If an organization makes records widely available online, either on its own website or through a third-party site like Guidestar, it does not have to send copies of documents to people who request them. Organizations demonstrate their compliance with this part of the tax code by specifying in their Form 990 whether they make documents available for inspection upon request or online.
While Podhoretz had previously signed at least thirteen non-profit tax returns from 2007 to 2020 attesting “under penalties of perjury” that Commentary made its tax return (and several other documents) available to the public upon request in past years, I could not be certain that Commentary had said the same thing in its 2021 return.
I can only speculate that Podhoretz was attempting to invoke the “widely available” exception when he referred to the documents “available online through relevant suppliers.” But the relevant section of the Code of Federal Regulations clearly states that under the “widely available” exemption an organization still "must notify any individual requesting a copy where the documents are available (including the address on the World Wide Web, if applicable),” a statement reiterated word-for-word in the IRS’s instructions to non-profits for filling out Form 990 tax returns in 2021. The IRS’s FAQs for tax-exempt organizations also explain that “an organization that makes its documents widely available in this manner must advise requesters how to access the forms.”
In a very lawyerly way, the tax professors I spoke with mostly refrained from making a determination about the extent to which Podhoretz had failed to comply with the conditions of the Tax Code. But it is fairly clear that his email included absolutely no instructions about how to obtain the tax return. Nor is there an iota of proof that Commentary provided its 2021 return to any vendor or organization in effort to make the disclosure widely available.6
Somewhat pathetically, the main penalty for not complying with a document request from a member of the public is a $20-a-day fine, which can total up to $10,000 (500 days).
One helpful tax professor did tell me, however, that in his opinion I could avoid any ambiguity by requesting the tax return from Commentary in person—that the right to public inspection would take precedence over the widely-available exemption.7 I happen to live in New York where Commentary is based, so I thought I’d give it a try.
Commuting to Commentary
On Friday, April 14, I took the subway to Times Square. In the spirit of being professional about the endeavor, I decided to wear a jacket and tie. I also stuck a tape recorder in my pocket in case anything happened. (New York is a one-party-consent state.)
I was a bit concerned about whether I'd even be able to ask for the tax returns. In most Midtown Manhattan office buildings, you can’t simply go up to an office these days. But when I got to the building where the magazine occupies a floor, I told the lobby attendant that I wanted to visit Commentary, and he waved me to the elevator.
I found that nobody was there. The lights were off and no one answered when I knocked on the door in the elevator vestibule.8
I decided to give it another try the following Monday. This time I had a bit more luck. As I got off on Commentary’s floor, I saw that the lights were on. Through the vestibule window, I could also see Podhoretz himself.
I knocked. A woman named Stephanie Roberts, who is Commentary’s director of operations, answered at the door.
I explained why I was there.
Roberts asked me to wait in the lobby vestibule and kindly provided me a copy of Commentary’s 2021 tax return approximately five minutes after I arrived.
She also reprimanded me. What follows is a transcript9 of our exchange immediately upon her handing me a sealed envelope with the return.
DS: Thank you so much, I really appreciate it.
SR: In the future it would behoove you to email me in the future rather than Him, OK?
DS: Got it.
SR: Your pushiness is kind of unacceptable, so just email me. Showing up at our office without an appointment is sort of not OK.
DS: Well, I did email.
SR: You didn’t ask to come.
DS: Sure, but—
SR: We work in a place that security is important to us, right, especially in this day and age. I don’t know what reason you have for this pushiness, you’re suddenly going to be a donor? It’s available to foundations usually upon request, that sort of thing.
DS: Yeah, I’m just doing a project and thought I’d stop by—basically, I emailed and asked for it and John didn’t want to send it.
SR: I’m aware of that, but He was the wrong person to ask. I’m director of operations. And please, showing up at our office is just unacceptable without an appointment.
DS: Well thank you (I guess I should have called in advance), have a great day!
While I am deeply appreciative of Roberts for providing me with a copy of Commentary’s tax return promptly upon my asking for it, which is exactly what the law says she’s supposed to do,10 there are some things she said that are worth noting.
First, Roberts seemed to indicate that Commentary tends to only provide its 990s to “foundations” upon request, which is not in keeping with the tax code.
Second, she placed fault with me for not contacting her directly—that because she was “director of operations,” I should have known she was the go-to tax return person. If this were the case, Podhoretz could have simply forwarded my request to her rather than tell me—presumably on behalf of the organization including Roberts—I wasn’t going to get another email from Commentary.
The reason I included Carol Moskot in my emails to John Podhoretz is that someone named Ilya Leyzerson, Commentary’s “business director,” has been listed as “the person who possesses the organization’s books and records” on Commentary’s tax returns since 2007 and naturally would be the person to contact.
Leyzerson appears to no longer work at the Commentary. Their name was dropped from the masthead in December 2021. The phone number listed next to Leyzerson’s name has also been disconnected. Since the publisher of a magazine is generally the head “business” person, I thought Carol Moskot was the natural second person to copy on the email.
After leaving Commentary’s offices, I made my way to Schnipper’s11 for a celebratory lunch. While I was waiting for my hamburger, I opened up the envelope and located the section of the 990 I was most curious about: Part VI, Section C.:
Most notably, you can see how Commentary represented to the IRS that it makes its 2021 tax return available for public inspection “Upon request.” Commentary did not select “Own website” or “Another’s website” to indicate that it had opted for the alternative of making the records widely available.
Second, you can see that Ilya Leyzerson is listed as the “person who possesses the organization’s books and records” along with the disconnected phone number.
I also found the Schedule O appendix in which (as I had anticipated) Commentary represented that it makes “governing documents, conflict of interest policy, and financial statements … available to the public upon request.”
While these additional disclosures are not required under the law like the Form 990, at the very least it was misleading for Commentary to represent that it makes them available while not doing so.
The strangest part of this whole saga is that Commentary’s 2021 return actually shows that the organization did a bit better in 2021 than it had in prior years.
Notably, the magazine grew its revenues by 26%. For sure, it still spent $97,194 more than it brought in, but this was a lot less than it had lost in previous years. Furthermore, gains in the value of its investment portfolio more than offset its operational losses. On December 31, it had $416,382 more on its books than it did on January 1.
(You can read my much more in-depth look at Commentary’s finances up to 2020 here.)
A Closer Look at Subscription Revenue
Most interestingly, Commentary grew its subscription income by 16% from $726,69512 in 2020 to $845,971 in 2021, which is likely attributable to a steep increase in subscription rates.
In early 2020, an annual print subscription went for $29.99 and a digital-only subscription went for $19.00. By April 2020 an annual print subscription quadrupled in priced to $119.40, and a digital subscription had nearly quintupled to $95.40. Throughout this period (2020-2021), Commentary continued to represent that it had either 25,000 or 26,000 subscribers (depending on where you looked), suggesting that subscribers were willing to pay for more expensive subscriptions.
It’s not clear—since all periodical subscription pricing is generally a racket—whether existing subscribers are actually paying the new listed rates.13 $845,971 divided by 25,000 subscribers suggests an average subscription price of $33.83; alternatively, $845,971 divided by the cheapest subscription of $95.40 gets you 8,867 subscribers.
Previously, the numbers computed incredibly cleanly. For instance, in 2020, when Commentary reported $659,394 in print subscription revenue and $67,301 in digital subscription revenue, it translated (at the early 2020 rates) to 21,987 print subscribers and 3,365 digital subscribers—totalling 25,352.
What the podcast makes
Commentary produced 247 episodes of its daily hour-long podcast in 2021, which features advertisements. It’s unclear from the tax return how much revenue the podcast brings in after paying royalties to Mel Brooks for using “Hope for the Best” as its theme song, but potentially it corresponds to $11,233 in “Other Income” listed on the tax return or is part of the $68,263 in advertising revenues it brought in.
Overall, Commentary spent about 3.6% or $67,725 less on salaries, compensation, and benefits in 2021 than it had in 2020.
This is partly attributable to the fact John Podhoretz’s salary was cut by $13,638 (3.4%), bringing it down to $382,567, while his total compensation went down $41,958 (9.3%) to $410,599. Due to the spottiness of 2021 tax return data, I do not attempt to benchmark Podhoretz’s salary against peer editors for 2021.
I doubt I would have written this article had John Podhoretz simply emailed me Commentary’s tax returns when I asked him. The numbers weren’t too remarkable. In fact, they somewhat run counter to my narrative of rapid decline from the previous piece.
If Commentary won’t make its financials available to the public on its own, it should at least do what it tells the IRS it does and send its tax returns to people who request them.
I’ve submitted a complaint to the IRS summarizing what I’ve described here. Perhaps John Podhoretz will have to pay a $340 fine for the 17 days I spent trying to get Commentary’s tax return after he said he wouldn’t send it to me.
Podhoretz’s father had previously edited the magazIne for many years. “There was no search process,” reported the New York Times in 2007.
For Commentary whose fiscal year ends on December 31, the deadline was May 16, 2022, after which Commentary was eligible (and has in most years) to request and receive an automatic six-month extension to November 16, 2022. Further, as per the New York Charities Bureau: “There are no further extensions available after this one.”
Commentary in recent years has indicated on its tax returns that it also files its disclosures in Delaware, although I am not certain why.
If this is indeed the boilerplate response to a form you can print on their website to request Form 990s, why bother having the the form at all?
Commentary apparently did provide its financials to Guidestar—but most recently in 2018 (Screenshot taken on May 8, 2023):
I was able to look through a window onto a sea of desks heaped with Commentary merchandise, suggesting that neoconservatives do their own shipping fulfillment.
Edited for clarity, and my saying “sure” and “thank you” a bit too many times.
See 26 U.S.C. § 6104 (emphasis added):
(A)a copy of—
(ii)any annual return which is filed under section 6011 by an organization described in section 501(c)(3) and which relates to any tax imposed by section 511 (relating to imposition of tax on unrelated business income of charitable, etc., organizations) …
shall be made available by such organization for inspection during regular business hours by any individual at the principal office of such organization and, if such organization regularly maintains 1 or more regional or district offices having 3 or more employees, at each such regional or district office, and
(B)upon request of an individual made at such principal office or such a regional or district office, a copy of such annual return, reports, and exempt status application materials or such notice materials shall be provided to such individual without charge other than a reasonable fee for any reproduction and mailing costs.
The request described in subparagraph (B) must be made in person or in writing. If such request is made in person, such copy shall be provided immediately and, if made in writing, shall be provided within 30 days.
Here I assume that the line items in Commentary’s 2020 return for “Print Magazine” and “Website” correspond to digital/print subscriptions, since advertising is broken out separately.