New IRS demands that American Legion posts produce confidential documents they don't have in order to maintain their tax-exemption is a “disgusting” intrusion that could harm the charitable organization’s work for veterans, a top Legion official told the Washington Examiner.

Louis Celli, national legislative director of the Legion, stopped short of saying the IRS is “targeting” the organization for political purposes, as the tax agency admitted doing earlier this year Tea Party and other conservative groups seeking nonprofit status since 2010.

IRS auditors are now requiring local Legion posts to produce military discharge papers to document their members' years of service, something that had never been required since the organization was chartered by Congress in 1919, Celli said.

Posts that cannot produce the documents, called DD-214s, face fines of $1,000 per day. One post in Round Rock, Texas, already has been fined $12,000.

The Legion has historically maintained a roster of its 2.5 million members, and verified years of service when a member joins, Celli said. It does not keep the discharge documents, and that has always been good enough for the IRS.

But within the past few weeks, national Legion officials got word that auditors were asking local chapters for the discharge records and other documents for all active members.

Those documents include members' Social Security numbers and other personal information, including in some instances medical histories. The Legion does not keep the discharge papers and has no desire to do so, Celli said.

“The American Legion will never, ever, turn those documents over to the IRS with all of that personal information on it,” Celli said. “Forget it. It’s not going to happen.”

Celli added the new rules seem to be the result of “some phantom regulation that we’re not even provided a copy of.”

IRS officials refused an interview. A spokesman issued a statement defending the agency’s enforcement efforts, but insisting “there is no special enforcement underway regarding (veterans') organizations, just regular compliance activity.”

The law includes some requirements for federally chartered veterans organizations, including that at least 75 percent of their members be past or present members of the armed services.

“The IRS conducts exams of veterans’ organizations to ensure adherence to such details of the tax code,” the statement says. “Given the important role these charities play in the nation, exams help protect the integrity of the tax-exempt sector and the important groups operating under the special provisions of the tax law.”

Other veterans’ groups contacted by the Examiner have not been subjected to similar documentation requirements, including the VFW, which is chartered under the same section of the tax code as the Legion.

“We are very concerned with the allegations,” said Joe Davis, a VFW spokesman. “While we are not aware of any new guidance that warrants any change in the way VFW maintains its records, we are investigating the issue further and will stand firm in insisting that any guidance implemented by the IRS does not impose any new or unfair burden on any veterans’ organization.”

Guidance to veterans’ groups published on the IRS website requires that organizations maintain a list of members and, if they receive tax-deductible contributions, their dates of service. It makes no mention of producing the discharge documents themselves.

The new requirements came from revisions to the Field Determination Guidelines published in January 2011 and used by IRS auditors to verify eligibility.

They are in the purview of the IRS Exempt Organizations division, the same division under fire in Congress for targeting Tea Party organizations and other conservative groups seeking non-profit status with detailed, intrusive and lengthy reviews during the 2010 and 2012 campaigns.

The Legion and a few other national groups receive their tax-exempt status from a separate section of the law that recognizes veterans’ service organizations.

The taint of the past IRS scandals raises concerns the Legion is being targeted for political reasons, said Rep. Jeff Miller, R-Fla., chairman of the House Committee on Veterans’ Affairs.

“As if we needed more proof the IRS is completely out of control,” Miller said. “After illegally targeting innocent groups solely on the basis of their political beliefs, the IRS now appears to have America’s veterans service organizations in its crosshairs. Allegations that VSO’s are now being unfairly targeted by the very government they sought to protect and defend are nothing short of unacceptable to me.”

Miller and Sen. Jerry Moran, R-Kan., sent separate letters last week to acting IRS Commissioner Daniel Werfel demanding an explanation for the changes.