CSA America Inc.

March 25th, 2018

Someone sent us a tip, complete with comments, entertaining ones, and inside info.  And the tipster had a good opener;

“The words no American wants to hear: ‘I’m from the government and I’m here to help’.  And when we think of such unhelpful ‘help’, we’re often thinking of the Internal Revenue Service [IRS].  I don’t expect the IRS to help me, but they might help you.”

Really?  This is starting well.

You see, the Canadian Standards Association (CSA) has offices around the world, expensively, unnecessarily and all at your expense.  Among these, CSA has a rather large subsidiary in the United States called CSA America Inc.  You might know this outfit by their trade name, CSA International.

What all does CSA America do, you ask?  Well, where to begin?

“CSA International is a provider of product testing and certification services for electrical, mechanical, plumbing, gas and a variety of other products.” 

Ah, right.  So it’s the US arm of CSA’s product testing racket.  That is, they amend legislation to mandate retesting of products, then direct retestings through their own labs, and then invoice for the standard, invoice for the amendment, invoice for the testing, and invoice for the certification.  It’s profitable, this racket.

The core of it though, at least as far as CSA America is concerned, is product testing and certification.  So much so that they keep banging on about it;

“CSA International [is] a provider of testing and certification services for electrical, mechanical, plumbing, gas and a variety of other products”.  They deem themselves “a global leader in testing and certification” and “a leading certification and testing organization” dedicated to “delivering the best possible solutions and services to [CSA] customers.”

Clear, right?  They’re in business, offering products and services to customers.

New CSA facilities “will position CSA International [CSA America Inc.] to be the certification partner of choice for clients by providing timely, high-quality, and cost-effective services for a variety of products destined for the global marketplace.”

Or how about this line, from CSA America’s own website;  “CSA can test and certify products you are selling at home or exporting to the U.S.A. and Canada, […]. We test products to Canadian and U.S. standards and issue the CSA Mark for qualified products.  CSA International can also test products to European and other national standards.”

The CSA’s created quite a problem with all their bragging about sales of products and services.  You see, CSA America is registered with the IRS as a Business League.  That classification exempts CSA America from taxes, massively advantaging them over their competitors.  Only one snag; being a Business League doesn’t allow them to sell products or services.

From the personable persons at the IRS; “Section 501(c)(6) of the Internal Revenue Code provides for the exemption of business leagues, chambers of commerce, real estate boards, boards of trade, [etc.]”  And then they define it;  “A business league is an association of persons having some common business interest, the purpose of which is to promote such common interest and not to engage in a regular business of a kind ordinarily carried on for profit.”

At CSA America however, they “provide our distinguished clients with superior local testing and certification services that will help fast-track their exports to the North American market and around the world”. 

That does sound quite a bit like engaging “in a regular business of a kind ordinarily carried on for profit.”  And it’s CSA that sells these products and pockets the profits -it’s not CSA members doing this, it’s CSA itself.

Any offering of products or services in trade for dollars (i.e. business) to the benefit of CSA is contrary to the Business League exemption.

That’s what our inside tipster pointed out.  “As we all know, CSA America uses a vast sales force (consuming a large share of CSA’s massive travel budget), for the purpose of selling services to private, for-profit businesses.  Is CSA’s product certification business compatible with the IRS definition of a business league? I think not.”

Indeed, according to the IRS; “To be exempt, a business league’s activities must be devoted to improving business conditions […] as distinguished from performing particular services for individual persons.”

But, but, but, says CSA, we’re just building the CSA Group brand for not-for-profit profit.  Well, says the IRS, a Business League cannot “include a group composed of businesses that market a particular brand within an industry”, like the CSA brand, for instance.  As for the not-for-profit profit bit, a Business League “may not be organized for profit to engage in an activity ordinarily carried on for profit (even if the business is operated on a cooperative basis or produces only enough income to be self-sustaining).”

Well, that pretty much rules out CSA America’s use of the Business League exemption.  Yet the IRS allows it.  Why?  Well, it might be because CSA America gives the IRS a different story about what they’re up to.

Remember CSA’s description of their activities -selling products and services, serving clients, having customers, reaching markets, etc.?  Contrast their public statements with what they told the IRS (on their Form 990), that CSA America exists to “support the establishment and promotion of, and conformity assessment to, national safety performance quality registration and dimension standards for the production and delivery of industrial, commercial and domestic goods and services”. 

So to the IRS, they’re just offering standards related to products and services, whereas in public CSA is offering actual products and services.

Said our tipster, an IRS investigation will expose CSA as “a for-profit enterprise that uses standards as a facade to establish credibility (and preferred tax status), for the ultimate purpose of promoting their certification business.” 

Said one CSA employee; “Time will tell if CSA’s extraordinary corruption can be reduced to ordinary corruption.”  Corruption, of course, is concealed; its “usually limited to the things the public could not see.”  You know, things like tax compliance.

The CSA is not paying the taxes they should be in the United States.  We’ll fix that.