CoA argues that these loose coalitions are spending money on lobbying but because they are not incorporated, they don't have disclosure requirements or pay taxes. Saying that it wanted to "provide the public with a better understanding of the rules that apply to coalitions and to ensure that lobbying entities are paying taxes and are in compliance with IRS regulations," CoA wrote the IRS in March asking for documentation showing how the agency monitors tax-exempt organizations' lobbying ties.
"Cause of Action is concerned about the risk that lobbying coalitions are exercising political influence without paying taxes under the Internal Revenue Code," CoA wrote in its request for documents. "In order to avoid the disclosure requirements of the Lobbying Disclosure Act, many organizations are simply not incorporating."
But the IRS responded saying no relevant documents had been found, according to CoA.
"In other words, the IRS has failed to require lobbying coalition's to report their activities and the IRS has failed to conduct oversight over tax-exempt corporations that sponsor coalition lobbying without disclosing those activities," the letter to a Treasury Department inspector general says. "Moreover, the IRS, despite concerns by Congress and the media, has failed to conduct any investigations of lobbying coalition activities that may be inconsistent with the Internal Revenue Code."
In a statement, CoA executive director Dan Epstein said: "The burden now lies upon the Treasury Department's investigators to examine why the IRS has turned a blind eye to numerous coalitions that have the potential to lobby with tax-exempt dollars, which is a clear violation of the Lobbying Disclosure Act."
CoA says it is still waiting to see if the inspector general responds.
We've asked the IRS for comment and will update the post if we hear back.
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