Two Washington-based campaign watchdog groups are asking the Internal Revenue Service to investigate the tax-exempt status of prominent organizations with strong ties to both Republican and Democratic campaigns.
Democracy 21 and the Campaign Legal Center sent a request on Wednesday to the IRS asking the agency to look into whether politically engaged organizations Crossroads GPS, Priorities USA, American Action Network, and Americans Elect deserve their tax-exempt 501(c)(4) status.
“These four groups should be operating as 527 political organizations and disclosing their donors, instead of disingenuously posing as ‘social welfare’ organizations to hide big-money campaign givers,” said Democracy 21 President Fred Wertheimer in a statement. “It is incumbent on the IRS to put a stop to this charade.”
In their letter to the IRS, the campaign watchdog groups argued that there is “no legal basis” for allowing the groups to spend “up to 49 percent of their total expenditures on campaign activity and maintain their tax-exempt status.” The watchdog groups also pointed to a 2008 ruling from the IRS stating that groups that place "first and primary emphasis" on influencing elections are ineligible for 501(c)(4) status.
Crossroads GPS spokesman Jonathan Collegio called the request for an IRS investigation “the fourth frivolous complaint in 12 months from a highly ideological group.” Collegio said he has no knowledge of any IRS investigation of Crossroads GPS, despite earlier letters of complaint by Democracy 21 and the Campaign Legal Center.
The complaint targets organizations on both ends of the ideological spectrum. Crossroads GPS is the grassroots advocacy arm of American Crossroads, a super PAC affiliated with Republican political strategist Karl Rove and Mississippi Gov. Haley Barbour. Priorities USA is the nonprofit arm of Priorities USA Action, a super PAC headed by former aides to President Obama.
“The abuses of the tax code by these shadow campaign operations have mushroomed since the last election cycle, with both Democrats and Republicans now in on the act,” said J. Gerald Hebert, executive director of the Campaign Legal Center “Until the laws on the books are enforced, these groups will continue to flourish to the extreme detriment to the health of our democracy.”
Priorities USA and Priorities USA Action were created explicitly in order to counter the influence of conservative groups like American Crossroads, which poured millions of dollars into targeted ad campaigns during the 2010 election.
American Action Network is another organization founded by prominent Republicans that made independent expenditures in 2010. In their letter, the campaign watchdogs highlight media reports of AAN coordinating its political activities with American Crossroads and Crossroads GPS.
Americans Elect, in contrast, seeks to bypass the traditional party process and directly nominate candidates for office, including a presidential candidate in 2012.
Collegio highlighted some of Crossroads GPS' social-welfare initiatives, including an ad calling for the repeal of Obama's health care law, which it dubs ObamaCare; radio ads asking citizens to call their representatives in Congress to protest “failed Obama/Pelosi spending policies”;and a $20 million advocacy initiative to draw attention to the poor economy and skyrocketing national debt during the Obama administration.
This article appears in the September 28, 2011, edition of National Journal Daily PM Update.