Citizens for Responsibility and Ethics in Washington, the campaign finance watchdog, is calling on the IRS to investigate Freedom Partners, a fund tied to the Koch Brothers that quietly doled out $235 million in grants to conservative groups last year.
As we reported in September, when news of the group’s existence first broke, Freedom Partners made fairly novel use of a section of the tax code — 501(c)(6) — reserved for trade associations, like the National Beer Wholesalers Association, or chambers of commerce. Freedom Partners calls itself a chamber of commerce, but it seems to be driven by political ideology rather a common business interest.
“I haven’t seen a situation like this, and we watch that area pretty closely,” Jim Clarke, the senior vice president of public policy at the Society of Association Executives, a sort of trade association of trade associations, told National Journal at the time. Most “dark money” political groups are organized as “social welfare” organizations under Section 501(c)(4) of the tax code, but 501(c)(6) status makes it easier for businesses to write off donations and may insulate groups from regulatory pressure.
Now, CREW is calling on the IRS to look into the Koch-backed group’s use of this tax designation, writing in a complaint to the tax agency that “it is clear the organization’s activities do not meet [the] criteria” of a 501(c)(6) organization. Freedom Partners’ only activity last year was to distribute money to other groups. “How does operating as a pass-through for anonymous sources to influence our elections mesh with the concept of a business league?” CREW Executive Director Melanie Sloan asked in a statement.
CREW is also asking the IRS to issue new rules clarifying what 501(c)(6) organizations can and can’t do ahead of next year’s election.
“If the IRS fails to act, Americans should expect to see an increase in the number of so-called ‘business leagues’ created to funnel money into our elections while cloaking the identities of their donors,” Sloan said. “With the 2014 election cycle getting underway, it is imperative for the IRS to clarify its regulations and nip abuse of 501(c)(6) status before it gets out of hand.”
After Citizens United, Speech Now, and other recent court rulings, wealthy people of all political stripes seeking to influence elections have been in an arms race with regulatory agencies as well as outside watchdog groups and journalists seeking more transparency. CREW and others worry that Section 501(c)(6) could be a brand new class of weapons in this battle.
UPDATE (4:55 p.m.): James Davis, the spokesperson for Freedom Partners, responded to the complaint in a statement to the National Journal: “It’s not surprising the Soros and Democracy Alliance funded CREW is attacking an organization that supports free-markets. Freedom Partners Chamber of Commerce follows all IRS regulations as a non-profit, nonpartisan business league that advances our members common business interests by promoting free-market policies. All of our activities are described in our tax Form 990 which is posted on our website.”
What We're Following See More »
The Commission on Presidential Debates put out a statement today that gives credence to Donald Trump's claims that he had a bad microphone on Monday night. "Regarding the first debate, there were issues regarding Donald Trump's audio that affected the sound level in the debate hall," read the statement in its entirety.
"A video of Donald Trump testifying under oath about his provocative rhetoric about Mexicans and other Latinos is set to go public" as soon as today. "Trump gave the testimony in June at a law office in Washington in connection with one of two lawsuits he filed last year after prominent chefs reacted to the controversy over his remarks by pulling out of plans to open restaurants at his new D.C. hotel. D.C. Superior Court Judge Brian Holeman said in an order issued Thursday evening that fears the testimony might show up in campaign commercials were no basis to keep the public from seeing the video."
No matter that his recall of foreign leaders leaves something to be desired, Gary Johnson is the choice of the Chicago Tribune's editorial board. The editors argue that Donald Trump couldn't do the job of president, while hitting Hillary Clinton for "her intent to greatly increase federal spending and taxation, and serious questions about honesty and trust." Which leaves them with Johnson. "Every American who casts a vote for him is standing for principles," they write, "and can be proud of that vote. Yes, proud of a candidate in 2016."
Speaking at the funeral of former Israeli Prime Minister Shimon Peres, President Obama "compared Peres to 'other giants of the 20th century' such as Nelson Mandela and Queen Elizabeth who 'find no need to posture or traffic in what's popular in the moment.'" Among the 6,000 mourners at the service was Palestinian President Mahmoud Abbas. Obama called Abbas's presence a sign of the "unfinished business of peace" in the region.