EO Tax Journal

This has to be a frustrating time for Democrats. Faced with a possible landslide against them in a couple of weeks, they are complaining to the IRS about Republican groups improperly using section 501(c)(4) status, the latest complaint in a letter reprinted below by Senator Durbin. While these allegations may be correct, I’m not sure what difference it would make even if the IRS were “to quickly investigate the tax status of Crossroads GPS and other [(c)(4)] organizations that are directing millions of dollars into political advertising without disclosing their funding sources,” as Durbin seeks. Yesterday’s Washington Post has added to the fray, with two more articles reprinted below.

The IRS is caught in the middle. And the political consequences could be severe if the IRS were to go after Republican groups. The next Congress could be in Republican hands, with the Republicans controlling not only the tax-writing committees but also the appropriations committees. Best to lay low if you are the IRS.

On the other hand, I can understand the frustration of Democrats. Lack of disclosure is killing them, and adding a Republican Congress to a Republican Supreme Court is going to make it very lonely for the current occupant of the White House.

For the IRS’ EO function, Republican control of Congress may not be so bad. If Senator Grassley regains the chair of the Senate Finance Committee, he should be able to move on his EO initiatives and to demand that the IRS become more active in the EO area. Continue…

Yesterday I mentioned that Cathy Livingston is the new Health Care Counsel, “leading a small group in the Chief Counsel’s office to tackle projects connected with the Affordable Care Act.” I neglected to mention that she will be coordinating IRS efforts in this area with the Chief Counsel in reaching out to folks in TE/GE and other divisions. One of my readers says this will be a huge effort with huge responsibilities — assuming of course that the Republicans don’t repeal the Affordable Care Act next year.

I’ve discussed the situation with the Milton Hershey School. See Email Update 2010-124 (9/3/10), where I observed that the situation reminded me of the Bishop Estate — a relatively small school supported by a massive trust, hence with lots of money sloshing about.

My thanks to Richard L. Fox of Dilworth Paxson, Philadelphia, for sending along two recent articles. I’ve added my comments in CAPs. Continue…

1 – More 501(c)(4) Developments

1 – More 501(c)(4) Developments

For earlier developments, see EO Tax Journal Updates 2010-116, 120, 128, 129, 133, 134, 135, 136, 139, 141, 142, and 143. As I noted in Email Update 2010-128 (9/13/10), “Opening an audit involving the U.S. Chamber of Commerce will bring a firestorm of criticism from Republicans who will charge White House complicity. Clearly a no-win situation for Commissioner Shulman whose budget may be in Republican hands next year.” Continue…

1 – Fresh Off the Wire

The New York Times continues its review of 501(c) organizations involved in politicking and the IRS that seemingly does nothing. Today’s article, “Hidden Under Tax-Exempt Cloak, Political Dollars Flow,” focuses on Americans for Job Security, “a pro-business group based in the Washington suburbs that had spent tens of millions of dollars since the late 1990s roughing up Democrats with negative advertisements around election time” that is “a front for a coterie of political operatives, devised to sidestep campaign disclosure rules.” Americans for Job Security is another nonprofit advocacy group that critics say “allow moneyed interests to influence elections without revealing themselves” by devoting itself “to politically charged ‘issue advocacy,’ much of it negative.”

Emboldened by Citizens United, Americans for Job Security, according to the Times, “paid close to $4 million for ads directly attacking nine Democratic candidates for Congress. That made it among the first to abandon the old approach of running ads that stopped just short of explicitly urging voters to elect or reject individual candidates.”

The article asks “whether, under cover of its tax-exempt mission ‘to promote a strong, job-creating economy,’ the group is largely a funnel for anonymous donations.” A director at Public Citizen is quoted as saying: “A lot of nonprofits game the system, but A.J.S. is unusual in that they so blatantly try to influence elections and evade disclosure. By any common-sense, reasonable interpretation of what they do, they are in violation of the rules.”

According to the article, “In 2007, Public Citizen filed complaints with the Internal Revenue Service and the Federal Election Commission, contending that Americans for Job Security spent the vast majority of its resources electioneering — running ads close to elections — contrary to I.R.S. guidelines for tax-exempt, nonprofit business groups. Public Citizen said it never heard back from the I.R.S.”

2 – Yesterday’s Update Continued

Today I am following up on the Associated Press story, “Tax-Exempt Status of 3 Bowls Challenged,” noted yesterday. What follows are a new release and excerpts from the complaint filed by Caplin & Drysdale on behalf of Playoff PAC. Continue…

1 – More on 501(c)(4) Politicking

2 – Alliance Defense Fund and Americans United Square Off Over Pulpit Freedom Sunday

3 – Devilish Plot to Destroy American Way of Life Continue…