Former IRS Director On Shadowy NonProfits: Investigate And Prosecute Them

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For those of you who have been following my series on how non-profits are abused to finance right wing agendas, campaigns and elections, this is a good sign. Mother Jones reports that former IRS director Marcus Owens has called for a bright-light focus on them.

"The government's going to have to investigate them and prosecute them," says Marcus Owens, who ran the IRS' tax-exempt division for a decade and is now a lawyer in private practice. "In order to maintain the integrity of the process, they're going to be forced to take action."

In their initial applications seeking tax-exempt status under a particular provision of the tax code, section 501(c)(4), dozens of political non-profits told the IRS their political spending would be limited or, in some cases, non-existent. (Otherwise, they wouldn't qualify for this advantageous tax status, which allows them to take foreign donationsand hide the identities of their funders.) But ProPublica reported that many of those groups have spent big on politics. In 2008, for instance, the Iowa-based American Future Fund assured the IRS on its tax-exempt application that it would spend "no" money to influence elections; the same day the group mailed its application, it released a web adhailing then-Sen. Norm Coleman (R-Minn.) and went on to spend $8 million on politicking in the 2010 elections. Americans for Responsible Leadership, an Arizona-based nonprofit, was more bold: It told the taxman it would engage in zero political work. It then spent $5.2 million backing Mitt Romney.

Regular readers know I've been banging this drum for a very long time. In recent days, I've written about Americans for Job Security, American Commitment, and the American Action Network. I have several other reports in the pipeline about even more organizations because every time one is uncovered, four more pop up.

These organizations do not simply exist to function as conduits for elections. They exist to guide large sums of money into unaccountable silos to fight against candidates and issues on a state by state basis. No issue is too small for billionaires to take up, and the real beneficiaries are the consultants, media buyers and fundraisers who are paid millions to push the message out.

Millions in, garbage out. Yes, investigate and prosecute would seem to be a no-brainer. Ironically, the only 501c4 who has had their status denied is Emerge America, a group that recruits and trains Democratic candidates. Funding for Emerge America is a drop in the bucket compared to the millions that have flowed through these nonprofits on the right-wing side. Ironically, what cost Emerge America their exemption was the truth, which they told on their application for exemption.

Conversely, right wing organizations put a lot of nonsense and lies in their applications, get approval, and the IRS never spends another moment on them. Here's an example of the crap they say:

XYZ Committee, Inc is a social welfare organization dedicated to educating and informing American citizens, in an in-depth manner, about free market principles and policies and about the importance of working together to encourage opinion leaders and public officials to support ideas, programs and policies that promote the concept of a free market.

XYZ Committee, Inc. will work to inform the general public about various public policy issues...and will promote the concept of a free market as the appropriate solution.

[...]

XYZ Committee, Inc does not plan to produce its own publications or advertisements at this time, but XYZ does intend to help other organizations plan for and create campaigns that will best communicate the policies and principles of a free market to the general public.

That particular organization received approval three months after they filed their application.

Despite repeated calls by watchdog organizations to look into the activities of Crossroads GPS and allied entities, nothing happens. Via the Mother Jones article:

Tax experts like Owens, Hill, and Tobin aren't the only ones prodding the IRS to take action. Campaign finance watchdogs have hounded the agency for years for not investigating and punishing politically active nonprofits. In a letter dated January 2, lawyers with the Campaign Legal Center and Democracy 21, two groups that favor more regulation of political money, urged the IRS to officially deny tax-exempt status to Rove's Crossroads GPS. (The group's application is technically still pending.)

"Crossroads GPS served as little more than a campaign operation in 2012," the lawyers wrote.

Collegio, the Crossroads spokesman, has dismissed the letter as "the 25th identical letter that the partisans and ideologues at the Campaign Legal Center have sent to the IRS, and it doesn't merit anyone’s attention."

Well, yes. It absolutely merits attention. But it never seems to get any.

I will volunteer my time to the IRS to assist in the audit process of these organizations, if it would help get this done. If they allow these organizations to serve as money laundering operations for campaigns and elections, do you suppose there might be money laundering occurring in other contexts?

Get on it, IRS.

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