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Thursday, October 20, 2016

D’Oh! ‘America Is Not Stupid’ Wins IRS Recognition As Tax-Exempt Nonprofit

D’Oh! ‘America Is Not Stupid’ Wins IRS Recognition As Tax-Exempt Nonprofit

by Kim Barker, ProPublica.

Smart move?

The IRS has granted nonprofit status to America Is Not Stupid — a so-called dark money group best known for a 2012 election ad featuring a talking baby who compared the smell of his diaper with a Montana senator.

As ProPublica wrote in January, America Is Not Stupid and a related group, A Better America Now, applied for IRS recognition in the run-up to the 2012 election, swearing under penalty of perjury that they would not spend money on elections.

Then both groups went ahead and did exactly that, spending more than $125,000 on mailers and ads opposing Democratic candidates in Texas and Montana.

Despite these disclosures, records show, the IRS gave A Better America Now its stamp of approval as a social welfare nonprofit in April and recognized America Is Not Stupid in late June, decisions that elicited amazement among campaign finance watchdogs.

Marcus Owens, a nonprofit lawyer who ran the IRS Exempt Organizations division from 1990 to 2000, questioned whether a controversy that erupted earlier this year, over the agency subjecting certain conservative nonprofits to extra review, had damaged its ability to fulfill its regulatory functions.

“The oversight has collapsed,” Owens said. “The current people in Exempt Organizations have no tax law enforcement experience and no exempt organization experience in particular. And they’ve been charged with making this particular headache go away.”

Because of the government shutdown, the IRS could not be reached for comment. In the past, the IRS has not commented on stories about specific groups. Talking about individual taxpayers violates the law.

No one from either America Is Not Stupid or A Better America Now responded to emails and phone calls asking for comment.

In May, the IRS admitted that it had flagged the applications of Tea Party and related groups for extra review, dooming many to years of limbo. That admission turned into a firestorm, leading to the immediate resignation of the acting IRS commissioner and the eventual replacement of the top officials in the Exempt Organizations division. Senate and House committees started investigating. The Treasury Inspector General for Tax Administration expanded its initial audit. And the Justice Department announced a criminal inquiry. (Later, records were released showing that the IRS was also flagging liberal groups with “progressive” in their names.)

Since the Supreme Court’s Citizens United ruling in early 2010 opened the door to increased political spending by corporations and unions, nonprofits like America Is Not Stupid have taken on an expanding role in U.S. elections. That’s largely because they do not have to identify their donors, unlike SuperPACs, leading them to be dubbed “dark money” groups.

About 150 of these nonprofits spent more than $254 million in 2012 on ads, phone calls and mailings reported to the Federal Election Commission. Almost all the donors of that money have remained anonymous. Most of that money 2014 more than 85 percent 2014 was spent by conservative groups, according to the Center for Responsive Politics and research by ProPublica.

These groups are allowed to spend limited amounts to influence elections, as long as they can prove their primary purpose is “social welfare.” But ProPublica has shown how dozens of social welfare nonprofits have underreported their political spending, or spent money on elections despite telling the IRS they would not do so.

In its 2012 annual work plan, the IRS recognized the problem, announcing it would take a hard look at nonprofits and “serious allegations of impermissible political intervention.”

If the agency’s exchanges with America Is Not Stupid and A Better America Now are any indication, however, the augmented focus on nonprofits has been less than ferocious.

The IRS sent ProPublica the groups’ applications for recognition last November, even though they had not yet been recognized and the documents were therefore not supposed to be made public. We wrote stories about these and several other pending applications, bringing it to the IRS’ attention that these groups had pledged that they would not spend money on elections, yet did so.

According to IRS records, neither group ever amended its application to reflect its political spending.

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  • Dominick Vila

    The fact that many non-profit organizations lie when they apply for tax exempt status, and get involved in electioneering, is not the problem. The real problem is why do we tax exempt status to anyone, other than to organizations such as the Red Cross?
    It doesn’t matter if these non-profit mafia organizations help the right or the left, our focus ought to be on ending the pervasive influence of money in our political process, from electioneering to policy making.
    Politicians pretend to be interested in spending reductions, why don’t they start their commitment to such a laudable cause by ending the tax exempt status privileges?

    • disqus_ivSI3ByGmh

      Dom, I belong to a couple of 501c3 organizations, but no 501c4 groups (that I know of). These groups actually do education concerning specific issues, and specifically do not get involved in any politics outside of our own group leadership. And, let me tell you, if you have never been involved in the internal politics of a volunteer based non-profit organization, you would be surprised. It makes the “dirty politics” we see regularly by candidates for public office look like a bunch of school yard kids taunting each other.
      Where I have a real problem is not with the 501c4 groups, which I know lie through their teeth when it comes to their claims of “issue advocacy only”. My problem is with the Churches that attempt to use their pulpits to overtly support candidates through the sub-rosa of “issue advocacy”. Sorry, but when a Pastor tells his congregation that they should support “pro-life” any way possible, and do so on the Sunday before an election, you know damn well that they are telling the parishioners WHO to vote for! When Bishops publicly threaten to withhold the Sacraments from Democratic Senators and Congressmen for NOT supporting the bills they want to support, that goes beyond the Church’s mission!

    • John Pigg

      It’s a lot easier said than done. A few years ago I applied for non-profit status for a athletic sports association. The paperwork and process was extremely extensive. The problem is if we increase regulation and scrutiny we will miss out on a great many non-profits that do have a great impact on the community.

      It’s far easier to get local business to help support your cause if you have a 501c3 status. There has to be a way to screen them better but without a large increase in funding and manpower, I don’t see it. And at the end of the day I think the ones most likely to lose are your local neighborhood charities.

  • Allan Richardson

    The original LAW that created 501(c)3 and 501(c)4 tax-exempt status said that these organizations were to do ZERO political actions (not even to influence voters to protect their core missions, e.g. the Red Cross opposing candidates who want to outlaw blood banks). The IRS then “interpreted” the law to mean “primarily” non-political. Since then, it has been like the 1970’s CB craze. The FCC found it was FUTILE to try to enforce the Citizens Band regulations on the books, so they just gave up and the result was the CB-trucking craze in which 90 percent of usage was illegal and unpunished. Likewise, the IRS has given up on trying to enforce even the “primarily non-political” rule.

  • ridemybroom

    Americans aren’t stupid…Just Illiterate.. especially those making our laws !…

  • Bryan Blake

    Americans are STUPID! Why else would be be in the death grip of the open revolution of rich and ultra-rich Right Wing Libertarians? There is abundant evidence that 99.99% will NOT rise significantly from the economic station of our birth. But, the low information fact and science denying voters, believe that THEY WILL! That is the Lynchpin to our National Stupidity. Little girls will grow up to be movie stars and little boys will grow up to be a GI Joe that becomes president. The more these low information types gorge on our overabundance of cheap processed food, the more we become pears and beer bellies lost in TV and video games during our sterile evenings, the more Stupid We Become. On Sundays and Wednesdays a big chunk of low information citizens lose touch with reality and openly beg for admittance to heaven while supposedly still alive. To bet on living your life after your body dies and devote the time we know we have to that bet is STUPID! So Yes We Are Stupid!

    Even the most intelligent and thoughtful among us are sometimes stupid. We all, at times, make poor decisions and careless mistakes.

    STUPIDITY of the MASSES is the primary characteristic of humanity that the Power Elite have always used to rule the Stupid People. While Governor Bobby Jingle has warned the GOP that they must stop being the “Stupid Party”, perhaps that message has been lost on its stupid members.

    But the close association with Politically Stupid People seems to have an upward mobility of its own. Hence, the Koch brothers and others of the rich and ultra-rich having to rebuke their own creation: The Tea Party! It was like watching that arrogant little roadrunner discover that he too CAN NOT walk on air!

    • bhaggen

      You pitiful Americans are a joke.

      • foundingprinciples

        How did your Zurich Street Parade go this year? As much drugs, nudity, rap music and overall degeneracy as the previous year? Did the sirens sound out the church bells?

        I heard that now over 30% of the Swiss are foreign-born. I guess that accounts for the rise in crime: Foreigners commit crime four times as much.

        But the UN has investigated your People’s Party because they wanted some immigration reforms. How has that gone?

    • foundingprinciples

      “STUPIDITY of the MASSES is the primary characteristic of humanity”

      Isn’t that what Karl said? Or what is Ho? Maybe Che? I get the Leftist Luminaries mixed up sometimes. Anyway, it does provide an excellent rational for rule by experts in the Central Authority.

  • Ed

    Short answer to Kim Barker: YEP ! A looooong time after they (IRS) were exposed for what they are: HOODLUMS and THUGS ….