The National  Memo Logo

Smart. Sharp. Funny. Fearless.

Monday, December 09, 2019 {{ new Date().getDay() }}

The world of dark-money politics may soon get a little brighter, if the IRS agrees to investigate a number of nonprofit political groups associated with political action committees and Super PACs.

The groups that are almost certainly violating tax law are nonprofits known as 501(c)(4) groups, after the section of the tax code that governs their behavior. They are very similar to 501(c)(3) groups, which are typical nonprofit charities, with one important difference: while 501(c)(3) groups are legally prohibited from interfering in politics, 501(c)(4) groups are allowed to make political contributions as long as it’s not their “principle purpose.”

501(c)(4) organizations are officially considered “social welfare organizations,” not political organizations, but that hasn’t stopped many 501(c)(4)s from engaging in politics. In fact, many 501(c)(4)s exist only to funnel money to Super PACs that run political advertisements supporting or opposing political candidates and policies. They’re like shell corporations, only they’re nonprofits that can accept tax-deductible donations. And unlike a Super PAC, which can accept unlimited corporate donations but must publicly disclose its donors to the Federal Elections Commission, a 501(c)(4) — since it’s not considered a primarily political organization — never has to register with the Federal Elections Commission or disclose the names of the individuals and corporations that fund it.

Unsurprisingly, many political operatives have seen the value in being able to accept unlimited corporate donations without telling the public, and many 501(c)(4)s have been set up to shield the identities of donors to Super PACs. For instance, Karl Rove’s Super PAC, American Crossroads, is associated with the 501(c)(4) group Crossroads GPS, and Priorities USA Action, a Super PAC focused on Barack Obama’s re-election, is associated with the 501(c)(4) group Priorities USA.

It seems these 501(c)(4) groups are breaking the law, since their primary purpose is to interfere in politics, and they could conceivably be prosecuted by the IRS. Last week, campaign finance watchdogs Democracy 21 and the Campaign Legal Center sent a letter to the IRS urging them to investigate these 501(c)(4) groups and others like them. Last October, Sen. Dick Durbin sent a similar letter to the IRS, and in April, longtime campaign finance advocate and former Sen. Russ Feingold called the creation of Priorities Action USA akin to “playing with fire.”

Recently, satirist Stephen Colbert mocked the close ties between political groups like Super PACS and supposedly non-political 501(c)(4) organizations. In a segment on his show (which can be viewed below), Colbert sets up a 501(c)(4) named SHHH! to funnel money to his SuperPAC, Americans For A Better Tomorrow, Tomorrow. His lawyer, Trevor Potter, reminds him that, legally, his 501(c)(4) organization’s “principle purpose for spending its money” cannot be politics. “No, my principle purpose is an educational entity,” Colbert replies, “I want to educate the public that gay people cause earthquakes.”

He later seems shocked that what he has just done is legal. He asks, “I can take secret donations from my [501](c)(4) and give it to my supposedly transparent Super PAC…what is the difference between that and money laundering?” Potter can only reply that “it’s hard to say.” Unfortunately for many political 501(c)(4)s, the IRS may soon come to the same conclusion.

Advertising

Start your day with National Memo Newsletter

Know first.

The opinions that matter. Delivered to your inbox every morning

Bernie Sanders On Gun Control: Certainly Not Liberal
Bernie Sanders On Gun Control: Certainly Not Liberal

Sen. Bernie Sanders said Friday that by vowing to uphold the archaic Senate rule standing in the way of voting rights legislation, his colleagues Joe Manchin and Kyrsten Sinema are putting "the future of American democracy" at risk.

"It is a sad day when two members of the Democratic caucus are prepared to allow the Freedom to Vote Act to fail," the Vermont senator tweeted. "I hope very much they will reconsider their positions."

Keep reading... Show less

White House Press Secretary Jen Psaki and Fox News' Peter Doocy

White House Press Secretary Jen Psaki ended the week with yet another smack down of Peter Doocy, as the Fox News reporter admitted there are Republicans who "don't agree with voting rights."

"As you talked about a year ago and working with Republicans, now [President Biden] is talking about Republicans that don't agree with voting rights," Doocy complained, "he's describing them as George Wallace, Bull Connor, and Jefferson Davis. What happened to the guy who, when he was elected said: 'To make progress me must stop treating our opponents as our enemy'?"

Keep reading... Show less
x
{{ post.roar_specific_data.api_data.analytics }}