Nonprofit Wants Back-Up to IRS Handling of Campaign Finance Abuses

A Washington ethics advocacy group has filed a complaint alleging campaign finance abuses by 10 organizations it calls “dark money groups,” taking the unusual step of filing with both the Internal Revenue Service and the Justice Department, including the FBI.

Citizens for Responsibility and Ethics in Washington said the 10 “social welfare groups” are “violating their nonprofit status by acting as political organizations or…significantly underreporting their political activity.”

The IRS, whose Exempt Organizations division is responsible for reviewing applications for tax-exempt status from organizations under the 501(C) 4 section for social welfare groups, has been criticized for appearing to go soft on possible abusers of campaign finance laws in the wake of Republican investigations of the agency’s alleged political bias in mishandling past applications.

CREW filed its complaints with the IRS, but added criminal complaints against six of the groups, calling on the FBI and Justice to investigate whether they lied to the IRS about their political activity.

“The disastrous [2010 Supreme Court] Citizens United decision opened up the floodgates for dark money groups to spend on politics,” said CREW Executive Director Noah Bookbinder. “But there are still some limits to the amount of spending and secrecy these groups are permitted -- and too many brazenly ignore these modest limits.”

The groups CREW named are the American Dream Initiative, the Arizona Future Fund, the Jobs and Progress Fund, Michigan Citizens for Fiscal Responsibility, Ohio’s Mid America Fund, the Rule of Law Project, Ohio’s Freedom Vote and Moving Ohio Forward, Oklahomans for a Conservative Future, and the Legacy Foundation Action Fund.

Many of them spent money in states other than the ones in which they’re based, CREW said in a statement. “All impermissibly spent more than 60 percent of their spending on political activity -- as did many of the groups included in the criminal complaint, leading to today’s IRS complaints,” CREW said.

“These groups have demonstrated a clear disregard for the law,” Bookbinder added. “If the government does not act, it will send a signal to dark money groups that no laws or limits apply to them and it is open season for secret money in our elections.”

Bookbinder was asked by Government Executive whether CREW thinks the IRS has soft-pedaled its enforcement since the so-called targeting controversy that unfolded in Congress and the political realm. “The IRS certainly could investigate if it wanted to--it has the capacity to look into the groups that are either lying to them or violating their nonprofit status,” he said. But the agency’s requirement to keep investigations confidential “makes it hard to know. We have seen things like the decision several months ago to grant Karl Rove’s Crossroads GPS nonprofit status, which we and many others think was a pretty questionable decision. Some of that suggests that they’re not being as tough or as critical as they need to be.”

The IRS said it cannot comment on investigations of specific taxpayers.