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Nonprofit's Exemption Was Granted Despite Record Fine, Big Political Spending

by Viveca Novak and Robert Maguire on April 14, 2014 2:49 PM



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A conservative nonprofit that paid a record-setting fine in California for its part in a campaign finance scheme might never have sought formal recognition as a tax-exempt group had it not been demanded by a key architect of the money-shuffling operation.
The exemption -- the official imprimatur that gives a group status as a "social welfare" organization and lets it keep its donors identities out of public view --  was granted to Americans for Responsible Leadership on Oct. 22, 2013 after lengthy exchanges between its representatives and the IRS, according to documents obtained by OpenSecrets Blog.
The "nonprofit" said they would promote transparent government using print and TV ads, phone programs and town hall meetings.  All they did was produce for the IRS was "A script, some flyers and a few other materials...The organization hadn't produced a newsletter or had any town hall meetings, as it had said it would.  It had also never recruited any volunteers or hired any employees to assist in their efforts."

The group funneled money "from Americans for Job Security," which, "transferred the money to another, the Center to Protect Patient Rights (a group, now called American Encore, that was at the center of a network linked to billionaire industrialist brothers Charles and David Koch), which in turn sent it to ARL, which handed it off to SBAC.

"The IRS bars those with 501(c)(4) designation -- "social welfare" groups -- from spending a majority of their resources on politics."  "ARL told the IRS that it spent less than 40 percent of its budget on politics in 2012. But if the IRS had considered the true nature of the $11 million -- funds that simply washed through the group's account going from one organization to another -- the money ARL spent on direct political advocacy in 2012 came to more than 60 percent of its budget."

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