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A few weeks ago, public interest group Common Cause filed a complaint with the IRS, asserting that the American Legislative Exchange Council (ALEC) is "a corporate lobbying group masquerading as a charity" and that its "primary purpose is to serve as a vehicle for corporations to do taxpayer-subsidized lobbying."

ALEC, of course, says it's work is not lobbying, and that its 501(c)(3) status with the IRS (the standard charitable organization classification) is justified because it essentially just provides education for lawmakers. Which is a curious assertion for a group that writes legislation and peddles it to state lawmakers. And for a group that has received special lobbyist exemptions in three states.

But in three states—South Carolina, Indiana, andColorado—ALEC has quietly, and by name, been specifically exempted from rules for lobbyists.

The laws in those states allow ALEC to spend millions annually hosting corporate lobbyists and legislators at three yearly conferences, send "issue alerts" to legislators recommending votes on pending legislation, and draft boilerplate press releases for legislators to use when pushing ALEC model bills—all without registering as a lobbyist or reporting these expenditures. Legislators can receive scholarships from ALEC's corporate donors to attend conference events, or they can legally go on the taxpayer dime.

There's little question that what ALEC does is lobbying, but its tax exempt status allows it to avoid disclosing just how much it's spending on lobbying activities, including all the money it spends on its conferences and supposedly non-lobbying contact with legislators.

Originally posted to Joan McCarter on Tue May 08, 2012 at 03:47 PM PDT.

Also republished by American Legislative Transparency Project.

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Comment Preferences

  •  Tip Jar (22+ / 0-)

    "There’s class warfare, all right, but it’s my class, the rich class, that’s making war, and we’re winning." —Warren Buffett

    by Joan McCarter on Tue May 08, 2012 at 03:47:22 PM PDT

  •  Compare and contrast (11+ / 0-)

    the scrutiny ALEC gets from the authorities, with that directed at Planned Parenthood, and ACORN before them.

    I hope that the quality of debate will improve,
    but I fear we will remain Democrats.

    by twigg on Tue May 08, 2012 at 03:55:47 PM PDT

  •  WHY was ALEC exempted from lobbying rules in (5+ / 0-)

    those three states?  What did the state presume was the need for this exemption?

    Sorry, I am confuzzled.

    202-224-3121 to Congress in D.C. USE it! You can tell how big a person is by what it takes to discourage them. "We're not perfect, but they're nuts."--Barney Frank 01/02/2012

    by cany on Tue May 08, 2012 at 04:24:59 PM PDT

  •  Doesn't the fact (2+ / 0-)
    Recommended by:
    elwior, johnny wurster

    that these states have exempted ALEC buttress their claim that they are not a lobbying organization?

    (I don't buy it, but just saying...)

    The important and difficult job is never to find the right answers, it is to find the right question. For there are few things as useless–if not dangerous–as the right answer to the wrong question. -- P. Drucker

    by The Angry Architect on Tue May 08, 2012 at 04:27:32 PM PDT

  •  It's an interesting subect. (2+ / 0-)
    Recommended by:
    antirove, Catte Nappe

    As a general matter, communications with members are excluded from the definition of lobbying unless there's express language urging members to contact legislators.  Here, of course, the members are legislators, which really makes it an interesting topic.  Let's say a legislator is a member of, say, AARP, and AARP sends a communication to its membership saying that bill X is a bad bill.  That's not lobbying, since it doesn't include an express call to contact legislators.  So what changes w/ ALEC?  Well, the key constituency comprises legislators!  There doesn't seem to be a qualitative way to distinguish the case of ALEC from the case of the AARP; rather, it's a squishy intent / facts & circumstances test, and it's not clear that the relevant statutes can support that sort of test.

    Very interesting, and a novel question in tax law as far as I know.  I'm hoping this at least reaches the tax court so I can read an opinion.

    •  BTW, I haven't read the complaint yet, (3+ / 0-)
      Recommended by:
      antirove, Catte Nappe, nextstep

      but I'd think another viable avenue of attack would be to argue, ala American Campaign Academy v Comm., that ALEC actually produces impermissible private benefit because the results of its activities inure primarily to one party.  In that case, a GOP org set up a "training school" for political activists, who all happened to be GOPers (despite an open admission process, blahblahblah).  The court found that the org was actually churning out GOPers and wasn't acting as a neutral education facility.  The public benefit doctrine tells us that the fruits of charitable activity must flow to the public at large, rather than to private parties like particular political parties, so the org was stripped of exemption for creating more than incidental private benefit (and not enough public benefit).  If this sounds like a horribly fuzzy, messy doctrine that's close to administer in practice, then you're thinking about it correctly. A decent of NFP law scholars really loathe the ACA decision, but it's still good law.

      •  I like this approach (1+ / 0-)
        Recommended by:
        johnny wurster

        IANAL, but it seems to me to be logically consistent with the notion of "pass throughs" being disallowed for charitable deductions.  In this case the "pass through" goes to a group, rather than a specific individual, but the concept is fairly understandable and explainable.

        from a bright young conservative: “I’m watching my first GOP debate…and WE SOUND LIKE CRAZY PEOPLE!!!!”

        by Catte Nappe on Tue May 08, 2012 at 05:14:22 PM PDT

        [ Parent ]

  •  Their tax status is the same as if they were (1+ / 0-)
    Recommended by:
    antirove

    a Charity!
       But rather than aiding causes like caring for the poor and the sick, disease prevention, etc., their causes are "Stand Your Ground" laws, forced ultrasound screenings, voter disenfranchisement, anti-immigrant laws, and so on.

       These "Causes" are the very definition of political, and are about as far away from charity as I can imagine.

        The IRS really does need to crack down on such 501(c)(3) groups such as ALEC and Karl Rove's American Crossroads GPS group as these "charitable deductions" are nothing more than theft from the national treasury.

    "We the People of the United States...." -U.S. Constitution

    by elwior on Tue May 08, 2012 at 04:43:21 PM PDT

  •  so ALEC's a charity like a NSDAP Salvation Army nt (0+ / 0-)

    slutty voter for a "dangerous president"; Präsidentenelf-maßschach; Warning-Some Snark Above"Nous sommes un groupuscule" (-9.50; -7.03) "Sciant terra viam monstrare." 政治委员, 政委!

    by annieli on Tue May 08, 2012 at 04:52:37 PM PDT

    •  Waffen ALEC or Salvation Wehrmacht /nt (0+ / 0-)

      slutty voter for a "dangerous president"; Präsidentenelf-maßschach; Warning-Some Snark Above"Nous sommes un groupuscule" (-9.50; -7.03) "Sciant terra viam monstrare." 政治委员, 政委!

      by annieli on Tue May 08, 2012 at 05:05:58 PM PDT

      [ Parent ]

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