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Remember all the wailing about the supposed harassment by the IRS of right-leaning 501c3's? Darrell Issa having a field day in hearings? Looks like maybe they need to scrutinize them more, not less.

ProPublica on Monday documented how the Karl Rove-linked dark money group Crossroads GPS spent about $11 million more on political activities in 2012 than it disclosed to the Internal Revenue Service.

By comparing tax documents, ProPublica's Kim Barker showed how even though Crossroads justified its social welfare non-profit status by pointing to $35 million in grants it made in 2012 to other non-profits, "at least $11.2 million of the grant money given to the group Americans for Tax Reform was spent on political activities expressly advocating for or against candidates."

This means that Crossroads spent at least $85.7 million on political activities, not the $74.5 million the group reported to the IRS on its 2012 tax return. It also means political activities made up about 45 percent of Crossroads' total expenditures.

This means that 51 percent of the group's money was spent on political ads, which conflicts with its stated status of 'social welfare' group.

On its 2012 tax return, GOP strategist Karl Rove’s dark money behemoth Crossroads GPS justified its status as a tax-exempt social welfare group in part by citing its grants of $35 million to other similarly aligned nonprofits. (Here’s the tax return itself, which we detailed last week.)

The return, signed under penalty of perjury, specified that the grants would be used for social welfare purposes, “and not for political expenditures, consistent with the organization’s tax-exempt mission.”

This one instance shows how the social welfare groups get around the rules.
The transaction also provides a window into one way social welfare nonprofits work around the tax code’s dictate that their primary purpose cannot be influencing elections.  Grants sent from one nonprofit to another may be earmarked for social welfare purposes, but sometimes end up being used to slam or praise candidates running for office.
I'm sure Darrell Issa will get right on it.
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Comment Preferences

  •  rove math is very base , (2+ / 0-)
    Recommended by:
    Heavy Mettle, elwior

    crude even , if not worse .

    "please love deeply...openly and genuinely." A. M. H.

    by indycam on Mon Nov 25, 2013 at 02:28:25 PM PST

  •  And the IRS and the DoJ will definitely follow up. (2+ / 0-)
    Recommended by:
    Heavy Mettle, elwior

    Yeah right.
    Issa's preemptive strikes have cowed the agencies, no one wants to be grilled on Capitol Hill.

    If I ran this circus, things would be DIFFERENT!

    by CwV on Mon Nov 25, 2013 at 02:32:07 PM PST

  •  Given that federal taxes either pay for necessary (2+ / 0-)
    Recommended by:
    Heavy Mettle, elwior

    services or simply return dollars whence they came for accounting and redistribution purposes, there is no reason for any corporation to be exempt.
    Exemptions are merely a way of demonstrating favoritism and affirming the myth that "the power to tax is the power to control." Currency is a public utility which the issuing agency (Congress) is within its rights to control and regulate. If individuals and groups don't want to follow rules as to how currency is used, they should desist from using it. They can rely on barter or personal IOUs.  But, if they use certified IOUs, then they have to follow the rules.
    It's the same as for people who want their cohabitation to be officially recognized as a marriage. Once they get their marriage recorded, there are new rules to be followed if they want to terminate it.
    Common law marriages are not recorded, but they are recognized by the courts. Ditto for verbal contracts or partnerships that aren't written down are honored in the law.

    Obamacare at your fingertips: 1-800-318-2596; TTY: 1-855-889-4325

    by hannah on Mon Nov 25, 2013 at 02:59:24 PM PST

  •  Rep Chris Van Hollen filed suit in (4+ / 0-)

    DC District Court to compel the IRS to enforce the law properly.

    There is no existence without doubt.

    by Mark Lippman on Mon Nov 25, 2013 at 03:33:53 PM PST

  •  This sort of thing fascinates the heck out of me. (1+ / 0-)
    Recommended by:
    Heavy Mettle

    I begin from the presumption - which may be wrong, mind you - that ATR has good attorneys that have vetted and signed off on their disclosures and have given special attention to the discrepancies between the two different reporting regimes.  I work with some charities out here in Ohio, and when OH was passing a particularly noxious piece of legislation we put together an email to our supporters about it.  Since we've never lobbied and really didn't want to disclose a lobbying expense, I took a good solid day tweaking the language to fit within the statutory IRS exceptions to the definition of lobbying and then I wrote a memo to my files explaining the position we were taking.  This is a small-ish org, mind you, so I'd expect a larger org would go even further.  Maybe I'm wrong!

    Anyways, I've spent.....too much time, probably, looking for play in the joints between the IRS reporting rules and the FEC reporting rules, and they just don't look that different.  ie, I can't imagine why there's a difference, although not being an expert and not having the time to dig through all the guidance it's entirely possible I'm missing something.

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