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Karl Rove on Fox screenshot
Dear Media: This man is not a victim, nor are his conservative allies.
Pro Publica:
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. [...]

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.”

But that’s not what happened.

And what exactly did happen? Well, according to Pro Publica's research, Crossroads GPS gave $11.2 million to Grover Norquist's Americans for Tax Reform, money that Crossroads claimed was intended for permissible "social welfare" purposes but was actually used for impermissible electioneering.

According to Pro Publica, this sort of transaction—claiming to earmark money for "social welfare" even though that money ends up getting spent on campaigns—illustrates one way that groups like Crossroads GPS manage to qualify for tax-exempt status while still engaging in political activity.

Remember, the issue here isn't whether Crossroads should be allowed to spend money on campaigns—it's whether it donors to Crossroads should be allowed to deduct their donations from their income. In other words, it's whether or not the public should subsidize their political activity. The law makes it clear that they should not, but Rove's group clearly believes that laws were made to be bent to their will.

The pathetic thing is that even though these guys get away with shenanigans like this, they still claim to be victims of Obama's tyrannical IRS. Nothing could be further from the truth, yet as we've seen throughout the year, the media is far more interested in reporting on their bogus claims of oppression than on actual examples of malfeasance taking place right beneath their noses.

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Comment Preferences

  •  So it's Crossroads/GPS donors that are on the hook (11+ / 0-)

    because their donations weren't tax deductible?
    I was so hoping that Rove would go the way of Capone.

    If I ran this circus, things would be DIFFERENT!

    by CwV on Mon Nov 25, 2013 at 04:33:49 PM PST

  •  Not sure this is true... (8+ / 0-)
    In other words, it's whether or not the public should subsidize their political activity.
    Tax exempt does not necessarily mean that contributions are tax deductable.    From what I have read, the main advantage these groups get is to be able to hide their donors.
  •  Hard to fake *social welfare* grants (2+ / 0-)
    Recommended by:
    Janet 707, Josiah Bartlett

    and electioneering doesn't count.

    Let's see if they use the "raising awareness" clause.  

    Hmmmmm....They were "raising awareness" that low income Americans will benefit from giving billionaires tax cuts.  

    Ok, how's this:  They were "raising awareness" about how tax cuts for billionaires will create jobs and training programs for the unemployed.

    Here's another:  They used the funds to educate voters about how to get their photo id and cast ballots by mail.  

    If cutting Social Security & Medicare benefits for low income seniors is what Democrats do after they win a budget standoff, I'd hate to see what they do after they lose one.

    by Betty Pinson on Mon Nov 25, 2013 at 04:53:15 PM PST

    •  Yup (2+ / 0-)
      Recommended by:
      Betty Pinson, VClib

      It's that increasingly broad definition of "social welfare" in which "raising awareness" and "education" can be narrowly focused on some obvious political agenda.

      “Texas is a so-called red state, but you’ve got 10 million Democrats here in Texas. And …, there are a whole lot of people here in Texas who need us, and who need us to fight for them.” President Obama

      by Catte Nappe on Mon Nov 25, 2013 at 05:12:44 PM PST

      [ Parent ]

  •  Only 501(c)(3) permits charitable deductions (7+ / 0-)

    Donations to 501(c)(3) organizations are deductible as charitable contributions, but 501(c)(4) "social welfare" organizations are not charitable and contributions to them do not qualify as charitable deductions, though the organizations themselves are exempt from taxation.  

    Corporations that contribute to 501(c)(6) "trade associations" can often deduct their contributions as ordinary and necessary business expenses, but I would think contributions to "social welfare" organizations would seldom qualify as business deductions.

    The issue is not the deductibility of the contributions, but the fact that social welfare organizations are not supposed to engage in candidate-oriented political activity.  They may, however, support ballot-measures and other non-candidate political activity.

  •  Here is link to IRS (0+ / 0-)

    Here is the link to the IRS. Donations can be deductible as business expenses, as Old Left Good Left and oythegoy have noted. They are not deductible to individuals. This means that they can receive a substantial subsidy from the Treasury. Businesses would have to have a lot of nerve to deduct a donation to Crossroads GPS. This doesn't mean that many wouldn't.

    I think we need to know whether donations have been deducted, and have a clear statement from the IRS as to what kinds of businesses could donate to such an organization.

    And I disagree with Jed that the only issue is whether donations are deductible. That's one issue. The other is whether 501(c)4s are doing what amounts to bribery. There, it's pretty clear that they are contributing to the corrupt nature of Washington, where real issues are almost never discussed unless they can make some money for some corporation or business interest.

  •  if only the IRS had some means of identifying (0+ / 0-)

    These political groups. Maybe they could examine the returns of groups that have political-sounding names?

    What's that? "Benghazi?" What does Be...

    BENGZAGZI!

  •  A loves B, B loves C, so therefore A loves C? (1+ / 0-)
    Recommended by:
    VClib

    So, just to be clear. Crossroads gives money to Americans for Tax Reform. The money is supposed to be spent by ATR for social welfare purposes, but ATR spent some of it on political campaigns. And this somehow turns into Crossroads spending on political campaigns.

    The logic escapes me. Apparently it also escaped Citizens for Responsibility and Ethics in Washington (CREW), which has filed suit (according to the linked article) against ATR, and not against Crossroads.

    Given that, plus (as others here point out) that contributions to Crossroads are not, in fact, tax deductible, doesn't leave much of Lewison's complaint intact. At the very least, the misleading headline ought to be changed.

  •  Wow. So much verbiage expended (1+ / 0-)
    Recommended by:
    Jake formerly of the LP

    in the minutiae of the law itself while overlooking the obvious: "legal" or not, this whole setup is designed to be so completely unethical and rigged in favor of hucksters and con artists, it falls just short of legalizing bank robbery. It has more holes in it than the victim of a Gambino family hit.

    The real question SHOULD be how this kind of legislation ever got by so-called "ethical" lawmakers on the subcommitte who released it in the first place.

  •  NO DONORS ARE DEDUCTING THEIR DONATIONS. (1+ / 0-)
    Recommended by:
    VClib

    correct that, Jed.  

    Crossroads GPS is a 501c4, and donations aren't deductible.

  •  Its so brazen (0+ / 0-)

    its a wonder how they get away with it.

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