After US Supreme Court rulings opened the floodgates for megabucks to be funneled into our elections and politics, someone is finally starting to
challenge the "non-profit", tax-exempt status of those same dark money groups.
Until now, those groups have used a loophole in US Tax Code to disguise themselves as "social welfare" organizations to avoid tax obligations. That will end if this challenge to the tax-exempt status of the Wisconsin Club for Growth is successful.
If nothing else can be done about the influx of vast amounts of money that the US Supreme Court has allowed, then it's about time for these dark money groups to pony up what they owe in taxes on the tens of millions they collect and spend buying elections and politicians.
A liberal Madison-based group filed a complaint with the Internal Revenue Service on Monday asking it to strip Wisconsin Club for Growth of its nonprofit status for spending millions of dollars to help Gov. Scott Walker and other Republicans during the recall elections.
The complaint is based in large part on records released as a result of Wisconsin Club for Growth's federal lawsuit aimed at stopping a secret John Doe investigation of the group. The suit has since been thrown out.
"I'm certain they'll spend a lot of money fighting an IRS investigation just like they spent a lot of money fighting the John Doe," Brendan Fischer, general counsel for the left-leaning Center for Media and Democracy, which filed the complaint. "But I think we have a really strong case here."
Documents unsealed in the current John Doe Probe regarding allegations of illegal coordination between dark money groups and campaigns have revealed that Governor Scott Walker (R-Wisconsin) solicited donations directly to the Wisconsin Club for Growth during 2011 and 2012 while both his campaign and WiCfG utilized the services of R. J. Johnson as an advisor. Using the same "advisor" for the dark money groups and campaign would seem to indicate a good amount of coordination between them.
Much of the current John Doe Probe looked into that coordination between Walker and the Wisconsin Club for Growth.
The complaint says Wisconsin Club for Growth deceived regulators by engaging "primarily in political campaign activities during those years and substantially operated for the private political benefit of the Walker campaign and the Republican Party and the private financial benefit of a top funder. It thus should not be entitled to tax-exempt status."
What is particularly troubling is that donors to dark money groups can, thanks to the US Supreme Court, funnel unlimited funds to those groups and remain anonymous. It
enables foreign countries or foreign donors to influence US elections.
The pdf file (warning: large file) is available here.
The filing claims that the Wisconsin Club for Growth misled the IRS by claiming $0 on campaign activities in 2011 and 2012 while spending close to $20 million. They spent $9.1 million on the 2011 and 2012 recall elections and funneling $9.624 million to other groups (some controlled by WCfG leaders) that spent those funds on political ads. That spending, the filing concludes, made it clear that WCfG's primary activity "was to elect political candidates in Wisconsin".
The filing goes on to say that the only candidates supported by that spending were Republicans indicating the partisan nature of their spending rather than for the common good of the public.
Ouch!
The filing goes into detail on the infamous $700,000 "contribution" made to WCfG by Gogebic Taconite (that subsequently had legislation they wrote to enable strip mining rammed through the Republican dominated legislature) and the $1.5 million WCfG then spent targeting legislators that opposed strip mining.
Many of the documents cited were the released, unsealed documents from the existing John Doe. And many of those are quite damning.
The request asks for an IRS investigation to determing:
1 - Whether the WCfG misled the IRS with its claim to have spent nothing on political campaign activities when it clearly appears to have spent millions of dollars.
2. Whether WCfG is not a social welfare organization
3. Whether WCfG exists primarily to "advance the private interests of the Republican Party and financial interests of its funders in violation of its 501 (c) (4) tax exempt status".
They also ask for the removal of the groups tax-exempt status and penalties large enough to serve as a deterrent to stop future violations.
Spokespeople for Wisconsin Club for Growth are trying to laugh this off, but if you read the filing, it seems they're whistling past the graveyard.
It's time for some sane and sensible regulations about this massive and abused tax and election loophole as well as accountability and transparency. We can only hope this spreads to all dark money groups.
PS - I haven't been around much, but I'm taking a day or 2 off from GOTV to rest and relax before the final push. Thanks to all of you making remote GOTV calls and donating to Mary Burke and other Wisconsin candidates.
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