Ex-IRS Director on Dark-Money Groups: "Investigate Them and Prosecute Them"
Big dark-money groups like the Karl Rove-advised Crossroads GPS promised the IRS they would have "limited" involvement in politics—in order to protect their nonprofit tax-exempt status—yet went on to spend hundreds of millions of dollars to influence the 2010 and 2012 federal elections. Now several tax policy experts, including a former high-ranking IRS official who ran the division overseeing nonprofits, say the IRS must bring the hammer down on these shadowy nonprofits or risk looking weak and useless.
"The government's going to have to investigate them and prosecute them," says Marcus Owens, who ran the IRS's tax-exempt division for a decade and is now a lawyer in private practice. "In order to maintain the integrity of the process, they're going to be forced to take action."
In their initial applications seeking tax-exempt status under a particular provision of the tax code, section 501(c)(4), dozens of political nonprofits told the IRS their political spending would be limited or, in some cases, nonexistent. (Otherwise, they wouldn't qualify for this advantageous tax status, which allows them to take foreign donations and hide the identities of their funders.) But ProPublica reported that many of those groups have spent big on politics. In 2008, for instance, the Iowa-based American Future Fund assured the IRS on its tax-exempt application that it would spend "no" money to influence elections; the same day the group mailed its application, it released a web ad hailing then-Sen. Norm Coleman (R-Minn.) and went on to spend $8 million on politicking in the 2010 elections. Americans for Responsible Leadership, an Arizona-based nonprofit, was more bold: It told the taxman it would engage in zero political work. It then spent $5.2 million backing Mitt Romney.
The most high-profile nonprofit to tell the IRS one thing and seemingly do another is Crossroads GPS, the powerful group cofounded by Karl Rove. In a 41-page application, dated September 3, 2010, Crossroads told the IRS it would spend only a "limited" amount of money on influencing elections. Crossroads is different from the two groups mentioned above in a crucial way: The IRS has yet to approve its tax-exempt application, which means its 2010 application is confidential. Yet ProPublica obtained it and exposed the gap between what Crossroads said in September 2010 and what it went on to do.
http://www.motherjones.com/politics/2013/01/irs-crossroads-gps-dark-money-karl-rove-investigate
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