Common Cause files IRS complaint against Liberty Central

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  • Dale Eisman

Group campaigned aggressively against Members of Congress who voted for the Affordable Care Act

Extensive political activity in the 2010 elections by a nonprofit group founded and formerly run by lobbyist and Tea Party activist Virginia “Ginni” Thomas appears to have violated federal tax laws, Common Cause said today.

“As the Internal Revenue Service examines how some of these ‘social welfare’ groups continue to enjoy tax exemptions while getting directly involved in electoral politics, it should take a close look at Liberty Central,” said Bob Edgar, president and CEO of Common Cause.

In a letter sent today to IRS Commissioner Douglas Shulman, Common Cause requested an investigation of Liberty Central’s tax status. If the agency finds that the group’s primary activity was influencing the 2010 elections, the letter urged that Liberty Central lose its tax-exemption, be reclassified as a political organization, and face appropriate taxes and penalties.

Liberty Central currently is classed as a 501(c)(4) “social welfare” group, permitted by IRS regulations to engage in political activity so long as that is not its primary focus.

Designating Liberty Central as a 527 political organization would also open the group up to FEC fines and require disclosure of its donors.

The Common Cause complaint comes amid a wide-ranging IRS review of the tax status of politically active nonprofit groups. The tax agency has sent questionnaires to dozens of Tea Party groups as well as Priorities USA Action, a committee run by former aides to President Obama, and Republican-aligned committees like Karl Rove’s Crossroads GPS.

Ginni Thomas founded Liberty Central in November 2009 and filed a request for 501 (c)(4) status in January 2010. Within a few weeks, notes the letter by Common Cause counsel Elizabeth Kingsley, the organization had turned its attention to the 2010 elections and “the major focus of the group’s President, Ms. Thomas, appears to have been coordinating with Tea Party organizations and traveling around the country to districts where Liberty Central had ‘target races.'”

Meanwhile, Liberty Central’s website published A-F grades for Tea Party and incumbent candidates across the country and urged site visitors to get involved in those races, donate to Liberty Central’s favored candidates, and “ensure that certain elected officials get an early retirement.”

A major focus of Ms. Thomas’ and Liberty Central’s efforts appears to have been the defeat of Members of Congress who voted for the Affordable Care Act. Justice Thomas and his Supreme Court colleagues have set aside three days next week to hear legal challenges to the law.

At a September 2010 fundraiser for the First Coast Tea Party in Jacksonville, Fl., Ginni Thomas described that group as a satellite office of Liberty Central and base for Liberty Central staff, and called for the election of several Florida candidates. The First Coast Tea Party is one of many groups currently under investigation by the IRS; others being probed include Tea Party organizations in Virginia and Texas where Thomas addressed Tea Party rallies.

The letter asserts that there is “substantial evidence of large-scale political activities, certainly sufficient to prompt an inquiry from the (IRS), which is the only reliable way to establish whether Liberty Central was actually operated primarily for political purposes, as appears from external observation to be the case.”

“Common Cause supports the efforts of the IRS to investigate all groups, regardless of their partisan leanings, that appear to use nonprofit status to hide their political activities from American voters,” Edgar said. “Special interests should not be permitted to use front groups to evade disclosure laws designed to inform voters and prevent corruption.”

Ms. Thomas left Liberty Central after the November 2010 elections, and the group no longer appears to be active.