Tax Laws Should Not Be A Shroud for ‘Dark Money’ Donors

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  • Dale Eisman
Common Cause Urges IRS to Enforce the Law

The Internal Revenue Service should act promptly to block non-profit political committees from using the tax laws to hide the identity of their donors, Common Cause said today.

In a letter to IRS Commissioner John Koskinen, the non-partisan citizen advocacy organization said that in recent years partisan operatives “have exploited I.R.S. regulations to funnel hundreds of millions of dollars through sham nonprofit organizations into our elections.”

Under the terms of their tax exemptions, those groups are supposed to be dedicated to “social welfare” initiatives, wrote Common Cause President Miles Rapoport. The law is explicit that “social welfare activities do not include ‘direct or indirect participation or intervention in political campaigns,’” he added.

But the IRS is ignoring the law, Rapoport said. According to an analysis by the Center for Responsive Politics, 501(c)(4) social welfare organizations (the most frequently-used entity over the past few years) have spent more than $470 million from secret sources to influence political campaigns.

“If an individual taxpayer blatantly disregarded the law to hide income or avoid taxes rightfully owed the government, the IRS would jump on the case – as it should,” Rapoport said. “So why is the IRS choosing to look the other way while clever lawyers and a small cadre of wealthy donors manipulate the law to avoid public scrutiny as they buy access to candidates and office holders?”

Rapoport’s letter comes on the heels of a report in Monday’s editions of The New York Times that IRS Commissioner Koskinen has opted not to crack down on enforcement of the tax provisions that political groups have been using to hide their donors. Analysts quoted in the article speculated that the agency is wary of a potential revival of charges that it wants to use the law to target conservative and Tea Party groups critical of President Obama.

In 2013, amid complaints by Tea Party groups that the agency was seeking to harass some of the president’s critics, the IRS initiated a rule-making process to clarify the limits on political activity by social welfare organizations. The initial proposals drew fire from across the political spectrum but the IRS has indicated a revised draft is in the works.

“Common Cause will be at the head of the line calling for change at the IRS when there is serious evidence that the law is being selectively enforced,” Rapoport said. “The problem now is that it’s not being enforced at all. If non-profit groups of any political stripe are spending money to sway votes, they should not be permitted to hide their donors. Voters have a critical interest in knowing who is trying to buy our elections and access to our officeholders.”

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