CREW files complaint against a ‘Kochtopus’ dark money organization

Posted by AzBlueMeanie:

Citizens for Responsibility and Ethics in Washington (CREW) has filed a complaint today against the "Kochtopus" dark money organization Freedom Partners Chambers of Commerce, Inc. Press release from Crew:

CREW Calls on IRS to Clarify Rules for 501(c)(6) Groups and Investigate Freedom

Washington, D.C. Following up on a
lawsuit against the Internal Revenue Service (IRS) for its failure to
properly regulate groups organized under section 501(c)(4) of the tax
code, today Citizens for Responsibility and Ethics in
Washington (CREW) filed a
rulemaking petition (.pdf) asking the agency to
clarify regulations and rein in abuses by 501(c)(6) organizations.

Section 501(c)(6) of the tax code provides tax-exempt status for
organizations such as business leagues, chambers of commerce, and boards
of trade.  Recognizing “business league” to be an ambiguous phrase, in
1919, the IRS defined it as an “association of persons” with a “common
business interest, whose purpose is to promote the common business
interest.”  Taking advantage of the fact that the IRS has never provided
guidance as to what activities serve the common business interests,
501(c)(6)s increasingly are serving as vehicles for wealthy groups and
individuals to funnel anonymous or “dark” money to other tax-exempt
organizations to influence elections.  Section 501(c)(6) groups reported
spending more than $46 million on federal campaigns in 2010, and more
than $55 million in 2012.

“If there’s a loophole in the tax code, it’s a sure thing that
someone will take advantage of it,” said CREW Executive Director Melanie
Sloan.  “If the IRS fails to act, Americans should expect to see an
increase in the number of so-called ‘business leagues’ created to funnel
money into our elections while cloaking the identities of their
donors.”

In addition to the rulemaking petition, CREW also filed a complaint and
supporting exhibits (.pdf) with the IRS asking for an investigation into the activities of Freedom
Partners Chamber of Commerce, Inc., a 501(c)(6) organization linked to
the Koch Brothers.  In its application to the IRS, Freedom Partners
claimed it would be “promot[ing] the common business interests and
conditions of its members, in order to improve their competitive
standing and innovation in various lines of business, industries, etc.
in which they are engaged.”  In reality, Freedom Partners has done
nothing except funnel anonymous money into other tax-exempt
organizations.

During the 2011 reporting period, Freedom Partners’ activities
consisted exclusively of providing more than $235 million in grants to
30 different tax-exempt groups — including politically active
organizations like the Center to Protect Patient Rights, Americans for
Prosperity, and the National Rifle Association.  Because the grants were
provided for “general support,” there is no guarantee the money was
spent furthering the common business interests of Freedom Partners and
its members, as the law requires.

“How does operating as a pass-through for anonymous sources to
influence our elections mesh with the concept of a business league?”
continued Sloan.  “Given all the problems surrounding 501(c)(4)
organizations, and with the 2014 election cycle getting underway, it is
imperative for the IRS to clarify its regulations and nip abuse of
501(c)(6) status before it gets out of hand.”

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