Crossroads GPS has run advertisements critical of White House policies. Watchdogs to IRS: Curb Crossroads

Two campaign finance reform organizations are calling on the Internal Revenue Service to revoke the tax-exempt status of four non-profit organizations heavily engaged in national politics.

The groups are the Republican-leaning Crossroads GPS and American Action Network, the Democratic-leaning Priorities USA, as well as the nonpartisan Americans Elect. All fall under the IRS’s 501(c)(4) code — broadly defined as social welfare organizations that should not have a primary purpose of engaging in politics – and therefore aren’t required to disclose their source donors.


“These groups are misusing and abusing the tax laws at the expense of the American people. It is clear that these groups have little, if anything, to do with promoting ‘social welfare’ and everything to do with electing and defeating candidates,” said Fred Wertheimer, president of Democracy 21. “It is incumbent on the IRS to put a stop to this charade and to act promptly to protect the integrity and credibility of the tax laws and the interests of the American people.”

J. Gerald Hebert, executive director of the Campaign Legal Center, added: “The abuses of the tax code by these shadow campaign operations have mushroomed since the last election cycle with both Democrats and Republicans now in on the act and not even bothering to maintain a facade that they have any real purpose other than to elect members of their respective parties.”

Officials at Crossroads GPS, which federal records indicate spent more than $16 million advocating for or against politicians during the 2010 election cycle, scoffed at the complaint.

“This is the fourth frivolous complaint in 12 months from a highly ideological group that wants to sic the IRS on its opponents,” said Jonathan Collegio, a Crossroads GPS spokesman.

During the 2010 election cycle, dozens of non-profit organizations made independent political expenditures that advocated for or against the election of political candidates and did so without revealing their source donors.

Other non-profit groups, such as the U.S. Chamber of Commerce, spent large sums of money on similar kinds of advertisements called electioneering communications, which do not overtly advocate for or against a political candidate but mention them by name in the weeks immediately before an election.

Democracy 21 and the Campaign Legal Center argue in a letter delivered this morning to the IRS that the groups have “has engaged in far more than an insubstantial amount of participation or intervention in elections and that the overriding purpose of each organization is to influence elections.”

To date, the IRS has taken only modest steps toward enforcing laws that might affect politically active 501(c) organizations.

In May, for example, officials said they’d begin closely monitoring gifts given to 501(c)(4) groups if such gifts should be subject to taxes. The practical effect of this kind of enforcement would be a tax on donor anonymity, where contributors would be forced to pay additional money in order to keep their names from public view. But little action has occurred since.