The Fox News fight against Media Matters is now being taken up by its cousin, Fox Business.

Fox Business published a 2,500-word investigation into the legitimacy of Media Matters’ tax-exempt status yesterday, promising it was the first in a three-part series. The piece comes on the heels of more than three dozen segments into Media Matters's tax status on Fox News.

Media Matters founder David Brock told POLITICO’s Ben Smith that the media watchdog was preparing for "war" and “guerrilla warfare and sabotage” against Fox News in March, and ever since, Fox has highlighted these words as evidence that Media Matters had drifted from the educational mission that justifies its tax-exempt status as a nonprofit organization.



But as I reported last month, so far there is no indication that Media Matters broke IRS rules, either by presenting “viewpoints or positions unsupported by facts,” as IRS rules put it or by crossing over from ideological into partisan activity. As Marcus Owens, a partner at Caplin & Drysdale and former director of the Exempt Organizations Division of the IRS, put it: “I’m afraid Fox loses this round.”

Fox Business’s Elizabeth MacDonald also speaks to Owens, who says that “what Media Matters is doing is generally protected by the First Amendment.” But she also speaks to Robert Kamman, another former IRS official, disagrees, saying “You say as a nonprofit we are raising money to, what, sabotage companies because you disagree with what they say? And is that educational, is that a charity?”

According to the law as it is now written, the answer is essentially yes. As Owens told me last month, nothing in the tax law prohibits tax-exempt educational nonprofits from attacking specific companies, as long as there is no private benefit to that company’s competitor. The Fox Business report goes on to question the current state of tax law as it applies to tax-exempt educational organizations with political points of view — a critique that would affect organizations on both sides of the aisle.

Media Matters declined to comment in the Fox Business story, but Executive Vice President Ari Rabin-Havt told POLITICO, “This is just continual evidence that Fox doesn’t behave like a media organization and instead has decided to continue pursuing nonstory as it campaigns against its most vocal critic.”