Baucus leads the Senate Finance Committee, which oversees non-profits and the IRS. | AP Photo Baucus seeks probe of GOP groups

Sen. Max Baucus (D-Mont.) on Wednesday called on the Internal Revenue Service to investigate political activity by non-profit groups, specifically the GOP-allied groups spending tens of millions of dollars raised from anonymous donations to boost Republican congressional candidates headed into the critical midterm elections.

Recent media reports detailing the activities of big-spending GOP-leaning political groups “have raised serious questions about whether such organizations are operating in compliance with the Internal Revenue Code,” Baucus wrote in a letter to IRS Commissioner Doug Shulman.


The groups highlighted in the reports cited by Baucus include Crossroads GPS, American Action Network and Americans for Job Security – all of which are so-called “social welfare organizations” registered under section 501(c)4 of the tax code.

That section allows non-profit groups to collect unlimited donations from wealthy individuals, corporations and unions and does not require public disclosure of the donations. But it requires groups to spend more than half of their money on non-campaign-related activity.

Crossroads GPS, which was conceived by former Bush political guru Karl Rove; American Action Network, which is led by former Sen. Norm Coleman; and Americans for Job Security have spent millions on ads boosting Republican Senate candidates and attacking their Democratic rivals. But they won’t be required to file reports disclosing how much they raised and spent overall until months after Election Day.

Crossroads GPS spokesman Jonathan Collegio expressed confidence that any investigation would find his group compliant with tax rules because it engages in activity not expressly related to elections.

“The law is clear, and we follow it carefully,” he said. “It provides for the establishment of groups that promote any variety of issues, from labor issues to environmental issues to the tax relief and economic issues that are in our platform.”

Political spending by 501(c)4 groups appears to be on the rise across the board, but thus far, neither the IRS nor the Federal Election Commission, which is charged with enforcing election laws, have signaled they intend to look into the groups’ spending.

In a statement accompanying his letter, though, Baucus said “The tax exemption given to non-profit organizations comes with a responsibility to serve the public interest and Congress has an obligation to exercise the vigorous oversight necessary to ensure they do.”

Baucus leads the Senate Finance Committee, which has oversight authority over non-profits and the IRS, and in his letter he asked the IRS to identify “possible violation of tax law” and suggested those could result in non-profits losing their tax-exempt status. He also indicated that based on the IRS’s findings he might open his own committee investigation and may “take appropriate legislative action.”

Though Baucus cited only GOP-leaning groups as his causes of concern, his letter asks the agency to “survey major 501(c)(4), (c)(5) and (c)(6) organizations involved in political campaign activity” – and 501(c)5 is the tax classification of unions, which almost exclusively support Democrats.

Sill, spending by independent groups supporting Republicans has dwarfed that supporting Democrats this cycle and Baucus’s request is likely to draw criticism cries of politicking from the right.

Spokesmen for the IRS and American Action Network did not immediately respond to questions about Baucus’s request.