In a letter sent today to the Internal Revenue Service the Campaign Legal Center joined Democracy 21 to again urge the IRS to deny the application filed by Crossroads GPS for tax exempt status as a section 501(c)(4) “social welfare” organization.

According to the letter from the watchdog groups:

Crossroads GPS submitted an application for tax exemption under section 501(c)(4) of the Internal Revenue Code (IRC) in September 2010. To the best of our knowledge, Crossroads GPS has been operating as a “social welfare” organization for more than three and a half years without being granted section 501(c)(4) tax-status by the IRS.

We believe the record is clear, as we have stated in numerous letters to the IRS, that Crossroads GPS, which was founded by Republican operative Karl Rove, is a campaign operation formed to hide the donors who are financing the campaign expenditures the group makes.

Today, J. Gerald Hebert, Campaign Legal Center Executive Director commented on this latest letter to the IRS:

The FEC's General Counsel has reviewed the activities of Crossroads GPS and issued a report that there “is reason to believe that Crossroads GPS had as its major purpose the nomination or election of federal candidates.” Though the FEC deadlocked 3 to 3 and thus failed to approve the General Counsel's recommendation, the General Counsel's report confirms our position that Crossroads GPS is a political group, not a ‘social welfare’ organization. It is absurd that the IRS has failed to act in this matter. Its failure to act hurts the American taxpayers and tears at the fabric of our democracy. The agency should fulfill its statutory responsibility and deny section 501(c)(4) tax exempt status to Crossroads GPS.

The letter from the watchdog groups forwarded to the IRS a report issued by the General Counsel of the Federal Election Commission that, according to the groups, “concluded, consistent with what we have argued in our letters to the IRS, that Crossroads GPS has a major purpose to influence federal elections.”

The letter noted:

The General Counsel’s report was prepared following review of a complaint filed with the FEC alleging that Crossroads GPS had violated the campaign finance laws by failing to register and report as a “political committee” under the Federal Election Campaign Act, as well as review of information submitted by Crossroads GPS to the FEC in response to the complaint, and reports of political spending filed by Crossroads GPS with the FEC.

According to the letter, the General Counsel examined the campaign-related spending by Crossroads GPS in the 2010 election and concluded:

In short, taking into account all of its spending in 2010, Crossroads GPS appears to have spent approximately $20.8 million on the type of communications that the Commission considers to be federal campaign activity—approximately $15.4 million on express advocacy communications and $5.4 million on non-express advocacy communications that criticize or oppose a clearly identified federal candidate. This total of $20.8 million represents approximately 53 percent of the $39.1 million Crossroads GPS reported spending during 2010. Therefore, Crossroads GPS’s spending by itself shows that the group’s major purpose during 2010 was federal campaign activity (i.e., the nomination or election of a federal candidate.)

Report at 26-27 (emphasis added).

The letter from the watchdog groups noted that the FEC “by a divided 3-3 vote on December 3, 2013, did not adopt the General Counsel’s recommendation to find reason to believe Crossroads GPS had violated the law. Under FEC precedents, a tie vote means the FEC itself takes no formal position, one way or the other, on the report.”

The letter continued:

Notwithstanding the FEC’s tie vote on the issue of whether to pursue an enforcement action, the IRS should take cognizance of the factual analysis of the FEC’s General Counsel, and of his conclusion that Crossroads GPS has a major purpose to engage in campaign activity. The General Counsel’s conclusion is amply supported by the analysis set forth in his report, and confirms the position we have taken, and the documentation we have provided, in our previous letters to the IRS about Crossroads GPS.

The letter from the watchdog groups stated:

Beginning in October 2010, Democracy 21 and the Campaign Legal Center have written to the IRS on ten occasions, urging the IRS to deny tax exemption under section 501(c)(4) to Crossroads GPS because the organization is primarily engaged in campaign activities. As such, it is not a “social welfare” organization and does not qualify for tax exemption under section 501(c)(4). We urge the IRS to take expeditious action to deny the application filed by the organization.

Our letters to the IRS on this subject are dated October 5, 2010, December 14, 2011, September 28, 2011, September 27, 2012, July 23, 2012, May 24, 2012, April 17, 2012, March 22, 2012, March 9, 2012, and January 2, 2013. In those letters, we thoroughly document the extent of the campaign activity that Crossroads GPS has engaged in and presented the legal case as to why Crossroads GPS fails to qualify as a “social welfare” organization.

Our prior letters also raised similar complaints about Priorities USA, a pro-Obama group, Americans Elect, a group that supported independents, and American Action Network, a group supporting Republicans. We continue to urge the IRS to take enforcement actions against these organizations as well by denying their section 501(c)(4) tax-status.

The letter concluded:

The IRS has permitted Crossroads GPS to operate through two elections, and now well into a third election, as a campaign operation masquerading as a “social welfare” organization. Since Crossroads GPS is one of the major “dark money” operations in the country, the failure by the IRS to act has denied the public basic campaign finance information that they have a right to know.

The IRS should deny section 501(c)(4) exempt status to Crossroads GPS, which is being used to funnel huge amounts of secret money into federal elections, and end its phony claim of being a “social welfare” organization.

To read the full letter, click here.

To read the FEC General Counsel’s recommendation (November 21, 2012), click here.

Today, the Campaign Legal Center and the Sunlight Foundation, represented by the Institute for Public Representation of Georgetown University Law Center, filed complaints with the Federal Communications Commission (FCC) against 11 broadcast television stations for failure to publicly disclose legally-required information about sponsors of political ads they aired this year.  Without this information, viewers are denied important information about the organizations and individuals seeking to influence their vote through these ads.

The FCC has required broadcast stations to disclose this information in their “political files” for decades.  The disclosure requirements were expanded in 2002 with the passage of the Bipartisan Campaign Reform Act. Stations in the top 50 U.S. markets have been required to upload this information into their online public files housed on the FCC website since 2012.  Beginning in July 2014, smaller stations will fall under the same requirements.

The complaints stem from reviews of the stations’ online political files, which exposed widespread noncompliance with the disclosure requirements.  For example, many stations failed to identify the following:

• the candidate to which the ad refers;
• the issue of national importance to which the ad refers; and/or
• the chief executive officer or board of directors of the sponsor.

The last requirement is especially important when the sponsor is a relatively unknown organization such as the LIBRE Initiative or American Encore. Without the information included in the online political file, viewers are left in the dark as to who is responsible for the ad. 

The complaints also show that violations occurred without regard to the political leanings of the sponsor, the geographic location, or the station’s network affiliation.  Separate complaints were filed against WDIV (NBC) Detroit; KNXV (ABC) Phoenix; WTVJ (NBC) Miami; WMUR (ABC) Manchester/Boston; WFLA (NBC) Tampa; WTVT (FOX) Tampa; WWJ (CBS) Detroit; KMGH (ABC) Denver; WCNC (NBC) Charlotte; KMSP (FOX) Minneapolis; and WTVD (ABC) Durham.  Each complaint includes a link to the ad and the relevant portion of the stations’ online political files. 

“These files are often the only way we can track political activities and spending by dark money groups that aren’t required to disclose those activities with the Federal Election Commission,” said Sunlight Foundation Managing Editor Kathy Kiely.

“These complaints may lift the curtain on why the National Association of Broadcasters has fought so hard against putting the political files online,” said Meredith McGehee, Policy Director of the Campaign Legal Center.  “In too many cases, the stations and their advertisers failed to comply with the simplest and most basic disclosure requirements.  As a result, the public does not have the information it needs to understand who is speaking on the public airwaves and attempting to influence their views on political issues.  The information required to be included in the political file allows viewers to assess for themselves the information they are presented with on the air.”

“While it is great that the FCC required stations to make their public inspection files available online, the FCC must now act to ensure that television stations are uploading the required information so that the public can be informed.” said Angela Campbell, Director of the Institute for Public Representation.

To ensure better disclosure and improved compliance with the law, the Public Interest Public Airwaves Coalition (PIPAC), whose members include Campaign Legal Center, Sunlight Foundation and others, will continue to monitor the online files and urge the FCC to require broadcasters to standardize their data in machine-readable formats.

To view the WCNC (NBC) Charlotte complaint, click here.

To view the KMGH (ABC) Denver complaint, click here.

To view the WDIV (NBC) Detroit complaint, click here.

To view the WWJ (CBS) Detroit complaint, click here.

To view the WTVD (ABC) Durham complaint, click here.

To view the KNXV (ABC) Phoenix complaint, click here.

To view the WMUR (ABC) Manchester/Boston complaint, click here.

To view the WTVJ (NBC) Miami complaint, click here.

To view the KMSP (FOX) Minneapolis complaint, click here.

To view the WFLA (NBC) Tampa complaint, click here.

To view the WTVT (FOX) Tampa complaint, click here.

To access the FCC database with all the online political files for the top 50 broadcasters, click here 

Sunlight Foundation / Campaign Legal Center Disclosure Complaint List (May 1, 2014)

Yesterday, House Ways and Means Committee Chairman Dave Camp sent a letter to the Justice Department stating that former IRS official Lois Lerner may have violated criminal statutes and asking the Department to act on the findings within the letter. 

At the core of the letter is a charge that Lerner and the IRS engaged in an “aggressive and improper pursuit of Crossroads [GPS].” 

The letter implies that this so-called “improper pursuit” was motivated by letters submitted by Democracy 21 and the Campaign Legal Center to the IRS detailing the extensive political activities of Crossroads GPS.

Democracy 21 and the Campaign Legal Center strongly disagree with the Committee’s finding that the IRS’ investigation of Crossroads GPS was improper. 

The IRS’s investigation of Crossroads GPS was not only proper, but essential to the agency’s fulfillment of its law enforcement responsibilities. Far from being too aggressive, the IRS’s efforts with respect to Crossroads GPS were too slow. Crossroads GPS has raised and spent nearly $100 million on candidate election ads since its formation in 2010 - activity that Democracy 21 and the Campaign Legal Center believe constitutes abuses of the tax laws and violations of the campaign finance laws.

Beginning in October 2010, Democracy 21 and the Campaign Legal Center sent a series of letters to the IRS documenting that Crossroads GPS was not entitled to section 501(c)(4) tax status as a “social welfare” organization and calling on the IRS to take appropriate action.  Many of the letters raised similar concerns about three other organizations, including Priorities USA, a group that supported Democrats, American Action Network a group that supported Republicans and Americans Elect, a group that supported Independents.

Crossroads GPS is the brainchild of Karl Rove. It appeared clear that the organization, formed at the same time as an affiliated Super PAC, American Crossroads, was created to provide a way for donors to fund campaign activities without being disclosed.

It also appeared clear that the organization was a political organization and not a “social welfare” group.”  Founder Karl Rove left little doubt that Crossroads GPS is a political operation in an op-ed article he published in The Wall Street Journal on August 1, 2012.  Rove wrote:

Roughly $111 million of Mr. Obama’s ad blitz was paid for by his campaign; outside groups chipped in just over $20 million.  The Romney campaign spent only $42 million over the same period in response, with $107.4 million more in ads attacking Mr. Obama’s policies or boosting Mr. Romney coming from outside groups (with Crossroads GPS, a group I helped found, providing over half). 

Rove thus stated that in response to an “ad blitz” by President Obama’s reelection campaign and supportive Democratic outside groups, Crossroads GPS spent more than $53 million on ads “attacking Mr. Obama’s policies or boosting Mr. Romney.”

We believe the documentation we submitted to the IRS starting in 2010 provides clear and convincing evidence that Crossroads GPS is not entitled to tax-exempt status as a 501(c)(4) group. 

We continue to strongly call on the IRS to deny non-profit tax status to Crossroads GPS.

The Camp letter also says that there is “no evidence she [Lerner] directed review of similarly situated left-leaning groups.”  We are not in a position to know what the IRS did or did not do with other groups.  If there was no action taken regarding the other three groups implicated in our letters, this means there was no action taken against one group supporting Republicans, one group supporting Democrats and one group supporting Independents.

The Camp letter also mentions that representatives from Democracy 21 and the Campaign Legal Center met with IRS officials on January 4, 2013.  Of course, there is nothing improper about meeting with governmental officials. 

That meeting was requested to discuss a petition filed by Democracy 21 and the Campaign Legal Center with the IRS on July 27, 2011.  The petition challenged the existing regulations governing eligibility for section 501(c)(4) tax status as contrary to statutory law and court decisions interpreting the law. The petition called on the IRS to conduct a rulemaking to adopt regulations that properly implemented the law.

The meeting was not about and did not involve any discussion of the specific cases we had brought to the attention of the IRS in the letters we sent about Crossroads GPS and other three groups.  Indeed, as the Ways and Means letter acknowledges, Ms. Lerner carefully adhered to the rule against discussing any specific cases.   

Ways and Means Committee Chairman Dave Camp’s letter is a political act, apparently aimed, among other things, at getting the IRS to avoid scrutiny of 501(c)(4) groups like Crossroads GPS. 

Late Friday, the Federal Communications Commission (FCC) issued a notice reminding all U.S. television broadcasters that as of July 1, 2014, they will be required to post their political files online in a Commission-hosted database.  Of vital importance in this requirement is the information it provides regarding political advertisers.  The Public Interest Public Airwaves Coalition (PIPAC) has repeatedly urged the FCC to require this disclosure to increase transparency as required by statute.  The National Association of Broadcasters (NAB) has fought this move despite losing an effort to stay the requirement at the U.S. Court of Appeals in 2012.

“Applying these online disclosure requirements for every TV broadcast station in the U.S. is an important victory for transparency in our political process,” said Meredith McGehee, Policy Director of Campaign Legal Center, which leads the PIPAC. “By moving forward with the online filing requirement for the political file, the FCC’s policy will help ensure that viewers have the information they need to assess for themselves the messages they are viewing.  We commend FCC Chair Tom Wheeler and the Commission for letting a little more sunshine breakthrough in the multi-billion dollar business of political advertising, despite pushback from some FCC licensees.”

The Coalition recognizes the dominant role that television plays in our nation’s political contests.  The Sunlight Foundation estimates that money spent on broadcast political ads in 2012 was about $5.6 billion, up 30% from 2008.  “For too long these files, which contain important information about who is paying to influence voters through political ads, have existed only on paper,” said Lisa Rosenberg, government affairs consultant for the Sunlight Foundation. "This information has long been considered public, but accessible only to those who could take the time to dig through a station's file cabinet. By putting already public information online, the FCC will ensure that anyone who wants access can get it.”  Noted Cheryl A. Leanza, policy advisor for the UCC's media justice ministry, OC Inc., "The United Church of Christ's media justice ministry has long pushed to ensure that ordinary citizens can better understand the political process through this kind of disclosure."

Broadcasters’ claims that such reporting is burdensome do not withstand the laugh test.  Not only have they kept these files without issue for years, even the smallest broadcasters keep the vast majority of their information on computers.  “Putting the political files online is a small and inconsequential price for TV stations for the millions in additional revenue they get from political advertising,” said Charles Benton of the Benton Foundation.  “Indeed, filing these reports should be accurately viewed as a minor matter in complying with the stations’ public interest obligations.” 

PIPAC’s members include the Benton Foundation, the Campaign Legal Center, Common Cause, Free Press, Institute for Public Representation of Georgetown Law, New America Foundation, Public Citizen, Sunlight Foundation, United Church of Christ Office of Communication, Inc.

As the FCC noted in its reminder, “stations affiliated with the top four national networks (ABC, CBS, Fox and NBC) licensed to service communities in the top 50 Designated Market Areas (DMAs) were required to post political file documents online beginning August 2, 2012.”  Prior to that date, the ad files were only available by making an appointment at a local TV station to arrange a personal visit during business hours and usually facing a charge for making copies of the files.  “Even though this information has long been public record, many stations did not realize it and were reluctant to open up their files,” said Craig Holman, government affairs lobbyist for Public Citizen. “Now that this information is going on-line, the public will have easy access to these records.”

The information required to be included in a broadcast licensee’s political advertising file includes “a complete and orderly” record of all requests for specific schedules of advertising time by candidates and certain issue advertisers on issues of national importance, as well as the final dispositions or “deals” agreed to by the broadcaster and the advertiser in response to any requests.  For ads from outside groups, the file is supposed to fully identify the ad’s sponsors as well as the issue and the candidate referred to in the ad.  Also, the file should record any free time provided to a candidate.  The file must have information on offers of “lowest unit charge” for candidates, as well as the station’s compliance with “equal access” for all legally qualified candidates for public office and reasonable access” for federal candidates.  Finally, the file must include the reconciliation of the deal such as a description of when advertising actually aired, advertising preempted, and the timing of any make-goods of preempted time, as well as credits or rebates provided the advertiser. 

In its explanation of the new rules, the FCC notes that the Commission first adopted rules requiring broadcast stations to keep a public file more than 40 years ago and certain political programming files have been public for nearly 75 years. 

“Under Professor Angela Campbell’s leadership, the Institute for Public Representation has worked for years to get the FCC to insist on greater transparency about broadcasters' activities,” said Andrew Jay Schwartzman, Benton Senior Counselor at IPR.  “This is an important milestone, but we're going to press for even more disclosure.”  Currently, the FCC allows broadcasters to upload these files as “pdf” files -- documents without standardized formatting.   The Public Interest Public Airwaves Coalition has urged the FCC to adopt a standardized reporting form and will continue to strongly urge the FCC to require broadcast licensees to upload this information in a searchable, sortable and downloadable format, similar to other government databases (e.g., lobbying disclosure database, federal election information).