Campaign Legal Center and Democracy 21 Call for Justice Department Investigation of Group Supporting Rubio Campaign and Improperly Claiming 501(c)(4) Status


In a letter sent today to the Tax Division of the Justice Department, the Campaign Legal Center joined Democracy 21 in calling for an investigation of the Conservative Solutions Project (CSP), an organization claiming tax-exempt status as a social welfare organization under section 501(c)(4) of the tax code.

According to the letter, “The investigation should determine whether CSP is improperly conferring a “private benefit” on Senator Marco Rubio’s presidential campaign in violation of federal tax law by engaging in excessive campaign activity on Senator Rubio’s behalf that is not permitted for a section 501(c)(4) organization.”

According to Campaign Legal Center Executive Director J. Gerald Hebert:

The publicly available facts indicate that Conservative Solutions Project is little more than a single-candidate 501(c)(4), with no other mission than to advance the presidential aspirations of Marco Rubio and as such in clear violation of the tax code.  501(c)(4) “social welfare groups” by statute must “[promote] the common good and general welfare of the people of the community as a whole” rather than an individual candidate for political office.  In promoting the Rubio candidacy, to the apparent exclusion of all else, Conservative Solutions Project would seem to be in clear violation of the tax exempt status it claims but for which it has yet to even apply.

If these apparent violations are left unchallenged, they will quickly be emulated by candidates for Congress and soon by candidates for state and local office as well. The victims of this type of apparent lawbreaking will be the American people who will not only be cheated out of tax revenue, but more importantly robbed of any information about the special interests seeking to buy influence with public officials.

The IRS has been cowed into inaction by a series of congressional hearings intended to intimidate the agency and keep it from enforcing tax laws as they apply to political active nonprofits like Conservative Solutions Project.  However, the laws passed by Congress remain the laws of the land and as the nation’s law enforcement agency, it falls to the Department of Justice to enforce those laws when agencies do not or will not.  The Tax Division of the Justice Department should promptly open an investigation into the millions of dollars spent to advance the candidacy of Marco Rubio to determine if tax laws have been broken and take appropriate action against the group.

According to the letter from the watchdog groups;

CSP was formed by a former aide to Senator Rubio and is spending large sums of money on television advertisements that are being aired in support of Rubio’s presidential campaign.  This campaign activity by a social welfare organization  violates the statutory requirement that a section 501(c)(4) organization be devoted “exclusively” to social welfare purposes—which do not include intervention in campaigns—and  also violates the requirement that a social welfare group serve general community purposes, and not provide a private benefit to any individual or political group.

The letter stated:

CSP was “formed by allies of Senator Marco Rubio.”[1]  It “shares a name and some staff” with the individual candidate Super PAC supporting Rubio’s presidential campaign, the Conservative Solutions PAC.[2]  The CSP nonprofit and the Super PAC also share a spokesman.[3]  CSP was established by Warren Tompkins, who is now on its board and who is also the head of the Rubio Super PAC, which shares fundraising consultants with CSP.[4]  Tompkins is a Republican consultant who was once a business partner with Rubio’s campaign manager.[5]  CSP is now run by Pat Shortridge, who was an adviser on Rubio’s 2010 Senate campaign

CSP has been airing television advertisements supporting Rubio’s presidential campaign. The group’s commercials “all focus on Mr. Rubio.” As one report states about CSP’s television ad campaign:

Every single one of the group’s thousands of television ads, in fact, has featured Rubio, and nobody else—perhaps unsurprisingly, given that the group coordinates with a pro-Rubio super PAC and that its leader co-founded a political consulting firm with the manager of Rubio’s presidential campaign.

According to the letter:

According to The New York Times:

Of all the television advertisements aired in support of the Florida Senator so far this year—$5.5 million worth—none have been paid for by Mr. Rubio’s own campaign.  Even the “super PAC” supporting him has not yet spent a dime on ads.

Instead, the money has flowed through a political nonprofit group called the Conservative Solutions Project, formed by a former Rubio aide and now overseen in part by a Republican strategist who is close to Mr. Rubio’s campaign manager.

According to AP:

Every pro-Rubio television commercial so far in the early primary states of Iowa, New Hampshire and South Carolina has been paid for not by [Rubio’s] campaign or even by a super PAC that identifies its donors, but instead by a nonprofit called Conservative Solutions Project.  It’s also sending Rubio-boosting mail to voters in those same states.

According to the letter:

Section 501(c)(4) provides tax-exempt status to “[c]ivic leagues or organizations not organized for profit but operated exclusively for the promotion of social welfare.”  26 U.S.C. §§ 501(a) and 501(c)(4).  IRS regulations make clear that, in order to be tax-exempt under section 501(c)(4), an organization must be “operated exclusively for the promotion of social welfare” and that an “organization is operated exclusively for the promotion of social welfare if it is primarily engaged in promoting in some way the common good and general welfare of the people of the community.”

The requirement that a section 501(c)(4) organization be primarily engaged in promoting “the common good and general welfare of the people of the community” and not, by contrast, primarily engaged in promoting the good of a private individual or organization is a clear requirement with regard to section 501(c)(4) status—often referred to as the “private benefit” doctrine.

The letter further stated:

In American Campaign Academy v. Commissioner of Internal Revenue, 92 T.C. No. 66, 92 T.C. 1053, 1063 (1989), the Tax Court considered application of the “private benefit” doctrine to an organization that the IRS had concluded operated to “benefit Republican Party entities and candidates more than incidentally” and therefore operated to “serve the private interests of Republican Party entities rather than public interests exclusively[,]” in violation of the “private benefit” doctrine.

According to the letter:

As a practical matter, CSP is operating as an arm of the Rubio presidential campaign.  As such, it is providing a “private benefit” for a partisan campaign purpose, and is accordingly in violation of its asserted status as a section 501(c)(4) social welfare organization.

The fact that “[e]very pro-Rubio television commercial so far in the early primary states of Iowa, New Hampshire and South Carolina has been paid for” by CSP, and that “[e]very single one of [CSP’s] thousands of television ads, in fact, has featured Rubio, and nobody else,” shows the integral and exclusive role that CSP is playing in the Rubio presidential campaign.  In playing this role, CSP has spent millions of dollars on ads promoting the Rubio campaign in the key early primary states.

The fact also that CSP shares a name, and staff, and a founder with the Rubio Super PAC reinforces the tightly integrated role that CSP plays in the larger Rubio campaign operation.

There can be little doubt that CSP is providing an impermissible “private benefit” under applicable judicial and IRS precedent.

The letter stated:

This position is consistent with the series of recent IRS letter rulings applying the “private benefit” doctrine.  Just as the IRS found that “an organization which conducts its educational activities to benefit a political party and its candidates serves private interests,” Determination Letter 201128032, supra, so too CSP serves a private interest in spending millions of dollars to assist the presidential campaign of a single candidate.

The letter concluded:

There is an important reason that this matter has special urgency.  The impermissible use of social welfare organizations to conduct campaign activities has the purpose and effect of defeating the donor disclosure requirements of federal tax law that are applicable to “political organizations.”  26 U.S.C. §527.

Social welfare groups organized under section 501(c)(4) are not required by tax law to disclose their donors to the public.  By contrast, a “political organization” under section 527 of the tax code is required to disclose its donors.  By engaging in campaign activity (and in so doing, by conferring a “private benefit” on the candidate supported), but doing so under a claim of section 501(c)(4) status, a group such as CSP is frustrating the requirement of the tax code that there be public disclosure of donors who are funding efforts to influence elections.

CSP presents an especially clear-cut and egregious example of flaunting of the tax code.  By electing not to file an application for recognition of exemption, the group seeks to avoid any scrutiny of its activities until its first tax filing and thus to continue to serve as a conduit for undisclosed money through the 2016 election cycle.

The Tax Division has the authority to intervene to stop this abuse of the tax laws. Given the extraordinary public interest in combating CSP’s effort to deprive the public of timely disclosure about its efforts to influence the 2016 election, the Tax Division should act promptly to investigate and take appropriate action against CSP. 

To read the full letter, click here.


[1]           N. Confessore, “Nonprofit Group Tied to Marco Rubio Raises Millions While Shielding Donors,” The New York Times (July 6, 2015).

[2]               N. Confessore, “Nonprofit Group Tied to Marco Rubio Raises Millions While Shielding Donors,” The New York Times (July 6, 2015).

[3]               J. Bykowicz, “Rubio’s presidential bid boosted by secret-money commercials,” The Associated Press (October 8, 2015).

[4]           S. Bland, “Secret-Money Group Tied to Marco Rubio Super PAC Has Been Researching Presidential Primary Voters,” The National Journal (April 10, 2015).

[5]               J. Martin & N. Confessore, “Nonprofit Masks Source of Ads Backing Rubio,” The New York Times (Oct. 11, 2015).