U.S. House: Watchdog Groups Challenge House Ways and Means Committee Letter Claiming IRS Pursuit of Crossroads GPS was Improper


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.