Campaign finance watchdogs Democracy 21 and the Campaign Legal Center are asking the Internal Revenue Service to investigate whether a GOP slush fund promoted by Fox News political analyst Karl Rove "is operating in violation of its tax status because it has a primary purpose of participating in political campaigns in support of, or in opposition to, candidates for public office."
The campaign group, Crossroads GPS, is the tax-exempt 501(c)(4) wing of American Crossroads, which Rove helped organize. Rove has reportedly been "pitching" the group to "wealthy conservative benefactors around the country."
In their letter to the IRS, top executives at Democracy 21 and the Campaign Legal Center write:
The status of Crossroads GPS as a section 501(c)(4) entity allows its donors to evade the public disclosure requirements that would apply if the organization was registered as a section 527 political organization. Section 527 groups are organizations that are "primarily organized and operated" to engage in political activities. By contrast, Section 501(c)(4) organizations are not permitted to be "primarily engaged" in activities to influence elections. They are not required to disclose their donors.
If, in fact, Crossroads GPS is impermissibly operating as a section 501(c)(4) organization in order to conceal its donors from the American people, the IRS has an obligation to take steps to protect the integrity of our tax laws and to make clear that such abuses will not be permitted in future elections.
Politico's Ken Vogel notes the letter in an article today detailing how Rove's groups have announced a "massive $4.2 million ad buy," of which "nearly 75 percent" has been paid for by "undisclosed donors."
The groups aren't partisan, and they don't mess around. In their press release, they note:
Following the 2004 election, Democracy 21 and the Campaign Legal Center took action against section 527 groups for violating the campaign finance laws. Democracy 21 and the Campaign LegalCenter called for an investigation of two pro-Democratic 527 groups, ACT and the Media Fund, the two biggest spending 527 groups in the 2004 presidential election.
In response to FEC complaints filed by Democracy 21 and the Campaign Legal Center against the two 527 groups, the FEC entered into conciliation agreements that found that the 527 groups, combined, had spent more than $150 million illegally in the 2004 presidential election. Both groups paid substantial civil penalties to the FEC
Of course, such penalties, if they are imposed on Crossroads GPS, will likely come long after the 2010 elections are already over.
It will be interesting to see if Fox chooses to ignore this story altogether, or bring Rove on to spin for his group.