Crossroads GPS, Karl Rove’s Republican powerhouse organization, has filed its first tax returns with the IRS and is claiming to be a 501(c)(4) “social welfare” organization rather than a political one. And it’s going so by using an incredibly absurd legal distinction between campaign ads and “issues advocacy.”
Crossroads Grassroots Policy Strategies, the political ad-buying organization cofounded by Republican strategist Karl Rove in 2010, has officially submitted its first tax forms with the Internal Revenue Service, and as expected, the group is formally requesting that the IRS treat it as a nonprofit operating under section 501(c)(4) of the tax code.
But that’s a tricky proposition for a group that spends the vast majority of its money on ads decrying one political candidate or another.
The hitch is that the tax code says 501(c)(4) groups “must be operated exclusively to promote social welfare” — the promotion of which “does not include direct or indirect participation or intervention in political campaigns on behalf of or in opposition to any candidate for public office.”
Rove depends on Crossroad GPS getting that 501(c)(4) status for one reason. Avowedly political groups, like Crossroads GPS’ sister organization, the American Crossroads Super PAC, have to disclose their donors; 501(c)(4) groups don’t (although that could be changing).
So how do they get away with this? By keeping a few magic words out of the millions of dollars worth of ads they buy:
The group insists that most of the ads the organization produces comprise “issue advocacy” rather than political campaign activity. It argues that since less than 50 percent of its budget goes to what it terms “direct” political spending, the group qualifies as being “primarily” a social welfare group.
The big question the IRS will have to address, therefore, is whether the ads that Crossroads GPS and similar groups call “issue advocacy” ads are, in fact, “on behalf or in opposition to any candidate for public office.”…
The Federal Election Commission’s hair-splitting rules allow Crossroads GPS to make the argument that these sorts of ads aren’t exactly the same as campaign ads. According to the FEC rules, in fact, advertisements from outside groups are only considered reportable as “independent expenditures” if they are “expressly advocating the election or defeat of a clearly identified candidate.” For the FEC, that involves literally using one of the magic words such as “elect” or “vote against” in their ad.
Over the years, political groups have interpreted that to mean that as long as they avoid those particular words, they can pretty much get away with anything — at least as far as the FEC is concerned.
And for good reason, because the FEC has allowed them to do so. That’s why you see so many ads that say “Senator So-and-so thinks it’s a good idea to put puppies into meatgrinders” and then at the end, instead of telling you not to vote for them, the ad says “Call Senator So-and-so and tell them that you don’t like grinding up puppies.” Voila! Now it’s an “issues ad” instead of a “campaign ad.” And the organization that put it out is a social welfare organization instead of a political organization, which means it doesn’t have to disclose who’s actually paying for the ad.
And this is not a Republican or Democratic issues; both sides have organizations, lots of them, that take advantage of this legal fiction in order to operate without disclosure.