3American Action Network, a pro-Republican group, reported
of its expenditures in2010 to the FEC
as “independent expenditures” and “electioneering communications
Under any interpretation of the IRS rules, this group does not qualify as a section
501(c)(4) “socialwelfare” organization.
Americans Elect, a group established to nominate and run an independent candidate for Presidentin 2012, registered as a political party on state ballots all across the country. There is no waythat a political party registered on state ballots can also qualify as a section 501(c)(4)
These groups were campaign operations, not “social welfare” organizations
. It appears clear thatthe groups were improperly claiming section 501(c)(4) tax-status so that donors could secretlyfinance their campaign expenditures in federal elections.In the case of Priorities USA and Crossroads GPS, they also had affiliated Super PACs. Donorssupporting their campaign activities were given the choice: give your contribution to the section527 Super PAC and the contribution will be publicly disclosed or give your contribution to thesection 501(c)(4)
organization and you can remain anonymous.There is no indication that the IRS has taken any action to prevent these four groups or any other groups playing prominent roles in the past two federal elections from improperly claimingsection 501(c)(4) tax status.It is a cardinal rule of our political system that campaign expenditures and the sources of thecontributions used to finance them should be disclosed to the American people.The Supreme Court has long recognized the constitutionality and importance of requiringdisclosure to inform citizens about campaign finance activities. In 2010, the Supreme Court inthe
case by a vote of 8 to 1 upheld the constitutionality of requiring corporationsmaking independent expenditures, including nonprofit groups, to disclose their campaignactivities. (Citizens United itself is a section 501(c)(4) group.)Recognizing the vital role that campaign finance disclosure plays in informing citizens and providing accountability, Justice Anthony Kennedy wrote in the
decision:With the advent of the Internet, prompt disclosure of expenditures can provideshareholders and citizens with the information needed to hold corporations and electedofficials accountable for their positions and supporters.
[D]isclosure permits citizensand shareholders to react to the speech of corporate entities in a proper way. Thistransparency enables the electorate to make informed decisions and give proper weight todifferent speakers and messages.The
decision also noted that the Supreme Court had earlier upheld campaignfinance
disclosure laws to address the problem that “independent groups were running election
related advertisements while hiding behind dubious and misleading names.”