Huffington Post: IRS To Take On Karl Rove? Tax Laws Could Take A Bite Out Of Secret Political Spending

-By Dan Froomkin

May 25, 2011- Top Republican political strategist Karl Rove's method of secretly funneling unlimited contributions from big donors was so hugely successful in the 2010 campaign that Democrats are now trying to copy it. But his model may yet end up backfiring spectacularly.

In one scenario, groups like Rove's Crossroads Grassroots Political Strategies could find themselves subject to massive fines, ranging as high as 35 to 70 percent of the money they received in secret donations.

In another scenario, their deep-pocket donors could be hit by a 35 percent tax on their contributions.

Rove may well have found a way around the nation's federal election laws. But now the key question is whether the Internal Revenue Service is willing to be assertive. Because if it is, then just like with Al Capone, it could be the IRS that gets him.

In Crossroads GPS's solicitations for money, the group describes itself as a tax-exempt 501(c)(4) organization, and due to a controversial loophole in federal campaign finance rules, the names of donors to those organizations do not have to be disclosed publicly.

ACW Press Release: Advocacy Group Releases Hard-Hitting Video Calling on NY Congressional Candidate Jane Corwin to Reject Karl Rove's Dirty Money

Advocacy Group Releases Hard-Hitting Video Calling on NY Congressional Candidate Jane Corwin to Reject Karl Rove's Dirty Money

IRS Investigates Rove's Donors

WASHINGTON, May 19, 2011 /PRNewswire-USNewswire/ -- AmericanCrossroadsWatch.org, an advocacy group dedicated to exposing the campaign finance activities of Karl Rove's American Crossroads group, just released a hard-hitting video calling on Jane Corwin, who is running in the special election in NY-26, to reject the $650,000 that Rove's group is using to support her campaign. The video comes days after the IRS announced that it is targeting donors to 501c4 groups, such as Rove's Crossroads GPS, for failing to report donations and pay a 35% gift tax on such donations. This was reported last Thursday by the New York Times.

POE Press Release: Group Applauds Rep. Anthony Weiner's Demand for Justice Clarence Thomas to Immediately Disclose His Financial Statements

Protect Our Elections Applauds Rep. Anthony Weiner's Demand for Justice Clarence Thomas to Immediately Disclose His Financial Statements

Group Urges Department Of Justice To Apply "Equal Justice" To Thomas

WASHINGTON, May 19, 2011 /PRNewswire-USNewswire/ -- Yesterday New York Congressman Anthony Weiner called on Justice Clarence Thomas to immediately release his 2010 financial disclosure statements. http://www.anthonyweiner.com/

NYT: G.O.P. Senators Question I.R.S. Scrutiny of Donors

May 18, 2011- A group of Republican senators wrote to the head of the Internal Revenue Service on Wednesday seeking internal correspondence and other information about the agency’s heightened scrutiny of donations to some nonprofit advocacy groups that are playing a growing role in political campaigns. 

At least five donors to such groups have received letters from the agency stating that their donations may be subject to federal gift taxes, invoking a provision of law long on the books but rarely enforced.

The Republicans, all members of the Senate Finance Committee, which has oversight of the I.R.S., said they were concerned that political considerations might have played a role in the agency’s decision to scrutinize such donations more closely. The senators are seeking the names of any agency staff members involved in that decision, along with internal documents and any correspondence with White House officials.

TruthDig: ‘Electronic Brownshirts’

-By Amy Goodman:

May 18, 2011- Judy Ancel, a Kansas City, Mo., professor, and her St. Louis colleague were teaching a labor history class together this spring semester. Little did they know, video recordings of the class were making their way into the thriving sub rosa world of right-wing attack video editing, twisting their words in a way that resulted in the loss of one of the professors’ jobs amidst a wave of intimidation and death threats. Fortunately, reason and solid facts prevailed, and the videos ultimately were exposed for what they were: fraudulent, deceptive, sloppily edited hit pieces.

Right-wing media personality Andrew Breitbart is the forceful advocate of the slew of deceptively edited videos that target and smear progressive individuals and institutions. He promoted the videos that purported to catch employees of the community organization ACORN assisting a couple in setting up a prostitution ring. He showcased the edited video of Shirley Sherrod, an African-American employee of the U.S. Department of Agriculture, which completely convoluted her speech, making her appear to admit to discriminating against a white farmer. She was fired as a result of the cooked-up controversy. Similar video attacks have been waged against Planned Parenthood.

Huffington Post: Democracy 21, Campaign Legal Center: James Bopp's Republican Super PAC Is Illegal

May 17, 2011- Republican officials beware! Two good-government groups are warning that GOP politicians will be violating federal law if they solicit unlimited contributions for the newly-minted "Republican Super PAC."

The new fundraising group is the brainchild of James Bopp Jr., a lawyer and Republican National Committee member who can take some credit for the "Citizens United" Supreme Court ruling last year that wiped out most of the post-Watergate campaign finance reform regulations.

Bopp thinks he's come up with a way around one of the last remaining strictures still standing -- the one prohibiting elected officials and party officials from directly soliciting or receiving unlimited campaign funds. He claims that, as long as those officials aren't involved in precisely how the money is spent once it's been received by his Super PAC, it still counts as an "independent" expenditure. This argument may be difficult to pull off, given Bopp's own status as a Republican Party member.

The reformers at Democracy 21 and the Campaign Legal Center say he's gone too far.

Politico: GOP 'Super PAC' seeks surplus cash

May 16, 2011- Attorney James Bopp Jr. spent much of the last two years trying to get rid of the ban preventing federal officials from raising unlimited contributions, or so-called “soft money.”

Now, he may have found a way around it.

Bopp and two other Republican National Committee members last week organized an independent political group called the Republican Super PAC, which will encourage state and federal candidates to direct any campaign cash the politicians can’t accept, such as unlimited donations, to the new Super PAC, which can accept them.

The new twist Bopp would usher in would be to turn federal and state elected officials essentially into his bundlers and fundraisers, lawmakers who would then solicit donations intentionally aimed at circumventing campaign finance regulations.

“We are not going to do any fundraising,” Bopp told POLITICO. “We are harnessing the fundraising operations of those entities, the RNC and all the state parties and federal candidates, who will be raising money first for themselves and then they would tell their donors, if they have extra money, to send it to the Republican Super PAC.”

Minneapolis Star Tribune: Appeals court sides with federal judge, allows Minnesota campaign law to stand

A group argued that a state law hampers their free speech by chilling corporate giving. The appellate court disagreed.

May 16, 2011- By a 2-1 vote, the 8th Circuit U.S. Court of Appeals on Monday sided with a federal judge in allowing a state campaign finance law to require corporations to disclose when they spend money to support or defeat a candidate.

The three-judge panel also said it was unlikely that a group arguing that such requirements are unconstitutional would prevail in their lawsuit.

The result of the Appeals Court decision is that the restrictions and requirements present in state law will continue.

"Minnesota did not ban corporate independent expenditures," the Appeals Court wrote. "Instead, based upon the lower court's findings, as strongly supported by the record, we find that Minnesota created a statutory scheme designed to require corporations to disclose certain information when making independent expenditures."

Those disclosures are allowed by federal law, the court ruled.

The decision affirms a ruling by U.S. District Judge Donovan Frank in September 2010, in which he refused to strike down the law. In his ruling, Frank said that voters have "an interest in knowing who is speaking about a candidate on the eve of an election."

Press Release: Campaign Finance Watchdog Spearheads Battle Against Anonymous Donations

Applauds IRS Initiative to Enforce Gift Tax of Fraudulent Non-Profits

Announcement Comes Months After Campaign Accountability Watch Sends Letter on Issue to AG Holder

WASHINGTON, May 16, 2011 /PRNewswire/ -- Campaign Accountability Watch (CAW), a watchdog at the forefront in the battle against secret campaign contributions, today applauded the IRS for announcing it will seek payment of a gift tax of 35% for donations made to non-profit organizations involved in electoral campaigns. CAW called it a good "first step" to reigning in these organizations.

CAW sent a letter on October 25, 2010 to Attorney General Holder seeking a special prosecutor for the misuse of non-profit organizations to hide the source of electoral donations.

The letter specifically highlighted the provision in the law that the IRS is now addressing:
…press reports indicate that these same 501c(4) organizations are not advising their donors that their donations are taxable as a 'federal gift tax' at a rate of 35%, thereby both misleading the donors and depriving the federal government of potentially hundreds of millions in tax revenue. 

NYT: I.R.S. Moves to Tax Gifts to Groups Active in Politics

May 12, 2011- Big donors like David H. Koch and George Soros could owe taxes on their millions of dollars in contributions to nonprofit advocacy groups that are playing an increasing role in American politics.

Invoking a provision that had rarely, if ever, been enforced, the Internal Revenue Service said it had sent letters to five donors, who were not identified, informing them that their contributions may be subject to gift taxes depending on whether the donations exceeded limits under the tax laws.

These advocacy groups have been drawing more scrutiny, from President Obama as well as others, as they have proliferated and funneled vast sums of money in support of campaigns and causes, without having to publicly disclose their donors.

During the midterm cycle, for example, groups like Crossroads GPS, which has ties to the Republican strategist Karl Rove, and Americans for Prosperity, backed by Mr. Koch and his brother Charles, were heavily involved in politicking, spurring campaign finance watchdogs to complain that they were flouting election and nonprofit laws.

Spokesmen for the Koch brothers and for Mr. Soros would not comment as to whether they had paid gift taxes on these types of donations, or whether they had received letters from the I.R.S.

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