IRS Revokes Tax Status of Political Non-Profit. Is Karl Rove Next?
In the very arcane world of campaign finance loopholes, there is an even bigger offender in 2012 than the billionaire-sponsored super PAC. It is highly partisan political operations masquerading as non-profit social welfare organizations. The worst of these, which mostly are on the Republican side of the aisle, spend more money on ads than the presidential candidates and deliver the nastiest messages, allowing Mitt Romney to appear above the fray.
But that non-profit fiction may be cracking under an IRS ruling that just revoked the tax status of a non-profit seeking to train women candidates running as Democrats in 10 states. While nobody wants to see fewer women in politics, the ruling could foreshadow a crackdown against the real abuser of this campaign loophole: Karl Rove's Crossroads GPS.
A tip of the hat to Rick Hasen's Election Law blog for pointing to this post on TaxProf blog, which begins, "An IRS decision revoking the tax-exempt status of a small political nonprofit organization may foreshadow an investigation into groups such as Crossroads GPS and Priorities USA that spend millions on the 2012 U.S. presidential election. At risk would be the groups’ nonprofit status, which lets them collect millions of dollars from individuals and corporations while keeping donors anonymous."
It continues: "The IRS decision released last month involved a so-called campaign school in which a partisan group trained candidates. [The nonprofit is Emerge America, which works in ten states to train Democratic women candidates.]
“You are not operated primarily to promote social welfare because your activities are conducted primarily for the benefit of a political party and a private group of individuals, rather than the community as a whole,” said the IRS letter telling the group it was losing its exempt status. [The ruling is Priv. Ltr. Rul. 2012-21-028 (Mar. 2, 2012).]"
The only question--and it's a big one--is whether the IRS will act against Rove before Election Day in November, not after.