Republicans seek IRS investigation into nonprofit status of group supporting King

Posted Oct. 10, 2012, at 2:45 p.m.

AUGUSTA, Maine — The Maine Republican Party is challenging the nonprofit status of a group that recently spent more than $700,000 on television advertising and polling intended to support independent Senate candidate Angus King.

The Maine GOP has sent a letter to the Internal Revenue Service challenging the right of the group Americans Elect to be registered as a tax-exempt, nonprofit organization under Section 501(c)(4) of the tax code and is requesting an IRS investigation into the organization. The group’s primary focus is political activity, the GOP argues, and that’s in violation of the federal tax code.

“Americans Elect’s first and primary emphasis is the election of candidates — specifically, third-party candidates,” Maine GOP chairman Charlie Webster wrote in a letter to IRS Commissioner Douglas Shulman. “Now, its emphasis is even more explicit: the election of Angus King. The facts and circumstances could not be more clear: Americans Elect is not entitled to nonprofit status.”

As a 501(c)(4) nonprofit organization, Americans Elect is considered a social welfare organization and can engage in some political activity as long as politics isn’t the group’s primary purpose, according to the IRS.

Ileana Wachtel, a spokeswoman for Americans Elect, said the group is operating within the confines of the tax code because its expenditures on King’s behalf amount to less than 5 percent of the organization’s budget and the organization’s primary purpose isn’t supporting political candidates.

“Our 501(c)(4) status is legal, and we have not crossed any lines,” she said.

The GOP’s request for an IRS investigation comes days after Americans Elect started airing third-party ads on King’s behalf that call the former governor “an independent fighter for Maine.”

Americans Elect spent nearly two years qualifying for ballot access in 29 states in hopes of nominating a third-party presidential candidate through an online nominating convention. Despite raising millions of dollars, the group called off its presidential efforts in May after no prospective candidate met the group’s qualifications: attracting 10,000 clicks of support, with the clicks spread across at least 10 states.

The group’s efforts were aimed at providing “a pathway” for third-party presidential candidates, not supporting the election of specific candidates, Wachtel said. But the Maine GOP is arguing that supporting candidates has become Americans Elect’s primary focus.

“Americans Elect’s over $500,000 expenditure on direct candidate support expressly advocating for Angus King demonstrates that Americans Elect is not primarily engaged in social welfare activity,” the party’s letter reads.

The party also points to an Americans Elect tax document from 2010 that says, “Americans Elect does not and will not support or oppose any candidate or candidate committee.”

Filings with the Federal Election Commission show that New York Mayor Michael Bloomberg, an independent, and Americans Elect founder Peter Ackerman each contributed $500,000 to the King ad campaign. A third donor, Passport Capital founder John Burbank, contributed $750,000. Independent of Americans Elect, Bloomberg is hosting King at his Manhattan home on Tuesday for a campaign fundraiser.

The GOP’s request for an IRS probe into the group follows a complaint the party filed Friday with the Federal Election Commission alleging improper coordination between King’s campaign and Americans Elect because Eliot Cutler, an independent candidate in Maine’s 2010 gubernatorial race, serves as one of nine state chairs for the King campaign and was listed on the Americans Elect website as a board member.

Outside groups set up to make unlimited expenditures in hopes of influencing elections aren’t allowed under federal election law to coordinate with candidates’ campaigns.

Cutler on Friday said he resigned from the Americans Elect board in June. Wachtel dismissed the FEC complaint as “baseless” and provided a copy of Cutler’s resignation letter, dated June 26, 2012.

The GOP’s request for an investigation into Americans Elect’s nonprofit status highlights a largely unsettled question about the extent to which 501(c)(4) organizations are allowed to engage in political activity.

ProPublica reported earlier this year that dozens of 501(c)(4) organizations have engaged almost exclusively in political activity, spending millions of dollars on political ads and other election efforts this campaign season. And the IRS has been investigating the political activities of several 501(c)(4) organizations this year to determine whether they qualify for nonprofit status.

The agency is also considering changes to regulations that could affect the political activity 501(c)(4) organizations are allowed to engage in under the tax code.

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