TaxProf Blog

Editor: Paul L. Caron, Dean
Pepperdine University School of Law

Thursday, June 23, 2011

Should Media Matters Lose its § 501(c)(3) Tax-Exempt Status?

Media Matters Washington Times, Taxpayers’ Subsidization of War on Fox News, by C. Boyden Gray:

Media Matters for America was originally established as a § 501(c)(3) organization, that is, an organization that can receive tax-deductible contributions to engage in educational activities. The more precise purpose was to counter alleged media bias and so to “identify occurrences of excessive bias in the American media, educate the public as to their existence, and to work with members of the media to reduce them.”

What MMA actually is doing, however, moves far afield from identifying possible bias to mounting a campaign to undermine a major media outlet and to promote the Democratic Party and progressive causes associated with it. Mr. Brock himself has described this new strategy as “a war on Fox,” an effort “to disrupt [Rupert Murdoch‘s] commercial interests” and look for ways to turn regulators against News Corp.’s media outlets.

MMA’s activities should disallow its tax-exempt status in two fundamental ways. First, IRS rulings make clear that attacks on individuals, statement of positions that are unsupported by facts and use of inflammatory language and other distortions will cost an organization its tax-free status. Second, in declaring “guerrilla warfare” on Fox as the “leader” and “mouthpiece” of the Republican Party and in developing a sophisticated Democratic-leaning media training boot camp, MMA has transformed itself into an aggressive advocate for Democratic and progressive causes and thus produced a second deviation from exempt educational activities.

MMA’s role as a Democratic training camp parallels exactly the operations of the American Campaign Academy which was denied tax-exempt status by the IRS in 1989. [American Campaign Academy v. Commissioner, 92 T.C. 1053 (1989).]

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Should Media Matters Lose its § 501(c)(3) Tax-Exempt Status? Yes. I could care less about their political leanings, but the company does not seem to follow the § 501(c)(3) requirements.

Posted by: Lt. Dangle | Jun 23, 2011 12:20:49 PM

Maybe so, but if so they probably won't be alone.

Posted by: Michael A. Livingston | Jun 23, 2011 12:31:17 PM

@Michael A. Livingston: Agreed.

Posted by: Lt. Dangle | Jun 23, 2011 2:57:25 PM

Rather than just moaning about it because you (Wash Times) are a conservative rag, the "newspaper" equivalent of Fox "News" why don't you follow the procedures set out by the IRS so it will get looked in to. I think it is a pretty simple form to fill out, plus an envelope and a stamp.

This is all about muckraking. Why the need to scream about it when all you have to do is submit a form that will have the IRS to investigate the matter?

This is why I hate mass media so much now. It is all opinion and no news. well, not no news. there has to be a sliver of news to wrap an opinion around it and warp it into Warp 9.2. It is almost amusing that CNN was on the outs until it tried the strategy of just reporting the news and not having opinion shows. Sure, CNN like everyone else has bias. But the programs are reporting the news in the old fashioned way the best you can in the modern era of "news" being so geared to the extreme right or left.

I know there are a whole bunch of people who are in the middle and a whole bunch of voters that are neither democrats or republicans (i think they are called "independents" as in give me the info and i will decide for myself what to think rather than have you tell me).

it looks like 501(c)'s are going to become a big issue because of what Congress has been doing to make them so high profile. but it may backfire on them as the (c)(4)'s the fund their lavish lifestyles and give them zillions of dollars "anonymously" (to the public that is) may wind up as 527's if the IRS actually starts looking at them -- especially if Media Matters and whatever right or left wing group complains about the other. and gazillionaires (corporations and individuals) don't want anyone to know who they are giving to and how much. (c)(4) is a shield that hides them from the public view. 527 is the shining beacon of disclosure. you give, your name is on the list and everyone can see the list.

Congress should be careful what it wishes for, although America would be better served if all political donations were subject to disclosure and could not be hidden from public view.

Posted by: tax guy | Jun 26, 2011 3:16:15 AM