NY Times: The IRS and Political Contributions by Business

New York Times:  Tax-Exempt Groups Shield Political Gifts of Businesses:

Two years after the Supreme Court’s Citizens United decision opened the door for corporate spending on elections, relatively little money has flowed from company treasuries into “super PACs,” which can accept unlimited contributions but must also disclose donors. Instead, there is growing evidence that large corporations are trying to influence campaigns by donating money to tax-exempt organizations that can spend millions of dollars without being subject to the disclosure requirements that apply to candidates, parties and PACs.

The secrecy shrouding these groups makes a full accounting of corporate influence on the electoral process impossible. But glimpses of their donors emerged in a New York Times review of corporate governance reports, tax returns of nonprofit organizations and regulatory filings by insurers and labor unions.

The review found that corporate donations — many of them previously unreported — went to groups large and small, dedicated to shaping public policy on the state and national levels. From a redistricting fight in Minnesota to the sprawling battleground of the 2012 presidential and Congressional elections, corporations are opening their wallets and altering the political world.

Some of the biggest recipients of corporate money are organized under Section 501(c)(4) of the tax code, the federal designation for “social welfare” groups dedicated to advancing broad community interests. Because they are not technically political organizations, they do not have to register with or disclose their donors to the Federal Election Commission, potentially shielding corporate contributors from shareholders or others unhappy with their political positions. ...

The IRS has no clear test for determining what constitutes excessive political activity by a social welfare group. And tax-exempt groups are permitted to begin raising and spending money even before the IRS formally recognizes them. Two years after helping Republicans win control of the House with millions of dollars in issue advertising, Crossroads GPS’s application for tax-exempt status is still pending.

New York Times editorial, Why Senator McConnell Is So Nervous:

America’s corporations and their executives are in grave danger, warns Mitch McConnell, the Senate Republican leader. According to Mr. McConnell, if President Obama were to find out who was giving hundreds of millions to secretive groups running political attack ads, he would “punish and intimidate” them with all the governmental tools at his disposal.

This is not one of those laughable Internet conspiracy theories. The senator actually wrote this in an op-ed essay in USA Today on Thursday as his explanation of why the Disclose Act, which would end the practice of secret political donations, is “un-American” and an attempt to limit free speech.

The vast majority of the secret money going into “social welfare” organizations like Crossroads GPS, founded by Karl Rove, is being spent on behalf of Mitt Romney and other Republican candidates, and the Disclose Act is coming up for another vote in a few weeks. So Mr. McConnell needs a new excuse for filibustering it again. But his suggestion that President Obama and Democrats want disclosure in order to compile a list of “enemies” is repugnant. ...

Mr. McConnell’s charge that the president has loosed the IRS on his enemies is breathtaking. After several years of indifference, the IRS is finally examining whether these “social welfare” groups are abusing their tax-exempt status by spending anonymous donations on political attack ads. The senator compares them to the NAACP, but Crossroads GPS and the like exist for no other purpose than to run political ads.

That is a clear violation of the tax code, which says political activity cannot be their primary purpose. The IRS is doing its job, at long last, and that’s what has Republican leaders like Mr. McConnell so worried.

(Hat Tip: Ann Murphy.)