Legal Center Weekly Report: October 17, 2011
Legal Center Challenges Tax Exempt Status of Crossroads GPS, Priorities USA American Action Network and Americans Elect / Legal Center Releases Analysis of Candidate Super PAC Funding by ‘Maxed Out’ Donors / Trevor Potter Helps Stephen Colbert Form “Anonymous Shell Corporation” / Policy Director Named Top Grassroots Lobbyist by The Hill / Legal Center President Travels to China for Carter Center to Speak on Political Transparency / Executive Director Speaks at University of Buffalo Law School Redistricting Conference / Legal Center President Joins Panel at New Hampshire Republican Presidential Primary Forum / FEC Program Director a Guest on “The Hutchinson Report Newsmaker Hour” / Legal Center President Speaks to American University Students / Legal Center Blog Highlights / Week in the News
Legal Center Challenges Tax Exempt Status of Crossroads GPS, Priorities USA, American Action Network and Americans Elect
On September 28, the Campaign Legal Center and Democracy 21 sent a letter to the Internal Revenue Service (IRS) challenging the eligibility of four organizations engaged in campaign activity to be treated as 501(c)(4) tax exempt organizations.
The letter to the IRS called for prompt investigations and action by the IRS. The four organizations cited in the letter are Crossroads GPS, Priorities USA, American Action Network and Americans Elect. Democracy 21 took the lead in preparing the IRS letter.
“The abuses of the tax code by these shadow campaign operations have mushroomed since the last election cycle with both Democrats and Republicans now in on the act and not even bothering to maintain a facade that they have any real purpose other than to elect members of their respective parties,” Legal Center Executive Director J. Gerald Hebert, said in a statement. “To maintain that these groups are ‘social welfare’ organizations is simply laughable.”
Under the Internal Revenue Code (IRC), IRS regulations and court decisions interpreting the IRC, section 501(c)(4) organizations are required to primarily engage in the promotion of social welfare in order to obtain tax exempt status. Court decisions have established that in order to meet this requirement, section 501(c)(4) organizations cannot engage in more than an insubstantial amount of any non-social welfare activity, such as directly or indirectly participating or intervening in elections.
To read the full letter click here.
Legal Center Releases Analysis of Candidate Super PAC Funding by ‘Maxed Out’ Donors
On October 4, 2011, the Campaign Legal Center, Democracy 21 and the Center for Responsive Politics released a new analysis showing that a significant percentage of the funds raised by candidate-specific Super PACs came from donors who had already reached the contribution limit to the candidates’ campaign committees.
The study show that 55 of the 75 individuals that donated to Restore Our Future also contributed to Mitt Romney's presidential campaign committee. These double-dipping donors represent almost three-quarters (73 percent) of all of Restore Our Future's individual donors.
Similarly, 24 individuals who had already reached their contribution limit to President Barack Obama’s reelection campaign also made contributions to Priorities USA Action, accounting for 37 percent of all individual donors and 82 percent of the total money raised by the group.
“This analysis offers yet more proof that these candidate-specific Super PACs are nothing more than an end-around existing contribution limits,” said Paul S. Ryan, FEC Program Director at the Campaign Legal Center. “The revolving door of staff between candidates and the Super PACs supporting them makes clear the close relationships between the two. The Super PACs are simply shadow candidate committees. Million-dollar contributions to the Super PACs pose just as big a threat of corruption as would million-dollar contributions directly to candidates.”
To read the press release, click here.
To read the full analysis, click here.
Trevor Potter Helps Stephen Colbert Form “Anonymous Shell Corporation”
On September 29, Legal Center President Trevor Potter appeared again on Comedy Central’s “The Colbert Report” as host Stephen Colbert’s “personal lawyer”. Colbert, concerned about the lack of large corporate contributions to his Super PAC, enlisted Potter to help him form a 501(c)(4) to keep the identities of his big donors a secret like Karl Rove’s Crossroads GPS.Colbert and Potter drew attention to the fact that current loose IRS rules mean the new entity will not have to file anything with the IRS until 2013, after the next Presidential election, and even then the names of donors to the organization will not be publicly disclosed.
The segment led to an e-mail from Rove’s lawyer to Colbert’s lawyer, Trevor Potter, which the comedian read on the air before issuing a clarification that Rove was not laundering “dirty money” through his Super PAC, but instead keeping it dirty and undisclosed in his 501(c)(4).
To watch Trevor Potter’s appearance on The Colbert Report, click here.
To view Colbert’s clarification, click here.
Potter is representing Mr. Colbert through his private practice and disqualified himself from any of the Legal Center's work in connection with Colbert’s political activities, which included filing comments with the FEC in response to an advisory opinion request filed by the Colbert Super PAC seeking a significant expansion of the ‘media exemption’. The Legal Center argued against this expansion of the exemption, which the FEC denied.
Policy Director Named Top Grassroots Lobbyist by The Hill
On October 12, the Campaign Legal Center’s public policy director, Meredith McGehee was once again named one of the “Top Lobbyists” by the The Hill newspaper. McGehee was joined on the list of the forty “most effective [grassroots] advocates in Washington” by the likes of Grover Norquist of Americans for Tax Reform, Nancy LeaMond of AARP, Bob King of the United Auto Workers and Chris Cox of the National Rifle Association.
To read the full article click here.
Legal Center President Travels to China for Carter Center to Speak on Political Transparency
From October 14-18 Legal Center President Trevor Potter travelled to China as a visiting speaker for the Carter Center, a non-profit established by former President Jimmy Carter with a mission that includes fostering democracy internationally. Potter spoke to a conference on political transparency at The Central Translation Bureau, a think tank of the Communist Party's Central Committee located in Beijing and also met with political scientists at Tsinghua University. Potter was asked to describe the strengths and weaknesses of transparency in the U.S. election system and political parties - a timely subject given the current debates in the U.S. on secret sources of money in campaigns.
Executive Director Speaks at University of Buffalo Law School Redistricting Conference
On October 14, Legal Center Executive Director J. Gerald Hebert spoke on a panel at the University of Buffalo’s “Major Developments in Redistricting” conference. The two day conference addressed both the theory and the reality of the redistricting process and changes in the current cycle including a variety of reforms passed in the states over the last decade.
Legal Center President Joins Panel at New Hampshire Republican Presidential Primary Forum
On October 13, Legal Center President Trevor Potter spoke on a panel at the Republican Presidential Primary forum at St. Anselm College in Manchester New Hampshire. The forum, “Solving our Fiscal Crisis: What’s Wrong with Washington?”, convened a panel of national political leaders and policy experts to discuss the issue before remarks were delivered by Republican Presidential candidates.
The forum was hosted by Americans for Campaign Reform and additional sponsors included Americans for Prosperity - New Hampshire, Committee for Economic Development, and No Labels.
FEC Program Director a Guest on “The Hutchinson Report Newsmaker Hour”
On October 1, Legal Center FEC Program Director Paul S. Ryan was the ‘Newsmaker’ on “The Hutchinson Report Newsmaker Hour” on KTYM and KPFK Radio in Los Angeles. Host Earl Ofari Hutchinson described Ryan’s appearance as giving listeners “a revealing inside look at how major corporate money and wealthy donors will dominate the 2012 Presidential election” and detailing “the dire threat of Super Political Action Committees to subvert the political process.”
Legal Center President Speaks to American University Students on Campaign Finance Issues
On October 6, Legal Center President Trevor Potter addressed American University undergraduates on “Campaign Finance in American Elections”. Potter’s remarks covered the history of campaign finance reforms and the recent drastic changes to campaign finance laws and the practical implications in the current election cycle.
Legal Center Blog Highlights
Each week, the Legal Center staff posts blog entries on its site, www.clcblog.org. Click to read recent blogs including, “Concepts in Campaign Finance that Defy Common Sense”, “Trevor Potter Helps Stephen Colbert form ‘Anonymous Shell Corporation’ to Avoid Disclosure”, “Colbert’s ‘Money Laundering’ Reference Leads to Ham Headed ‘Apology’ to Karl Rove as The Colbert Report Keeps the Pressure Up on Undisclosed Money in Politics”, and “Shrinking New Coverage Leaves Voters Susceptible to Attack Ads,” or to sign up for the blog, click here.
Week in the News
To read a variety of this week’s editorials and articles on a variety of Campaign Legal Center issues, please click here.