IRS Caught Between Parties On Tax-Exempt Groups

One of the biggest players in contested Senate races this year has been Crossroads GPS, a social welfare non-profit group that can conceal the names of its donors. Now, top GOP senators are telling the IRS to back off new rules that could make it harder for groups like Crossroads to operate.

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AUDIE CORNISH, HOST:

From NPR News, this is ALL THINGS CONSIDERED. I'm Audie Cornish. Now, a story that goes to the heart of the debate over campaign finance. A dozen Republican senators have written a letter to the IRS. They say they want to be informed if the agency starts even considering new regulations on political activity by tax-exempt groups. The senators say they're concerned that Democrats are putting political pressure on the agency.

NPR's Peter Overby explains.

PETER OVERBY, BYLINE: Among the signers of the letter is Senate Republican Leader Mitch McConnell. The senator said they're concerned about an IRS letter last month. The agency told two watchdog groups that it will consider proposed changes to the rules governing 501(c)(4) social welfare organizations. The GOP senators pointed out that Democratic senators also complained to the agency about the social welfare groups.

The best financed of these groups are all pro-Republican and the thing is about social welfare organizations, their donors can give unlimited sums and there's no public disclosure. The most powerful 501(c)(4) right now may be Crossroads GPS, co-founded by GOP strategist Karl Rove.

UNIDENTIFIED WOMAN: Four billion dollars every day. That's how much our country's debt has exploded since Martin Heinrich joined Congress. Tell Tester: stop spending money we don't have. Cut the debt.

UNIDENTIFIED MAN: Shelley Berkley is everything that's wrong with Washington. Crossroads GPS is responsible for...

OVERBY: That's just a bit of the $100 million Crossroads budget for Senate campaigns. Crossroads GPS and its connected superPAC are also budgeting $200 million for the presidential race.

Fred Wertheimer heads up the watchdog group Democracy 21. It has repeatedly asked the IRS to get tougher on social welfare organizations.

FRED WERTHEIMER: The biggest abuser, in our view, is Crossroads GPS, which clearly is not entitled to tax-exempt status and is using it to hide its donors.

OVERBY: To which Jonathan Collegio at Crossroads GPS says that what Wertheimer really wants is public financing.

JONATHAN COLLEGIO: Democracy 21 and their partners are ideologues who want taxpayers to fund campaign ads.

OVERBY: And conservative lawyer Dan Backer says there's no constitutional reason the IRS should treat politically active 501(c)(4)s differently from any other (c)(4)s.

DAN BACKER: To start looking at these groups and say, you've got a lot of political (unintelligible) here, so because of that, we're going to treat you differently than somebody else, I think that's unreasonable.

OVERBY: One thing Fred Wertheimer and Dan Backer agree on: the Republican letter is meant to put political pressure on the IRS. Peter Overby, NPR News, Washington.

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