Democrats Question AFP’s Tax Exempt Status

Americans for Prosperity might be busy enjoying its conference in DC this weekend, but the group might soon be defending its tax exempt status before the IRS. The New York Times reports:

In a complaint filed this week with the Internal Revenue Service, lawyers for the Democratic Congressional Campaign Committee charged that the group, the Americans for Prosperity Foundation, has been running ads in Kansas, Missouri and Michigan that are inherently “political in nature,” contravening a ban under federal tax law. A copy of the complaint was provided to The New York Times.

The foundation, which has just begun a $1.4 million ad campaign criticizing the economic policies in Washington as “wasteful spending,” has become a vocal critic of Democratic policies and drew a rebuke this month from President Obama.

Non-profit groups like the foundation, which falls under section 501(c)3 of the tax code, are forbidden from participating in “any political campaign on behalf of or in opposition to a candidate.” They may, however, seek to educate voters or conduct broader get-out-the-vote drives “if conducted in a non-partisan manner,” the I.R.S. says.

AFP will argue, of course, that all its advertising is issue-oriented and educational. Democrats will argue that the partisan nature of the vote on the stimulus, which AFP is vigorously opposing, makes it clear that the ads are implicitly attacking Democrats. AFP’s choice to air the ads in battleground states and districts around the country compounds the notion that the ads are designed to topple embattled Democratic legislators.

Lots of groups walk this fine line, however, and thus far neither the IRS nor the FEC have appeared eager to intervene. Revoking a group’s tax exempt status would be sure to provoke an extended battle in the courts — one which AFP feels confident that, under the conservative Roberts court, at least, would be likely decided in its favor.