The Democrats’ Complaint Against AFP, Decoded « The Washington Independent
Following up on the complaint lodged with the IRS by the Democratic Congressional Campaign Committee against the Americans for Prosperity Foundation — leaked to the New York Times on Friday — Loyola tax law professor Ellen Aprill weighs in.
Aprill explains that, while most media organizations refer to AFP as a single organization, it is in fact two groups: a 501(c)3 foundation, which can only engage in limited lobbying and is prohibited from political campaign interventions, and a 501(c)4 organization, which can lobby without limit and engage in political campaign interventions as long as they do not become the group’s primary purpose.
The complaint alleges that the foundation is in fact an “action organization” engaged primarily in lobbying and advocacy activities that make it ineligible for exemption under 501(c)3 and that its recent ad campaign decrying the stimulus in battleground states constitutes a prohibited intervention on behalf of candidates that are supported by its sister 501(c)4 organization. As to the criteria by which the complaint will be adjudicated, Aprill notes:
The IRS has no bright line test for what constitute political campaign intervention or a statement of a public policy position. In each case, the question is a matter of facts and circumstances. In the most recent official guidance, Revenue Ruling 2007-41, the IRS listed the following key factors as to whether a communication would be considered campaign intervention:
- whether the statement identifies one or more candidates for a given public office,
- whether the statement expresses approval or disapproval for one or more candidates’ positions and/or actions,
- whether the statement is delivered close in time to the election,
- whether the statement makes reference to voting or an election,
- whether the issue addressed in the communication has been raised as an issue distinguishing candidates for a given office,
- whether the communication is part of an ongoing series of communications by the organization on the same issue that are made independent of the timing of any election, and
- whether the timing of the communication and identification of the candidate are related to a non-electoral event such as a scheduled vote on specific legislation by an officeholder who also happens to be a candidate for public office.
A lot of the most specific criteria — directly naming candidates, specifically referencing the election — are absent from the AFP Foundation’s the major ad campaign, meaning the IRS would have to make an interpretive leap in order to concur with the DCCC. The fact that there’s no specific vote on stimulus spending on the docket, but there is an upcoming national election, however, does strengthen the Democrats’ case that the ads constitute political campaign interventions. In either case, it’s clearly well calculated timing on the part of Democrats for their complaints of AFP’s tax code improprieties to hit the news the same weekend the group was hosting a major event in the capitol that coincided with other Tea Party festivities.
As to the larger complaint about the AFP Foundation’s 501(c)3 status, notes Aprill, that’s a whole other can of worms:
The complaint, however, also makes another quite different claim. It argues that the financial disclosures on its 2008 Form 990 and the ads of APF asking its listeners to act to stop wasteful spending by the government show that it is engaged primarily in grassroots lobbying. If the IRS were to agree with this conclusion, APF would not be eligible for status as a 501(c)(3) organization. On its 2008 Form 990, it answered “no” to the question as to whether it engaged in any lobbying activities and described its activities as educational. The ads it has been running send its listeners say that wasteful spending must stop and send listeners to its website “to make your voice heard.” The website states that the APF provides educational programs and analyses that it supports “[c]utting taxes and government spending in order to halt the encroachment of government in the economic lives of citizens by fighting proposes tax increases and point out evidence of waste fraud and abuse” and “Tax and Expenditure Limitations to promote fiscal responsibility.” It does not, however, state anywhere that it supports such positions through lobbying or urging others to lobby. It states as well that the heart and soul of the organization is its “citizen activists.” It speaks explicitly about regulatory reform and the judiciary, but not about the legislative branch. Once again, the issue is not one of easy resolution.