The large donations may renew questions from Sunlight and others about whether Crossroads GPS should be able to file as a nonprofit “social welfare” group under the tax code, allowing it to avoid disclosing donor names. According to IRS regulations, the group’s “primary purpose” cannot be influencing elections, but the group can spend up to half of its money on political campaigning.
The tax documents provided by Crossroads GPS indicate that the IRS is reviewing whether to grant the group tax-exempt status.
Advocates for tighter campaign finance rules have written repeatedly to the agency, asking it to deny tax-exempt status to the group on the grounds that it is a political organization that should be forced to reveal donors.
“We are deeply concerned about the failure of the IRS to take any public steps to show that the agency is prepared to enforce the tax laws,” the heads of the Campaign Legal Center and Democracy 21 wrote to two top agency officials in December.
Crossroads GPS reports in its tax filings spending just over $17 million on direct election spending, which since the Citizens United ruling can include hard-hitting attack ads.
Other spending by the group has focused on issues in the political arena, often a subtle distinction because the ads inevitably help one political figure or party. For instance, Crossroads GPS spent $16 million over the summer on ads pushing against tax increases during the debate over raising the debt ceiling. Overall, it reported about $27 million on that type of “grass-roots issue advocacy,” or about 35 percent of its total budget.
Crossroads GPS also reported giving roughly $16 million to a constellation of like-minded conservative groups, including $4 million to Americans for Tax Reform, the group run by conservative activist Grover Norquist that asks lawmakers to pledge not to vote for tax increases.Other donations included $3.7 million to the National Federation of Independent Business, which advocates for small businesses; and $2 million to the National Right to Life Committee.
Crossroads GPS wrote on its tax return that it sends with its grants a letter “stating that funds are to be used only for exempt purposes and not for political expenditures.” That allows it to count the grants as part of its “primary purpose” of social welfare.
Americans for Tax Reform spent roughly $4 million on political ads in 2010, according to FEC filings.
Melanie Sloan, head of Citizens for Responsibility and Ethics in Washington, said that the $4 million from Crossroads GPS could have allowed the tax group to divert $4 million to election ads.
“It’s the same amount — does that seem likely to be a coincidence to you?” Sloan said.
Asked for comment, Adam Radman, a spokesman for the anti-tax organization, said it was happy to get the Crossroads GPS grant. “Given their strong work opposing tax increases it shouldn’t come as a surprise that they would support the leading group in the fight against tax increases. Their contribution was in support of our work fighting tax hikes,” he said.