The Internal Revenue Service has granted tax-exempt status to Crossroads GPS, a conservative group that has aggressively pioneered in a new form of political engagement by nonprofit groups sanctioned by the Supreme Court's Citizens United decision.
The decision by the IRS -- first reported by OpenSecrets.org, the website of the nonpartisan Center for Responsive Politics -- means that Crossroads GPS has been deemed a "social welfare" nonprofit under Section 501(c)(4) of the tax code. Such groups can raised unlimited sums from individuals and corporations and spend money on direct political activity, as long as they do not spend the majority of their funds on campaigns. Unlike political committees, they are not required to reveal their donors.
“We have always taken compliance very seriously, so we’re not surprised by the final result," president Steven Law said in a statement. "What we were surprised by was how long it took and how people outside the IRS improperly tried to influence and politicize the process, not just against us but against many other law-abiding advocacy groups.”
Crossroads GPS, which was was established in June 2010, was one of the first major politically active nonprofits to spring up in the wake of Citizens United. The group was formed as a companion to American Crossroads, a Republican super PAC co-founded by GOP strategists Karl Rove and former Republican National Committee chairman Ed Gillespie.
While Crossroads GPS was waiting for the IRS to consider its application for 501(c)(4) status, it raised more than $330 million and reported spending at least $112 million on direct political activity, according to CRP. Much of its money has been spent on TV ads lambasting President Obama and congressional Democrats. The organization spent tens of millions more on grants to other conservative groups, as well as to run "issue ads" that do not explicitly call for the election or defeat of a candidate.
The group said in 2013 that it believed it was among the nonprofits subjected to extra scrutiny by the IRS, which admitted to improperly singling out organizations with words such as "tea party" and "patriot" in their name. The IRS finally approved Crossroads' application in November, granting it 501(c)(4) status retroactive to June 2010, spokesman Ian Prior confirmed.
Advocates for stricter enforcement of campaign finance rules criticized the ruling.
"This decision by the IRS belies reality and cannot be justified," said Fred Wertheimer, president of the advocacy group Democracy 21. "Crossroads GPS is anything but a 'social welfare' organization. It is a political organization formed and operated to influence federal elections."