Bloomberg News

Rove, Burton Political Groups Are Subject of IRS Complaint

September 28, 2011

(Updates with Burton comment in sixth paragraph. For more campaign news, go to ELECT.)

Sept. 28 (Bloomberg) -- Advocates of stronger campaign finance laws today challenged the tax-exempt status of political groups that Republican Karl Rove and Democrat Bill Burton helped set up, a move that could force them to disclose their donors.

The complaint to the Internal Revenue Service names Rove’s Crossroads Grassroots Policy Strategies and Burton’s Priorities USA. Rove, a former adviser to President George W. Bush, and Burton, a former aide to President Barack Obama, also have related political action committees that disclose their donors.

The groups want “to keep secret from the American people the donors financing their campaign expenditures,” said Fred Wertheimer, president of Democracy 21, which filed the complaint along with the Campaign Legal Center, both based in Washington. “These groups have little, if anything, to do with promoting social welfare and everything to do with electing and defeating candidates,” he said in a statement.

Crossroads GPS was the subject of a similar complaint last year by the same advocacy groups. Crossroads GPS said in June it would spend $20 million on issue ads attacking Obama’s policies, commercials that regulators don’t consider election activity.

“This is the fourth frivolous complaint in 12 months from a highly ideological group that wants to sic the IRS on its opponents,” said Jonathan Collegio, a Crossroads spokesman, in a statement.

In Compliance

Burton, in a statement, said, “Our organization operates in compliance with all federal rules and regulations enforced by the IRS.”

Julianne Breitbeil, an IRS spokeswoman, said agency “privacy laws don’t allow us to comment on specific taxpayer information.”

Also named in the complaint were the American Action Network and Americans Elect. AAN and Crossroads GPS were among the four independent groups -- all backing Republicans -- that spent the most on the 2010 congressional elections, according to an analysis of Federal Election Commission records. Neither disclosed their donors. Americans Elect is planning to nominate a nonpartisan presidential ticket in 2012.

They are among the political groups that have spent millions to help elect or defeat candidates and don’t have to disclose their donors because they are registered as nonprofit groups with the IRS rather than political organizations with the FEC.

Shadow Campaign

“The abuses of the tax code by these shadow campaign operations have mushroomed since the last election cycle with both Democrats and Republicans now in on the act and not even bothering to maintain a facade that they have any real purpose other than to elect members of their respective parties,” said J. Gerald Hebert, executive director of the Campaign Legal Center, in a statement.

Overall, outside groups spent $305 million on the 2010 elections, compared with $69 million in 2006, according to the Center for Responsive Politics, a Washington-based research group that tracks political spending. Included in that total is $137 million spent by groups that didn’t disclose their donors.

Rove and another former Bush White House aide, Ed Gillespie, helped establish Crossroads GPS and a related organization that discloses its donors, American Crossroads. The two groups helped the Republicans win a U.S. House majority last year. The groups said they plan to raise more than $240 million for the 2012 elections.

Burton and Sean Sweeney, a former senior adviser in the Obama White House, helped set up Priorities USA and its sister group, Priorities USA Action, earlier this year, modeling them after the Republican-leaning independent groups. The groups plan to raise $100 million to help re-elect Obama.

--Editors: Jeanne Cummings, Don Frederick

To contact the reporter on this story: Jonathan D. Salant in Washington at jsalant@bloomberg.net.

To contact the editor responsible for this story: Mark Silva at msilva34@bloomberg.net.


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