Bloomberg News

Republican Group Subject of IRS Complaint on Lobbying

April 23, 2012

Bob Edgar, right, President and CEO of Common Cause, during a protest in front of the U.S. Supreme Court on February 23, 2012. Photographer: Alex Wong/Getty Images

Bob Edgar, right, President and CEO of Common Cause, during a protest in front of the U.S. Supreme Court on February 23, 2012. Photographer: Alex Wong/Getty Images

Common Cause, a Washington-based political ethics watchdog group, today filed a complaint accusing the American Legislative Exchange Council of violating its tax-exempt status by lobbying state legislators.

The filing asks the Internal Revenue Service to force ALEC to pay back taxes and penalties. ALEC is incorporated as a charitable organization, meaning donations to it are tax- deductible.

“ALEC is a corporate lobby front group masquerading as a public charity,” Common Cause President Bob Edgar, a former Democratic congressman from Pennsylvania, said in a statement announcing the complaint. “It tells the IRS in its tax returns that it does no lobbying, yet it exists to pass profit-driven legislation in statehouses all over the country that benefits its corporate members.”

ALEC’s legal counsel, Alan P. Dye, called the complaint “a tired campaign to abuse the legal system, distort the facts and tarnish the reputation of ideological foes.” The attacks on ALEC, he said in a statement, “are based on patently false claims being made by liberal front groups that differ with ALEC on philosophical terms.”

Drafting Bills

Bloomberg News reported in July how ALEC, a Washington- based policy group, allows representatives of corporations and interest groups to help draft legislation with state lawmakers, who then try to enact those bills in their home states. Companies pay dues of as much as $25,000 a year. The group was also the subject of a New York Times story yesterday that cited internal ALEC documents that suggest the group lobbied state lawmakers on key votes.

Ohio state Senator Bill Seitz, a Republican who sits on ALEC’s board of directors, told the Times that opponents were going after the organization because “they don’t have a comparable group that is as effective as ALEC in enacting policies into law.”

Democratic state representative Marc Pocan of Wisconsin said he has attended several ALEC meetings and “it is clear to me that ALEC’s primary role is as a lobbying advocacy organization.” Pocan made his comments in a letter today to ALEC Chairman Dave Frizzell, an Indiana Republican lawmaker, asking him to justify the group’s tax status.

Pressuring Corporations

A coalition of public advocacy groups, including Common Cause, has been pressuring companies to drop their ALEC memberships following the killing of Trayvon Martin in Sanford, Florida. The shooter, George Zimmerman, claimed self-defense under the state’s “Stand Your Ground” law, which allows individuals to use deadly force if they feel threatened. Similar laws have been enacted in other states with the support of ALEC and the National Rifle Association.

McDonald’s Corp. (MCD:US), Kraft Foods Inc. (KFT:US) and the Coca-Cola Co. (KO:US) are among companies that have announced they won’t renew their ALEC memberships. Cincinnati-based Procter & Gamble Co. (PG:US) said today that also was leaving the policy group.

ALEC said on April 17 that it will focus on economic issues as it abolished the task force that drafted the “Stand Your Ground” measure and one requiring voters to show photo identification at the polls.

The U.S. Justice Department has used its powers under the Voting Rights Act to challenge ALEC-inspired voter laws in South Carolina and Texas, saying the measures disproportionately disenfranchise minorities.

Bloomberg reported this month that 13 of the 22 companies and trade associations represented on ALEC’s private enterprise board also contributed at least $2 million to the Congressional Black Caucus Foundation. The Congressional Black Caucus has said that voter-ID laws “suppress” the right to vote of minorities.

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

To contact the editor responsible for this story: Jeanne Cummings at jcummings21@bloomberg.net.


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