The Pardu

The Pardu
Watchful eyes and ears feed the brain, thus nourishing the brain cells.

Saturday, April 20, 2013

Open Secrets: How To Steps To Become A Political Money Magnet/Magnate

Repost from Open Secrets Dot Org included below. Thanks to Open Secrets for the work they perform and we serious appreciate thier Creative Commons opportunity to publish their relevant work.  

If you visit The Progressive Influence, you know of our affinity for "Show Me The Money."  Politics and money have meshed together as thoroughly as epoxy material used in the construction of military aircraft and other weaponry.  Once the components of the bonding media set, it is impossible to separate the components without insertion of explosives.  We posit the very same has taken place at both State and Federal levels of governance.  

The American Legislative Exchange Council (ALEC) at the State level, and obscene and monstrous lobbying activities at the federal level stand as validation of our point. Respected journalist Bill Moyers' expose` on ALEC is a must watch , if you care about the horrid state of US Politics. The 31:55 minute segment, The United States of ALEC, educates about an old cancer (ALEC) which has metastasized into a growing terminal cancer.  Terminal for you and me, but a living entity pumping privilege and favorable legislation for ALEC members. A perfect example of terminal for you and me looks like this: 

A two week period in January 2013 showed (via three separate surveys)  formidable support even among Republicans and NRA Members.  What would lead US Senate blocking a vote on background checks in light of universal support around the 90% level?  You know the answer!    

Open Secrets Dot Org offers many webpages related to lobbying, contributions to congress, who receives money from which entities and on and on. 

Beyond posting information for public scrutiny about the moneyed state of US Politics Open Secrets has published "Shadow Money Magic". The series delineates five step process or methodology in setting up a lucrative path to money from contributors.  After reading half the five steps, I started to find reinforcement for long standing belief in many cases a vote for many politicians that leads to an election win, is like purchasing the politician a winning Lotto Ticket.  Since, the odds of hitting the Lotto is million upon millions to one, note I stated specifically handing it over of the "winning" ticket to the politicians. As I read through the Five Steps,  It became evermore clear politicians with proper consultation (Legal, tax, and accounting consultation) is assure wealth as long as the politician wins elections. Thus the 360 degree arrangement that never ends

"It takes money to win elections. Corporations and interest groups have money. Those groups are willing to spend money for favorable treatment in government chambers. It is inarguable the money as 'bait' snags or feeds people in winning elections and frankly, fills the pockets of the less scrupulous." ~ The Pardu

(Exhibit: Mel Blount (R) MO. and Monsanto Bill)

"Shadow Money Magic"
OpenSecrets Blog

OpenSecrets Reports: Shadow Money Magic

During the 2010 and 2012 elections, dozens of groups pumped hundreds of millions of dollars into the electoral system while dodging the disclosure requirements that apply to almost all other organizations that support or oppose political candidates; it came to be known as "shadow" or "dark" money. The groups took in unlimited amounts of money from people and corporations and spent it on ads or passed it along to friends at other groups that did the spending themselves, all while avoiding more than glancing oversight by federal regulators.

Call it the return of mystery money.
We are linking the series five steps below. We are also posting the final step for those who may not click all series links. If you read step five, I doubt you will walk-away without at least perusing the four previous steps. 

 Step Five

Shadow Money Magic: Five Easy Steps That Let You Play Big in Politics, Hide Your Donors and Game the IRS - Step 5

Part Five (View other installments)

Join us at 2 p.m. on Monday, April 22, for a live webchat on "Shadow Money Magic: How to Play Big in Politics, Hide Your Donors and Game the IRS." 

Step 5: Relax, Regroup and Procreate Nondisclosing groups -- most of them 501(c)(4) organizations -- told the FEC that they spent more than $300 million in the 2012 elections. But a clearer picture of how they operated won’t emerge until autumn, 2013, when some will be turning in their IRS tax forms. Others -- who formed late in the election season or whose fiscal year ends in the summer -- won't file all or most of their 2012 spending until well into 2014.

That’s long after the hurly burly of the 2012 campaign. And it's just the starting point of any process in which the tax cops might begin to audit and question a group's creative interpretations or misapplications of the agency's rules. 
However, the truth is, there is very little chance of any of that happening.

In recent years, whenever the IRS has made a move to rein in activity in this arena, Republican lawmakers have pushed back very publicly. In 2011, tax authorities began poking around on the subject of applying the gift tax to large contributions to 501(c)(4) groups, sending letters to a handful of big donors. The agency received a swift and forcefulresponse from Republican Sens. Orrin Hatch (Utah), John Kyl (Ariz.) and several others inquiring whether the IRS was acting on the basis of partisanship.

Then in March, 2012, several tea party groups reported receiving information requests from the IRS in connection with their applications for tax-exempt status. In addition, some Senate Democrats wrote the agency asking for a bright-line test delineating what counts as political activity by 501(c)(4)s (in Step 2 of our report, we discussed the IRS' imprecise rules in that critical area). Hatch again struck quickly with a letter, also signed by Senate Minority Leader Mitch McConnell (Ky.), Sen. Chuck Grassley (R-Iowa) and nine other GOP senators, implying that the IRS had embarked on a partisan crusade.

The next round came in July with a letter from IRS Commissioner Doug Shulman saying the IRS “will consider proposed changes" with respect to (c)(4)s that “identify tax issues that should be addressed through regulations and other published guidance.” The missive back from Republican senators, including once again Hatch, Kyl and McConnell, came less than a month later. They said they believed the pleas for tighter regulation "have less to do with concerns about the sanctity of the tax code and more about setting the tone for the upcoming presidential election, and we urge you to resist allowing the IRS rulemaking process to be subverted to achieve partisan political gains."

The IRS' appetite for wading into a battle that is cast as political -- and risk being accused of conducting a witchhunt or seeking to chill free speech -- appears to be low.

Pretty much everything the IRS does in connection with individual taxpayers (or non-taxpayers, in this case) is confidential. However, there are no indications that the agency has acted to revoke the 501(c)(4) status of any of the major, politically active organizations we've mentioned in our report. And if it did, that's no assurance that the group would have to disclose its donors.

Many of the groups pushing the bounds of the rules that apply to 501(c)(4)s -- including Crossroad GPS -- have applied for but not yet received exempt status after years of waiting. If the IRS were to deny that status, the group would would be required to pay back federal income taxes, but that's about it, according to IRS Deputy Commissioner of Services and Enforcement Steven Miller. "There is no penalty specifically applicable to an organization as a result of denial of tax-exempt status," Miller told Sen. Carl Levin (D-Mich.) in a letter last year. The groups can just fade into the ether.

Denial letters are heavily redacted before they're made public: Any information identifying the group is deleted. So the public is never notified if a group isn't granted 501(c)(4) exempt status. The letters are meant solely to serve as illustrations of circumstances that can lead to an organization's status being denied or revoked.

Most importantly, the IRS won't inform the FEC, nor does it require the organization to file as a 527 committee -- which would have to disclose its donors; it's ultimately up to the organization itself to change its status, if it chooses to do so. Furthermore, the IRS' focus in evaluating the nonprofit status of a given group is not on the organization's political activity -- which is logical, given that the IRS is responsible for overseeing all kinds of very different nonprofits, political and apolitical. In letters responding to questions from Senator Levin, Miller repeatedly stated that "all the facts and circumstances" are considered in the evaluation of nonprofit activities, "including, but not limited to, the organization's stated purpose, expenditures, principle source of revenue, number of employees and volunteers, and time and effort."

That's not the kind of evaluation that can be carried out quickly -- certainly not as fast as an election cycle would warrant. The result is that, of a total of 643 organizations classified as 501(c)(4)s that were investigated since 2007, only 22 were investigated for their political activities. Out of more than hundreds of investigations, 42 501(c)(4)s had their status revoked. It's not clear how many of the 22 investigated for their political activity are among the 42 whose status was ultimately yanked.

For the groups that did not yet have exempt status, the numbers are similar for the same period: Between 26 and 28 501(c)(4)s were denied exempt status -- but the numbers are likely higher given that the IRS often forewarns applicants of impending denials, giving them the opportunity to withdraw their applications before receiving denials.

So powerful is the culture of nondisclosure at the IRS that even shreds of public information are tightly held. In November, the Center for Responsive Politics called the agency trying to discern a smudged word on a particular organization's form 990 -- a public document. One hour and several IRS staffers later, the agency agreed that the document was public, that the scanned document was illegible, and that it had the information we needed. But, citing its policy of not disclosing information on individual taxpayers, it would not tell us what the word was. (Messages left for the organization, TC4, weren't returned).

With few perceived consequences for their actions, newer groups with links to the original Crossroads-Center to Protect Patient Rights cohort began spending money in the 2012 elections. American Commitment, for instance, was started by Sean Noble, the head of CPPR. It spent nearly $2 million in four federal races last year, including the presidential contest. Americans for Responsible Leadership, which received grants from CPPR, is a post office box in Phoenix that helped funnel funds intended for a ballot initiative effort in California through several different nondisclosing groups. California election authorities called it "money laundering."

Ironically, the group told the IRS that one of its largest program areas includes lobbying for transparency -- for the government, that is. ARL spent $9.8 million in the 2012 elections at the federal level, all of it from undisclosed donors.

This year, nondisclosing groups waged an unprecedented attack not against a candidate for office, but a nominee up for Senate confirmation: Chuck Hagel. Several groups, most notably SecureAmericaNow.Org -- the head of which is also on the board of the Republican Jewish Coalition -- ran a barrage of ads opposing his nomination to be Secretary of Defense. Other groups involved in the onslaught included the American Future Fund (a member of the Crossroads-CPPR network), the Emergency Committee for Israel and the Log Cabin Republicans.

That effort ultimately failed, but could indicate a new willingness by 501(c)(4)s to become heavily involved in other kinds of fights during nonelection years.

Still, the pushback from watchdog groups continues. One group, Citizens for Responsibility and Ethics in Washington, is suing the agency over 501(c)(4) political activity.Two others, the Campaign Legal Center and Democracy 21, have sent the IRS multiple petitions for rulemaking on the issue as well as requests that the IRS investigate whether groups such as Crossroads GPS have crossed the line. They've received just one short response from the agency, which said, in part, "These regulations have been in place since 1959. We will consider proposed changes in this area as we work with [high-ranking Treasury and IRS officials] to identify tax issues that should be addressed through regulations and other published guidance."

Levin is planning Senate hearings on the topic within the next few months.

And there is the possibility that government officials are quietly on the case. The IRS recently sent out more than 1,300 questionaires to organizations that operate as 501(c)(4)s without seeking IRS permission. The questions focus particularly on political activity by the groups.

At a congressional hearing last week, Mythili Raman, an official in the Justice Department's criminal division said that, "Without discussing ongoing investigations, I can tell you that we are incredibly vigilant about the use of these organizations as an end run around contribution [disclosure]."

It's impossible to know how much substance is behind that statement.

**A note about unions

Some believe that labor unions are the left's equivalent to shadow money organizations on the right. They do indeed control significant amounts of money and contribute generously to politically active nonprofits. They differ in a few crucial ways, though. First, union membership is measured in the thousands or the millions, whereas many politically active nonprofits boast a member base that can be counted on one's fingers. One of the most politically active unions -- the Service Employees International Union -- had just under 1.9 million members in 2012. The Center to Protect Patient Rights has only two board members, and it had no employees and no volunteers in 2011, according to its IRS report.

Maybe more importantly, unions already have to file more timely reports -- with the Department of Labor -- than the (c)(4) groups that file only with the IRS. Those reports are due just a few months after the end of the unions' fiscal year, and they contain much more detailed financial breakdowns than do a social welfare or trade association's filings with the IRS. For example, we know that SEIU paid InvestorTools Inc. $29,700 for consulting in 2012. We'd never know that for a 501(c)(4) filing with the IRS: First, we don't have any 2012 information on those groups yet, and second, they're required to report only the contractors to whom they paid more than $100,000 -- and even then, only their top five.

The sources of funding for these groups are fundamentally different, as well. Unions have many dues-paying members. Dividing SEIU's total 2012 receipts by its membership comes out to $219 per member. If that amount were given to a candidate, it would just barely qualify as a contribution that had to be disclosed to the FEC. SEIU's super PAC, too, raised all of its more than $16 million from donors of $!,000 or less. [ Compare that to the complete lack of disclosure of who is behind groups like Crossroads GPS, Patriot Majority, and any number of the other big spenders in the 2012 cycle. Sometimes we get a peek at the number of donors -- never their names -- to those organizations: Crossroads' first Schedule B shows that all their $48.4 million in revenue came from 64 donors. The top 15 donors all gave $1 million or more, and their contributions alone total more than $38 million -- 79 percent of Crossroads GPS' total revenue.

***A note about us: While we repeatedly note in this report that 501(c)(4) groups aren't required to disclose their donors publicly, CRP has been able to identify some of them by combing through hundreds of IRS form 990 tax filings and searching for grants given from one group to another (the organizations don't reveal who they received money from, but they must identify grants they gave to other groups). We hand-key our findings into our database (there is no searchable, downloadable source for the information, which the IRS doesn't require filers to send electronically). We have included our findings on our website,, on the pages pertaining to the groups in question.

Photo of Sen. Orrin Hatch; photo of Secretary Chuck Hagel via Flickr user Secretary of Defense; photo of Sen. Carl Levin via

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