Legal Filings

Legal Filings
May 23, 2011

CREW Files IRS and FEC Complaints Against Commission on Hope, Growth and Opportunity

IRS LogoWashington, D.C. –Today, Citizens for Responsibility and Ethics in Washington (CREW) called for the Internal Revenue Service (IRS) and the Federal Election Commission (FEC) to investigate whether the Commission on Hope, Growth and Opportunity (CHGO) violated tax and campaign finance laws. CHGO spent millions of dollars on political ads during the 2010 mid-term elections in violation of its 501(c)(4) tax status, and failed to file any required disclosure reports with the FEC.

“CHGO spent millions of dollars on the 2010 elections, entirely disregarding the law,” said CREW Executive Director Melanie Sloan. “CHGO misled the IRS about its plans to obtain favorable tax status and then violated the law governing c4s by doing little or nothing other than running ads advocating the defeat of Democratic House members.  On top of that, CHGO also ignored the law requiring it to report what it spent on political ads to the FEC.  While there is nothing wrong with working to elect Republicans, you can’t violate the law to do it.”

According to an application submitted under penalty of perjury to the IRS in July 2010, CHGO claimed it had no plans to spend any money on elections.  Yet only two weeks after the IRS granted CHGO tax-exempt status, the group’s founder, GOP consultant and lobbyist Scott Reed, said the organization planned to spend $25 million on political ads, and that it had already raised half that.  Soon after, CHGO’s attack ads hit the airwaves.  Click see the ads.

As a 501(c)(4) organization, CHGO is barred from making political campaign activity its primary focus.  “For CHGO to tell the IRS it would not participate in the election, but weeks later, turn around and brag about its plans to spend $25 million on campaign ads suggests the group deliberately lied to the IRS,” said Ms. Sloan. 

By law, groups that spend more than $10,000 on independent expenditures or electioneering communications (ads that mention a candidate by name close to an election) must promptly disclose their spending to the FEC.  While CHGO exceeded the spending trigger in at least 12 races, it failed to file any reports with the FEC even after the Democratic Congressional Campaign Committee filed a complaint with the FEC in early October 2010.  By deliberately failing to comply with the reporting requirements, CHGO may be subject to criminal penalties as well as fines.

Sloan continued, “If the IRS and the FEC have any interest in seeing compliance with even the feeble laws still governing political activity, they must take strong action against the sort of deliberate violations in which CHGO has engaged.”

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