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CREW: Senate Finance Committee Should Investigate Groups Influencing Elections

Washington, D.C. - With airwaves across the country flooded with political advertisements, today Citizens for Responsibility and Ethics in Washington (CREW) sent a letter to Senator Max Baucus requesting he and the Senate Finance Committee investigate how so many 501(c)(4) groups seem to be circumventing tax law in an attempt to influence the upcoming elections.

Senator Baucus himself has already recognized the potential problem, asking for the Internal Revenue Service (IRS) to investigate.

"Senator Baucus has correctly identified the gaping hole in our tax code that allows these faux tax-exempt groups to circumvent the law thanks to the flawed Citizens United decision," said Melanie Sloan, CREW Executive Director. "Yet, as Chairman of the Finance Committee, Senator Baucus can do something about this. He does not need to punt the matter to the IRS; rather, the Finance Committee can and should immediately begin its own investigation. The committee has the jurisdiction and authority to subpoena witnesses and documents to get a handle on the extent of the abuse of the tax code and begin working towards a legislative solution."

Americans are being bombarded with advertisements by shadowy groups. Citizens for a Working America, for example, recently sprouted up with an ad attacking Congressman John Spratt (D-SC). The group claims 501(c)(4) status, and as such, does not have to disclose its donors. Under the tax code, however, a 501(c)(4) organization's primary work must be devoted to advancing issues, not solely influencing elections. As a result, it is hard to see how this group qualifies as a 501(c)(4).

More brazenly, GOP leader Karl Rove has promised to drop more than $50 million into election ads through his two groups: American Crossroads and American Crossroads GPS, the latter of which is a 501(c)(4) group. Just yesterday the groups announced a $4.2 million ad buy in eight targeted senate races. To date, they have spent about $18 million, most of it on television ads.

"Although Republicans seem to be more adept at taking advantage of this hole in the tax code this election cycle, this not about politics, but about tactics," said Sloan. "To put these ads into proper perspective, the American people need to know the true identities of those behind them. The Senate Finance Committee has spent a lot of time considering whether 501(c)(3) organizations have abused their tax status, it is time to turn their attention to the 501(c)(4)s."