Washington, D.C. — Today, Citizens for Responsibility and Ethics in Washington (CREW) called for the Internal Revenue Service (IRS) to investigate whether the Kentucky Opportunity Coalition (KOC) violated tax laws. KOC spent nearly all of its money in 2013 and 2014 on advertisements that either directly supported the reelection of Sen. Mitch McConnell (R-KY) or heaped praise on him in a transparent attempt to boost his political advancement and agenda. Under tax law, the activities of a section 501(c)(4) organization like KOC may not primarily benefit the private interests of a single politician.
“KOC is something new, dangerous, and illegal — a dark money group that operates almost entirely for the private benefit and political advancement of a single well-financed candidate,” said CREW Executive Director Melanie Sloan. “It makes a mockery of a law that is supposed to promote social good, not get a particular politician reelected.”
An activity provides a “private benefit” if it advances the interests of particular individuals or groups, rather than the community as a whole. The law allows section 501(c)(4) organizations to engage in some amount of activities that provide a private benefit, but overall its activities must primarily benefit the entire community. Explicit political ads clearly provide a private benefit to supported candidates. Supposed “issue ads” that laud candidates but stop short of calling for their election also can provide a private benefit to those candidates. In particular, when those allegedly educational ads do nothing more than promote a single politician’s agenda, platforms, and political objectives, the organization provides the politician a private benefit.
By spending at least $13.4 million on ads that privately benefitted Sen. McConnell but little money on anything else, KOC impermissibly made Sen. McConnell’s benefit its primary activity and violated its tax-exempt status. KOC reported spending more than $7.5 million in 2014 on advertisements urging voters to reelect Sen. McConnell or vote against his opponent, Kentucky Secretary of State Alison Lundergan Grimes. KOC further acknowledged spending at least $5.86 million on ads ardently hailing Sen. McConnell and his agenda, most of it within a few months of the election.
“KOC is nothing more than a sham, and we can expect a wave of similar groups following its bad example,” Sloan continued. “The IRS needs to take quick and decisive action to stop KOC’s blatant violations of tax law and head off others from copying it.”