Washington, D.C.—Citizens for Responsibility and Ethics in Washington (CREW) today called on the Federal Election Commission (FEC) and the Internal Revenue Service (IRS) to investigate whether New Models, a section 501(c)(4) non-profit group, violated tax and campaign finance laws. New Models spent nearly 70 percent of its funds in 2012 on contributions to super PACS and other political organizations, violating the group’s tax-exempt status. It also failed to register as a political committee and file required disclosure reports with the FEC.
“New Models is clearly abusing its non-profit status to play politics. The group says it exists to do issue and opinion research, but the fact that it spent 70 percent of its 2012 budget on politics proves that’s untrue,” CREW Executive Director Melanie Sloan said.
New Models reported spending $4,506,176 in its 2012 tax filings. During the same period, the group contributed $3,132,500 to other organizations for political activities – 69.5 percent of its total spending - including $2.17 million to Now or Never PAC, and $627,000 to the Government Integrity Fund Action Network, federal super PACs that spent millions opposing Democratic candidates for Congress and supporting Republicans.
The tax code provides a tax exemption for groups “operated exclusively for the promotion of social welfare,” but the IRS has misinterpreted the statute to allow organizations to spend 49 percent of their budget on politics. Even under this incorrect interpretation, New Models clearly exceeded limits on political spending for social welfare organizations. In addition, groups whose major purpose is political activity must register as political committee with the FEC and file reports disclosing their donors. New Models failed to do either.
“This is a group that helped pioneer the practice of ‘dead end disclosure’; it seems to exist mostly to allow anonymous donors to secretly funnel money to political groups. New Models’ 2012 activities show it’s escalating its activities far outside of the law, and the FEC and IRS need to take immediate, vigorous action to rein it in,” Ms. Sloan added.
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