The IRS should investigate Advancing Freedom Inc. for apparently violating its tax-exempt status by spending a majority of its budget to influence elections, according to a complaint filed today by Citizens for Responsibility and Ethics in Washington. Advancing Freedom’s political spending accounted for over 74 percent of its total expenditures.
During its 2019 tax year, Advancing Freedom spent more than $150,000 of its $202,000 total spending on independent expenditures in the Phoenix mayoral election. It also falsely represented on its 2019 tax return that it did not engage in any political activities and failed to properly disclose all of its political expenditures in the Phoenix election to the IRS. As a result of its spending, political activity appears to be Advancing Freedom’s primary activity, a violation of its tax-exempt status.
“Based on what we know about Advancing Freedom’s activities, it is clear their behavior puts them squarely in violation of the law and their tax-exempt status,” said CREW President Noah Bookbinder. “We urge the IRS to open an investigation into Advancing Freedom and respond appropriately to ensure accountability for any potential violations.”
In March 2019, the group paid for eight independent expenditures, all of which either supported Phoenix mayoral candidate Daniel Valenzuela or opposed his opponent, Kate Gallego. Advancing Freedom’s newspaper ads, mailings and digital ads ran politically charged messages, including those that encouraged voters to support Valenzuela while criticizing Gallego’s policy positions.
Advancing Freedom is a section 501(c)(4) social welfare organization established in Oklahoma in May 2014. Tax-exempt organizations like Advancing Freedom may participate in elections, but they must report information about their political campaign activity to the IRS and cannot have influencing elections as their primary activity. The IRS defines political campaign activities as “[a]ll activities that support or oppose candidates for elective federal, state, or local public office.” Advertisements that explicitly advocate the election or defeat of an individual to public office are unquestionably political campaign activity.
“For far too long, dark money groups have unfairly interfered in our electoral systems, which undermines the public’s faith in our elections,” said Bookbinder. “It’s time for the IRS to step up its enforcement of these laws and hold these dark money groups accountable.”