November 24, 2014 — 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.
An activity provides a “private benefit” if it advances the interests of particular individuals or groups, rather than the community as a whole. 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.