Recently, multiple news outlets reported on a new “dark money group” that is sending mail-in ballot applications to voters in Minnesota and Pennsylvania accompanied by an “election guide” framed to benefit President Trump and hurt his opponent, former Vice President Joe Biden. Little is known about the group, Common Sense Voters of America LLC, other than that it was established in Ohio in June by a law firm with ties to Kanye West’s effort to get on the Ohio ballot.
The stories generally refer to Common Sense Voters of America LLC as a nonprofit organization without specifying what type, suggesting that it is similar to other politically-active nonprofits that are typically organized as nonprofit corporations tax-exempt under section 501(c)(4) of the tax code. Since this type of tax-exempt organization can spend money on politics but is not required to disclose its donors, it is commonly used by anonymous donors to influence elections and is referred to as “dark money.”
But Common Sense Voters of America LLC is actually a different type of entity called a domestic nonprofit limited liability company (LLC) that provides even less information to the public about its activities. Since at least 2018, nonprofit LLCs have increasingly been used as a vehicle for anonymous political activity.
Common Sense Voters of America LLC registered as a nonprofit LLC with the Ohio Secretary of State on June 29, 2020. If it had filed as a domestic nonprofit corporation, as section 501(c)(4) organizations typically do in Ohio, it would have been required to provide more information, including a description of the organization’s purpose, to the Ohio Secretary of State.
More importantly, due to its formation as an LLC, Common Sense Voters of America LLC is unlikely to file a publicly available tax return with the Internal Revenue Service (IRS) that would provide additional transparency about its operations. As a nonprofit LLC, Common Sense Voters of America LLC can be reported to the IRS as a “disregarded entity” of another nonprofit, which means it can essentially be treated as a subsidiary and does not have to file its own tax return. Instead, disregarded entities are treated as part of the controlling organization for tax purposes and their information is included in the parent nonprofit’s tax return, known as a Form 990.
This is exactly what has happened with several nonprofit LLCs registered in Ohio in recent years that have engaged in the political arena. LZP, LLC, for instance, was formed in Ohio as a nonprofit LLC in March 2018. During the 2018 election, LZP, LLC completely funded a federal super PAC that ran ads opposing recently indicted and now-former Ohio House Speaker Larry Householder’s election. As CREW detailed in a conduit contribution complaint with the Federal Election Commission, little was known about LZP, LLC at the time.
It was only after another nonprofit, Independence and Freedom Network, filed its 2018 tax return in November 2019 that LZP, LLC was revealed as a related, subsidiary organization of the larger nonprofit. LZP, LLC’s super PAC contributions were reported to the IRS as though they came from Independence and Freedom Network itself. Beyond that, the only specific financial information included about LZP, LLC on the tax return was its total income and end-of-year assets.
CREW has identified the controlling nonprofits of two other nonprofit LLCs registered in 2018 by the same lawyer who registered LZP, LLC. Security is Strength, LLC, which has paid for Facebook ads promoting Sen. Lindsey Graham (R-SC), is a disregarded entity of a nonprofit called the Government Integrity Fund while Next Policies, LLC, which ran an issue ad in the 2018 Kansas gubernatorial election, is a disregarded entity of a nonprofit called A Public Voice, Inc.
But there are more politically-active nonprofit LLCs whose parent nonprofits are still unknown. In last year’s GOP gubernatorial primary in Louisiana, for instance, a nonprofit LLC registered in Ohio called Securing Louisiana’s Future, LLC gave $262,500 to a similarly-named super PAC that backed Rep. Ralph Abraham (R-LA) in the race. Another nonprofit LLC, Women’s Action Fund LLC, spent more than $22,000 attacking an Oregon state Senate candidate in 2018. More recently, Freedom and Liberty Fund, LLC, which formed in Ohio early this year, spent in an Oklahoma state Senate GOP primary this summer.
The same law firm that registered the group sending mailers in Pennsylvania and Minnesota, Common Sense Voters of America LLC, was also involved in the registration of another nonprofit LLC, South Carolina Conservatives Fund LLC, in Ohio in June 2020 that soon spent more than half a million dollars on TV ads targeting a South Carolina state senator in a primary race. Two months after the targeted senator won the primary South Carolina Conservatives Fund LLC filed dissolution paperwork to go out of business.
“For each of these entities, the normal tools that watchdog organizations and journalists use to discern details about dark money groups are not as useful.”
For each of these entities, the normal tools that watchdog organizations and journalists use to discern details about dark money groups are not as useful. Since they are likely subsidiaries of other nonprofits, information can’t be found by entering their names into the IRS’s Tax Exempt Organization Search tool or looking for them in the Exempt Organizations Business Master File Extract, which aggregates cumulative information about exempt organizations. It’s no use requesting the group’s tax return or tax-exempt application directly from the IRS either.
Eventually, the information will be discovered, but it is likely to be long after the money has been spent and votes have been cast. Even then, less will be known than if the nonprofit LLCs filed their own tax returns.
Unfortunately, even though there are occasionally positive developments in the fight for more transparency, political operatives and lawyers determined to influence politics while allowing anonymous donors to remain in the dark are hard at work finding new ways to avoid sunlight.