Groups Send FEC General Counsel’s Report to IRS Finding  Major Purpose of Crossroads was Federal Campaign Activity

 Democracy 21, joined by the Campaign Legal Center, again urged the IRS to deny the application filed by Crossroads GPS for tax exempt status as a section 501(c)(4) “social welfare” organization.

According to the letter from the watchdog groups:

Crossroads GPS submitted an application for tax exemption under section 501(c)(4) of the Internal Revenue Code (IRC) in September 2010.  To the best of our knowledge, Crossroads GPS has been operating as a “social welfare” organization for more than three and a half years without being granted section 501(c)(4) tax-status by the IRS.

 We believe the record is clear, as we have stated in numerous letters to the IRS, that Crossroads GPS, which was founded by Republican operative Karl Rove, is a campaign operation formed to hide the donors who are financing the campaign expenditures the group makes.

The letter from the watchdog groups forwarded to the IRS a report issued by the General Counsel of the Federal Election Commission that, according to the groups, “concluded, consistent with what we have argued in our letters to the IRS, that Crossroads GPS has a major purpose to influence federal elections.”

According to Democracy 21 President Fred Wertheimer:

The report of the FEC General Counsel confirmed what we have documented in numerous letters to the IRS beginning on October 5, 2010 that Crossroads GPS is a campaign operation, not a 501(4)(c)“social welfare” organization.

Crossroads GPS has been masquerading as a “social welfare” organization for more than three and a half years to hide the donors financing their extensive federal campaign   activities.  The IRS has a responsibility to end the Crossroads GPS charade and should act promptly to deny 501(c)(4) tax status to Crossroads GPS.  The IRS must not allow Crossroads GPS for a third straight national election to improperly hide from the American people the donors financing its federal campaign activities.

The letter noted:

The General Counsel’s report was prepared following review of a complaint filed with the FEC alleging that Crossroads GPS had violated the campaign finance laws by failing to register and report as a “political committee” under the Federal Election Campaign Act, as well as review of information submitted by Crossroads GPS to the FEC in response to the complaint, and reports of political spending filed by Crossroads GPS with the FEC.

According to the letter, the General Counsel examined the campaign-related spending by Crossroads GPS in the 2010 election and concluded:

In short, taking into account all of its spending in 2010, Crossroads GPS appears to have spent approximately $20.8 million on the type of communications that the Commission considers to be federal campaign activity—approximately $15.4 million on express advocacy communications and $5.4 million on non-express advocacy communications that criticize or oppose a clearly identified federal candidate.  This total of $20.8 million represents approximately 53 percent of the $39.1 million Crossroads GPS reported spending during 2010.  Therefore, Crossroads GPS’s spending by itself shows that the group’s major purpose during 2010 was federal campaign activity (i.e., the nomination or election of a federal candidate.)

Report at 26-27 (emphasis added).

The letter from the watchdog groups noted that the FEC “by a divided 3-3 vote on December 3, 2013, did not adopt the General Counsel’s recommendation to find reason to believe Crossroads GPS had violated the law.  Under FEC precedents, a tie vote means the FEC itself takes no formal position, one way or the other, on the report.”

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