Category Archives: 501(c)4 groups

Montana, WTP, and the Supreme Court: A Tale of Irony — Part 2

by Kellye

In Part 1 on this subject (here), the history behind Montana’s Corrupt Practices Act, which made corporate contributions in state elections illegal, and the Montana Supreme Court case involving Western Tradition Partnership (WTP), which upheld Montana’s Corrupt Practices Act, are discussed.

Since the decision of the Montana Supreme Court contradicted the Citizens United ruling, WTP (now American Tradition Partnership, Inc. or ATP) appealed the decision to the U.S. Supreme Court. On June 25, 2012, the Supreme Court ruled in American Tradition Partnership, Inc., v. Bullock, via a per curiam opinion (without hearing testimony) that the state of Montana had to accept the Citizens United decision. In Citizens United, the Supreme Court majority said that there was no evidence of anything corrupting about independent spending. In the absence of evidence that WTP was coordinating with the candidates, there was nothing that Montana could do.

But here is where the irony comes into play, in the form of boxes found in a Colorado meth house. Continue reading


Montana, WTP, and the Supreme Court: A Tale of Irony – Part 1

by Kellye

This blog is about big money in politics and the corruption that follows it. Citizens for Truth was started as a result of the U.S. Supreme Court’s Citizens United decision in 2010. This ruling effectively removed limits on the amount of money corporations and unions can spend in elections. The only requirement is that the expenditures must be independent of the candidate’s own campaign — there can be no coordination or other collaboration between the candidate or political party and the outside group.

Since that decision, the number of outside groups has increased exponentially. Each election seems to involve more money than the one before it. National elections, but also state and local, are heavily influenced by big money donors. It is often the case that big money donors in state and local elections don’t even live in the state, let alone the local areas. As a result, outside groups, along with their corporate and out-of-state donors, are calling the shots in state and local elections, not the people who actually live there. The two primary types of big money outside groups are SuperPACS and 501(c)4 “social welfare” organizations (for more information see these posts: 501(c)4sPACs, SuperPACS, 501(c)4s).

The key difference between these two groups is disclosure. SuperPACs are required to disclose donations, while 501(c)4s are not. The latter is often referred to as “dark money.”

Let’s switch gears for a moment and discuss Montana’s importance in campaign finance. Continue reading

Will Proposed IRS Rules for 501(c)4 Groups Really Make a Difference?

On the Tuesday before Thanksgiving, a joint press release from the Treasury Department and the Internal Revenue Service revealed that they are proposing new standards for 501(c)4 organizations. This move comes after accusations in the spring of 2013 that the IRS was unfairly targeting Tea Party nonprofits for audits of their political activity.

The rules for 501(c)4 “social welfare” organizations have long been nebulous. It is clear that they can only retain their tax-exempt status under certain conditions, and that they are intended to work for the “common good,” not for specific political parties or candidates. The current Tax Code states, “To be operated exclusively to promote social welfare, an organization must operate primarily to further the common good and general welfare of the people of the community (such as by bringing about civic betterment and social improvements).”

But the language of the rules — working primarily for social welfare — has never been adequately defined.   Continue reading

The Real Story Behind 501(c)(4)s and 527s – Part II

by Kellye

In an update to the previous post (Part 1), Representative Chris Van Hollen of Maryland filed a lawsuit last week on August 21 against the U.S. Treasury Department.  This lawsuit would force the IRS to change its criteria for approval of organizations desiring 501(c)(4) status to what Congress had intended when it created that status and to enforce the law as written (click here for article). Specifically, an organization desiring 501(c)(4) status must be “operated exclusively for the promotion of public welfare.” Congress never intended section 501(c)(4) to be used by political groups to gain tax-exempt status.

After Congress decided to reform campaign finance in the early 1970’s with the passage of the Federal Election Campaign Act (FECA) and its amendments, Congress created section 527 of the IRS tax code to deal with political groups in 1975. This section of the code has its own set of rules in qualifying for tax-exempt status. Political committees (Republican National Committee, Democratic National Committee, and all the various Senate and House fund-raising committees), PACs and Super PACs fall into the 527 category. These groups are regulated by the Federal Election Commission (FEC) because their purpose is political. Continue reading

The Real Story Behind 501(c)(4)s and 527s — Part I

by Kellye

Due to the current IRS controversy, 501(c)(4) groups have become a topic of conversation in the media again. What exactly is a 501(c)(4) organization? How does it differ from other 501(c) organizations, in particular, a 501(c)(3) charitable organization? How does it differ from a political 527 organization?

The original intent of the tax law that Congress passed that was incorporated into section 501(c) of the IRS code over 75 years ago was to give federal tax-exempt status to non-profit organizations which weren’t political groups. In particular, the law stated that organizations desiring 501(c)(4) status had to be “operated exclusively for the promotion of public welfare.” However, in 1959 the IRS decided to loosen this requirement (without the consent of Congress) and allow 501(c)(4) groups to engage in political activity, as long as that political activity wasn’t the group’s primary purpose. Many of these 501(c)(4) groups became political in the 1960s not long after the IRS made that decision. Continue reading

Big Money in Education Part IV

by Anita

About a year ago I met a young woman who had attended a for-profit culinary school (for -profit schools are very expensive). She had been living at home with her parents while attending the school. When her father lost his job and had to move the family out of state in order to find work, she did not have the resources to stay behind and finish culinary school. Without completing her course of study, she couldn’t get a job at a real restaurant; instead, she ended up working in fast food. She cried as she told of the burden of the heavy debt and wondered how she would ever be able to pay her loans back considering her low income.

Her story was my introduction to the potential problems of for-profit schools. However, as I found out, she is not alone in her debt problem. Many young people (and some older, as well) have taken on large amounts of debt in order to attend college and improve their chances of getting a good job. Continue reading

PACs, Super PACs, and 501(c)4s

A group of people, such as a business, labor union, or ideological group, may create a PAC to raise and disburse voluntary donations directly to a political party or a political candidate’ s campaign. For example, PACs have been created by many corporations, unions, and special interest groups, such as the National Association of Realtors, AT&T, ExxonMobil, Sierra Club, Transport Workers Union, National Rifle Association, and Washington Women for Choice.

In 1944, the Congress of Industrial Organizations established the first PAC in response to the Smith-Connally Act of 1943 which disallowed contributions to federal political campaigns from union treasuries. The Federal Election Campaign Act Amendments (1974) set limits on donations to federal PACs, as well as spending limits which were later repealed (Buckley v. Valeo, 1976). Since the 1970s, campaign finance law has continued to evolve.

PACs are one of four sources of funds for candidates seeking federal office (the other three sources are individual donors,  political parties, and the candidate’s own money).   Continue reading