Pressure group letter to IRS on Crossroads GPS misstates the law, is inappropriate

Democracy 21, Campaign Legal Center improperly treats rejected staff analysis as authoritative guidance

For Release: May 21, 2014    Contact: Joe Trotter    Phone: 210-352-0055 (Cell)

Alexandria, VA – In a letter to the Internal Revenue Service sent today, the Center for Competitive Politics (CCP) criticized a recent letter sent jointly by Democracy 21 and the Campaign Legal Center (CLC) urging the IRS to deny tax-exempt status as a social welfare group to Crossroads GPS.

CCP Legal Director Allen Dickerson writes that the two groups misinterpreted the Federal Election Commission’s response to a complaint filed against Crossroads GPS:

“The CLC-Democracy 21 letter argues that the [FEC] General Counsel’s Report “confirms [the CLC-Democracy 21] position that Crossroads GPS is a political group, not a ‘social welfare’ organization.” But the Report does no such thing. It is merely a staff report that suggests there is sufficient reason to believe that Crossroads GPS may be inappropriately operating as a political action committee (PAC) to justify opening an investigation. The Report certainly arrives at no legal conclusion that Crossroads GPS is a political committee—and under federal law, the Office of General Counsel (OGC) could not have done so in any event.”

The letter further explains that the FEC did not even find reason to believe that Crossroads GPS had broken the law:

“Furthermore, as the FEC itself has noted, “[a] ‘reason to believe’ finding is not a finding that the respondent violated the Act, but instead simply means that the Commission believes a violation may have occurred.”  Here, the Commission did otherwise, declining to find reason to believe that Crossroads GPS was violating the law…

“To be blunt, the First General Counsel’s Report carries no legal authority. It is a staff document whose conclusions were, as a formal matter, rejected by the FEC. The controlling view of the Commission specifically disclaimed the legal theory upon which Democracy 21 and CLC rely in their May 6 letter.”

 The two groups have written to the IRS eleven times since October 2010 urging that Crossroads GPS be denied tax-exempt status.   Dickerson’s letter also said “CCP takes no position on the granting or denial of tax-exempt status to any particular organization, nor do we think it appropriate for us, or others, to do so here.”

Dickerson’s letter concludes:

“The IRS should decline to entertain CLC and Democracy 21’s invitation to become a regulator of last resort when the FEC fails to regulate speech and association in the manner some would prefer. And the Service certainly should not rely upon the rhetoric-laden legal argument advanced in the CLC-Democracy 21 letter, an argument that improperly treats rejected staff analysis as authoritative guidance.”

The complete text of the CCP letter is available here.

About the Center for Competitive Politics

The Center for Competitive Politics is one of the nation’s premier centers of public interest litigation. It is the only public interest law firm with in-house litigation staff solely focused on the defense of First Amendment rights to free political speech, assembly and petition. CCP was co-counsel in SpeechNow.org v. Federal Election Commission, which held that there can be no limits on contributions to independent expenditure committees. This case created what is now known as Super PACs. CCP’s amicus brief was cited in the majority opinion in the Citizens United case.

IRS Letter May 21st

 

The Center for Competitive Politics is now the Institute for Free Speech.