November 2008 may seem to be a long way off, but in the current reality of political campaigns, the presidential election is right around the corner, and the campaigns are not the only entities actively involved. Recent complaints filed with the Internal Revenue Service (IRS) and the Federal Election Commission (FEC) challenge the activities of two nonprofits, Priests for Life and Americans for Job Security.

 Priests for Life

Catholics for a Free Choice (CFFC) has filed a complaint with the IRS against the group Priests for Life, claiming that Priests for Life has engaged in prohibited campaign intervention in violation of its 501(c)(3) tax-exempt status. CFFC's complaint focuses on two videos on the Priests for Life website that implicitly support the presidential campaign of Sen. Sam Brownback (R-KS). The videos show Brownback giving a speech and display supporters holding up signs that say "Brownback For President." This is the third complaint CFFC has filed against Priests for Life. In October 2004, CFFC cited Priests for Life's heavy involvement in electoral activities supporting Republican candidates.

Americans for Job Security

On April 11, Public Citizen, a national advocacy organization, filed a complaint with both the IRS and the FEC against the business trade association Americans for Job Security (AJS). Public Citizen charged that AJS violated federal election law and its tax-exempt status as a 501(c)(6) trade association. Trade associations are barred from conducting activities that seek to influence elections as their primary purpose. After analyzing television and radio broadcasts, Public Citizen determined that the primary purpose of AJS is to influence elections. "The fact that AJS's advocacy communications were intended to influence elections combined with the organization's representation that it invested the vast majority of its resources on advertisements leads to the inescapable conclusion that the group was primarily engaged in influencing elections in the years covered in this complaint."

Public Citizen used the IRS 11-point test from IRS Rev. Rule 2004-6 to determine whether ads should be considered either electioneering or issue-advocacy messages. They also analyzed 32 transcripts of AJS messages, finding that each satisfied the criteria for "electioneering." The complaint said, "Every single one — 32 out of 32 — of AJS's communications analyzed in this complaint satisfied a clear majority of the factors in favor of a communication being deemed an exempt function under Section 527(e)(2) and each satisfied only a slim minority, if any, of the factors pointing against a communication being deemed an exempt function under the section."

As a result, Public Citizen said the group is not eligible for 501(c) nonprofit tax status and should instead be required to register as a political committee under federal campaign finance law and be subject to its disclosure requirements and contribution limits. In addition, Public Citizen also asks the IRS to collect back taxes for AJS's undeclared electioneering activities and require it to pay penalties for violating its tax-exempt status.

According to a recent report issued by the Campaign Finance Institute (CFI), "Soft Money in the 2006 Election and the Outlook for 2008 The Changing Nonprofits Landscape," in 2006, AJS spent about $1.5 million for ads favoring former Sen. Rick Santorum (R-PA).

This is not the first time AJS has seen such scrutiny. In October 2004, Citizens for Responsibility and Ethics in Washington (CREW) filed a complaint with the IRS against the group with the same charges. And according to a March 2005 New York Times article, AJS "ran more than 5,000 television advertisements in at least five states last year [2004], all without having to disclose the source of its money." As a 501(c)(6), AJS is not required to reveal its donors, assuming it is engaged in public policy advocacy activity.

The electioneering activity of 501(c) groups such as AJS showed others an opportunity to avoid campaign finance disclosure. The Public Citizen press release highlights a recent announcement that Club for Growth intends to establish a 501(c)(4) organization in light of recent scrutiny on its 527. According to an article in Roll Call, (subscription required) Club for Growth president, former Rep. Pat Toomey (R-PA), told its members that a "reorganized tax status will alter little of the group's focus on 'promoting economic freedom,' but also will allow unlimited anonymous donations from individuals and allow the group to take part in a variety of new lobbying activities. Club directors also reconfigured its political action committee, which it can use to channel hard-dollar donations to candidates." However, 501(c)(4) tax status does not eliminate all chances of running into trouble with the FEC. For example, if a group engages in prohibited political activities such as running an ad that "expressly advocates" the election or defeat of a candidate, it would run afoul of FEC rules.