A group of progressive ministers from Ohio along with prominent tax attorney Marcus Owens have sent a formal complaint about the tax exempt status of the American Legislative Exchange Council (ALEC) claiming that their activities do not align with this tax status.
ALEC claims to be bipartisan and educational in nature but with a board made up of 23 Republican state legislators and a website that boasts a history of crafting “close to 1,000 bills introduced by state lawmakers,” the organization is having trouble defending its record as a merely “educational” outfit. ALEC is an established player in pushing the agendas of its corporate donors. According to Clergy Voice’s complaint:
In its complaint, Clergy VOICE says ALEC has “deliberately and repeatedly failed to comply with some of the most fundamental federal tax requirements applicable to public charities” and that evidence “quite strongly” suggests that the group is violating civil and criminal tax laws.
The clergy’s complaint goes beyond allegations of improper lobbying, claiming that ALEC exists for the “private benefit” of its members rather than for charitable, educational, or other exempt purposes that serve the public interest and deserve special tax treatment.
Clergy Voice, which has taken on the tax exempt status of organizations in the past, suggests that ALEC is a corporate-funded lobbying group thus violating IRS rules that govern 501(c)(3) nonprofit corporations. According to IRS code,
a 501(c)(3) organization “may not attempt to influence legislation as a substantial part of its activities and it may not participate in any campaign activity for or against political candidates.”
While the board is made up of state legislators it also has a private enterprise board which represents the group’s corporate donors:
GlaxoSmithKline, PhRMA, Pfizer, AT&T, Koch Companies Public Sector, Altria (formerly Philip Morris) Client Services, ExxonMobil, and State Farm Insurance. Legislators join for $50 per year while private sector members join for $7,000, $12,000, or $25,000 for the top-tier “Jefferson Club.”
The complaint also states that ALEC improperly provides benefits to lawmakers.
The complaint also said ALEC had improperly provided a benefit to lawmakers by creating “scholarships” under the control of the national headquarters that paid for the lawmakers’ attendance at meetings “held in luxury hotels, frequently in vacation-worthy destinations like San Diego, New Orleans and Scottsdale.” These include “perks such as meals, recreational activities, and subsidized childcare for legislators and their families” that are often not reported by the lawmakers on their state ethics disclosure forms, the complaint said.
“Meeting agendas include events like golf tournaments, open bar parties and baseball games—all subsidized directly or indirectly by ALEC’s corporate members,” the letter said, citing an estimate by ALEC that these benefits cost $1 million to $2 million each year.
The group now wants the IRS to investigate the tax status of the organization. As our political system becomes more and more infiltrated by dark money, the IRS is becoming the new-found weapon in the battle to save the electoral process from corporate overreach.