1. The IRS bureaucrat who could upend the campaign finance money flow:
As this article in Roll Call, the Washington weekly, reports, there is increasing controversy surrounding super PAC-like groups that fashion themselves as coming under the Internal Revenue Service’s 501(c)(4) classification as a “social welfare organization.” Under IRS rules, 501(c)(4)’s are not only tax-exempt but also don’t have to disclose their donors. This means that they can spend unlimited sums on political advertising – including corporate contributions, following the Citizens United decision – but unlike super PACs, they can do so while keeping the sources of the money completely secret.
That’s why many of the big super PACS, such as Karl Rove’s American Crossroads – which are simply non-profits that engage fully and unabashedly in political activity but must disclose donors – operate companion 501(c)(4)’s that can take undisclosed donations. In the case of Rove’s super PAC, the companion 501(c)(4) is called Crossroads GPS.
The sole catch is that under the IRS rules, a 501(c)(4) can only spend money on political activities so long as that is not its “primary activity.”
Ads paid for by a 501(c)(4) can advocate political positions. Thus, there have been Crossroads GPS TV ads that declare, “Tell Obama: Stop the spending. Support the New Majority Agenda,” and “Senator Claire McCaskill was a key Obama adviser in passing his failed $1.18 trillion stimulus.” But these ads cannot directly urge that someone be elected or not elected. And, again, even this slightly tailored political advocacy cannot be the group’s “primary activity,” which is supposed to be “social welfare.” In fact, the IRS regulations specifically state that “the promotion of social welfare does not include the direct or indirect participation or intervention in political campaigns on behalf of or in opposition to any candidate for public office.”