IRS Sued Over Dark Money In Illinois Congressional Race

david gill David Gill on the campaign trail in Champaign, IL // credit: illelections.com[/caption]

One of the closest U.S. House races in the country was in Illinois’ 13th Congressional District. Republican Rodney Davis narrowly beat Democratic challenger David Gill by only 1,300 votes. Less than one percent of the electorate decided the election.

In the wake of Dr. Gill’s defeat, Friends of David Gill in partnership with the Citizens for Responsibility and Ethics in Washington (CREW) and the doctor himself are suing the Internal Revenue Service. Tweet at @CREWcrew:

The plaintiffs argue, “Dr. Gill was defeated by Rodney Davis due largely, if not exclusively, to the expenditure of money by the American Action Network (‘AAN’) in opposition to Dr. Gill’s candidacy.” Share the news:

The American Action Network is recognized by the IRS as a 501(c)4 non-profit ‘social welfare’ organization that “encourage[s] and promote[s] center-right policies based on the principles of freedom, limited government, American exceptionalism, and strong national security.”

The plaintiffs contend that this preferential tax treatment was the only reason the AAN was able to finance the attack ads that led to Gill’s defeat. From the filing:

“As a result of the large sums of money AAN spent on television advertisements and political robocalls advocating for the defeat of Dr. Gill, Friends of David Gill suffered economic harm when it was forced to spend campaign funds in an effort to counter the false and misleading advertisements funded by AAN”

Several attack ads were funded by the American Action Network. These ads asserted that he advocated eliminating medicare and contained lines like, “David Gill loves seeing your money fly away,” a charge that was classified as ‘Pants On Fire’ by Politifact when the National Republican Congressional Committee made the same accusation.

Even ‘social welfare’ groups are allowed to expressly advocate, but the IRS does not strictly define to what extent, only that they are to be dedicated ‘primarily’ to promoting social welfare.

The limit is typically thought to be — at maximum — 50 percent of organization funds dedicated to advocacy. Yet, both the Federal Elections Commission and the IRS have failed to prosecute

Similar concerns were raised concerning the American Future Fund earlier this year.

According to the Center for Responsive Politics, more than 90 percent of AAN expenditures in the 2012 election cycle went towards express advocacy against Democrats. Tweet stat:

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credit: Center For Responsive Politics

AAN tax filings from 2010, released by ProPublica, state:

“The Network will adopt appropriate internal controls to ensure that, to the extent that the Network’s activities impact specific political candidates in ways that would be classified as political campaign intervention under federal tax law, such candidate-related activity remain a minor activity and does not become its primary activity. Although the amount of such activities may vary from year to year, on average, the Network expects that such activities will be 20% or less of its activities.”

Given the opacity of current regulations governing political spending by 501(c)4 organizations, the IRS may get a pass in court. Nevertheless, since the suit also takes issue with the IRS’s existing use of ‘primarily’ to determine acceptable election spending limits, a revision in the tax code could follow.