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Democracy21 asks IRS to Investigate Americans Elect for Corporate Code Violations

Why has the presidential-nominating corporation called Americans Elect been insisting again and again in public that it is not a political party, while in private it has quietly acknowledged that it is indeed a political party, and not just a state political party but a “national party”?

Today we finally got an answer from documents filed by Democracy21, an organization working “to eliminate the undue influence of big money in American politics”:

American Elect is not only devoted to intervening in the 2012 elections, it is actually qualifying itself as a political party for purposes of state ballot access laws. A political party is not eligible to qualify as a section 501(c)(4) tax exempt organization.

But Americans Elect has indeed registered as a 501c4 corporation — and admits its reason for doing so is to hide the names of its big money funders from public view. If Democracy21 is correct (as a subsequent IRS investigation of Americans Elect will show), Americans Elect is simultaneously violating corporate codes and political ethics.

One document that would help clear all this up would be Americans Elect’s application for tax-exempt status as a 501c4 corporation. The federal government requires corporations organized under section 501(c) of the IRS code to make Form 1023/1024, the organization’s application for tax-exempt status (and any letter or other documentation accompanying the organization’s application for tax-exempt status) available upon request within 30 days. That application would contain Americans Elect’s rationale for its qualification as a 501c4 corporation. Given Democracy21’s claims, finding out Americans Elect’s stated rationale for its privileged and secretive status becomes even more important.

I have repeatedly made official requests for just such Form 1023/1024 documents and accompanying letters to Americans Elect over the course of the past nine months. Since April of 2011, I have been posting copies of these requests online to make a record. Americans Elect Chief Technology Officer Joshua Levine has personally received these requests. They have gone unanswered, despite the expiration of the 30-day mandated period for compliance. Given the new relevance of Americans Elect’s secret and undisclosed application to the IRS for tax-exempt status, the release of these documents you and I have a right to see becomes all the more important. Every day, Americans Elect’s silence on this and related matters grows louder.

Read the full Democracy21 letter here.

4 thoughts on “Democracy21 asks IRS to Investigate Americans Elect for Corporate Code Violations”

  1. Jeff Taxdahl says:

    This definitely seems a little bit suspicious… The real question is, why are they allowed to continue this way? Obviously they haven’t complied with requests for documentation. Companies, parties, and other organizations should always make an effort to follow all laws or regulations and supply all required paperwork when asked to do so.

  2. Tom says:

    Jeff – that’s the way it USED to be: there used to be laws that were enforced and regulations that had to be followed, but see, ever since they stopped using the Constitution as the foundation of our government, the machinery of said government has been co-opted by special interest groups and corporations with deep pockets buying our representatives (by funding their re-election campaigns, for example) to such an extent that now we have a faux democracy in which its citizens have no real representation or power to change anything affecting them in the political arena.

    It used to be a given that our reps and senators would listen to us via e-mails, petitions, letters, etc. but now they only listen to corporate lobbyists with wheelbarrows of cash going into their “war chests” in exchange for votes in the legislature. Our form of government is corrupted beyond repair now and it looks like people are finally beginning to push back via these occupations of cities (many unemployed are showing up for extended stays). We’ll see if the people are successful, or like Syria, our government turns to the police, homeland security and the FBI, CIA and NSA to keep us down.

  3. Tom says:

    Like this example (one of many in various governmental positions from NASA to the EPA, “our” watchdog agencies have been railroaded, compromised, and often the head position goes to someone from the private sector in direct conflict with the agenda of the agency):

  4. Lee Mortimer says:

    I decided to see for myself what’s in Democracy21’s letter to the IRS. The first thing I discovered is that Democracy21 is asking that four organizations be reviewed for 501(c)(4) compliance. From Jim’s post, one might have gotten the impression that Democracy21’s is directing all of its fire at Americans Elect. The other three organizations are Crossroads GPS, American Action Network, and Priorities USA.

    Crossroads GPS is a notorious Karl Rove-inspired attack-ad campaign active in the 2010 Congressional elections. Americans Action Network is a sort of “little brother” to Crossroads GPS that also raised and spent money in 2010 House and Senate races. Priorities USA is described as “mimicking the structure and function of Crossroads GPS” and is working for President Obama’s re-election. Money those groups are raising far exceeds the $20-$30 million AE has collected for its national ballot access campaign.

    The thrust of the Democracy21 letter is “advocacy communications” in election campaigns. The “facts and circumstances” used by the IRS to determine if an expenditure qualifies for 501(c)(4) status consists of six factors. All six relate to “communication” in influencing how voters view specific candidates or issues during an election. Democracy21’s focus appears to be more on how voters are influenced in their election choices and less on what a ballot access effort might lead to. The letter expended twice as much ink on each of the other three organizations as it did to discuss Americans Elect.

    So, while Americans Elect is a part of Democracy21’s review request, it does not appear to be the principal focus. In any case, it will be the IRS–not Democracy21–that determines whether Americans Elect meets the standard and is complying with the rules for 501(c)(4) status. It’s my understanding that AE had already secured a favorable court decision before it transitioned from 527 status to a 501(c)(4).

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