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Chamber of Commerce election spending omitted from taxes

Public Citizen yesterday sent a complaint to the Internal Revenue Service about undisclosed election-related spending by the U.S. Chamber of Commerce and its affiliated Institute for Legal Reform (ILR).

As 501(c) nonprofits, they may lobby and electioneer on a limited basis, but must pay taxes on the money spent doing so.  Together, they failed to report millions of apparent taxable expenditures from 2000 to 2004.

As one of the largest pro-corporate special interest groups, the Chamber brags about the millions it dishes out to fund attack ads and help elect business-friendly representatives, attorneys general and state supreme court justices.

Some examples:  In 2000, $6 million was spent on judicial races and the Chamber took credit for winning 15 out of 17 state supreme court races.  In 2002, $40 million was spent on congressional, state-level attnorneys general and judicial races.

None of this was reported to the IRS.

What’s more egregious is that at least two 501(c) groups, the American Taxpayers Alliance and Citizens for a Strong Ohio, reported receiving contributions from the U.S. Chamber.  Yet, the Chamber failed to report grants or allocations to outside groups as required on its tax forms.

In 2004, the Chamber and ILR began reporting some political expenditures ($18 million for that year), but much less than they otherwise bragged about spending.  In a "President’s Update" memo to the Board of Directors of the Chamber, Thomas Donahue claimed the amount spent was closer to $30 million.  Of that, we know $1 million was spent to defeat ex-Sen. Tom Daschle’s (D-S.D.) re-election bid and $3 million was spent to oppose former Democratic vice presidential nominee, John Edwards.

Public Citizen also asked the IRS to investigate whether the Chamber and ILR, two separate legal entities, combined funds in a shared bank to avoid taxes.

To read the complaint and see their tax returns, click here.