Sept. 6, 2012
On Pretense of Social Welfare Concerns, Bankers’ Key Lobbyists To Seek Special IRS Tax Status to Finance New Political Spending
501(c)(4) Status Has Become a Popular Disguise for Corporate Electioneering
WASHINGTON, D.C. – In a letter today to the Internal Revenue Service (IRS), Public Citizen has asked the agency to watch out for the submission of a Form 1024 by the American Bankers Association (ABA). The Washington-based lobbying and trade group representing about 5,000 banks nationwide is apparently poised to establish a 501(c)(4) social welfare organization largely for the purpose of raising and spending funds for campaign intervention in the 2012 federal elections.
The ABA would raise funds from the treasuries of corporate members of the association and other sources, and either make independent expenditures for or against U.S. Senate candidates or contribute to unnamed super PACs for the purpose of influencing elections. According to the ABA itself, one of the reasons for creating a 501(c)(4) to carry out this function is to avoid public disclosure of its sources for electioneering expenditures.
“The ABA has been working to repeal or weaken the Dodd-Frank bill, but has been stymied in the Senate,” said Craig Holman, Public Citizen’s government affairs lobbyist. “The ABA has now opted for a new approach: secretly pouring millions of dollars into the 2012 elections through its new nonprofit front group to defeat Wall Street reform supporters in the Senate.”
In its letter, Public Citizen urges the IRS to closely evaluate the ABA’s public statements on the purpose and anticipated activities of the new group it creates before the agency determines whether it legitimately qualifies for 501(c)(4) tax status. The letter also asked the agency to clarify its “primary purpose” standards, which form the basis for deciding whether an organization qualifies for social welfare status or should be registered instead as a Section 527 political organization that is subject to disclosure requirements.
“The ABA has announced that it aims to set up a group to influence elections. It shouldn’t be able to tack on – or claim that it will tack on – additional, non-electioneering expenditures as a way to ‘save’ its request for IRS approval of its application as a social welfare organization – an organizational device that will enable banks to spend Dark Money to oppose or benefit candidates,” said Robert Weissman, President of Public Citizen. “The IRS should act to prevent giant corporations from making a mockery of the tax code in order to escape modest campaign spending disclosure requirements.”
To read the letter, go to https://www.citizen.org/sites/default/files/aba-letter-to-irs.pdf