Common Cause and the Center for Media and Democracy Add to Evidence in “Whistleblower” Tax Fraud Claim Against ALEC

UnknownBy Elaine Magliaro

Common Cause announced earlier this week that it and the Center for Media and Democracy had “sent federal authorities new evidence…that the American Legislative Exchange Council (ALEC) is falsely passing itself off as a tax-exempt charity and effectively using taxpayer dollars to subsidize its lobbying on behalf of private interests.” Common Cause said that it had filed “a supplement to its three-year-old tax whistleblower complaint against ALEC”–and that both groups had “sent a joint letter to Internal Revenue Service Commissioner John Koskinen demanding an investigation, collection of fines and back taxes, and the revocation of ALEC’s status as a tax-exempt charity.”


David McCabe of The Hill said that Common Cause was “redoubling its attack against the American Legislative Exchange Council (ALEC), the non-profit group they say is designed to act as a quiet lobbying organization for its corporate members.”

Mike Ludwig (Truthout):

ALEC brings together about 200 state lawmakers, most of them Republicans, and a long list of wealthy corporations, trade groups and other members of the private sector to discuss public policy and draft model bills to be considered by state legislatures. In 2012, Common Cause and the Center for Media in Democracy filed a whistleblower complaint with the IRS, claiming that ALEC’s activities amount to lobbying on behalf of its corporate members, and therefore ALEC is ripping off taxpayers by filing as a tax-exempt charity group.

Miles Rapoport, president of Common Cause, said, “Our whistleblower complaint, which includes statements, letters and correspondence from ALEC member companies and previously undisclosed public records of ALEC’s lobbying activities, demonstrates beyond doubt that ALEC is – and always has been – a lobby, not a charity.” He added, “This whistleblower supplement is unrelated to our dispute with ALEC on climate issues…but I hope that with today’s filing ALEC gets the message that we will not be deterred from working to expose its activities.”

The filing reportedly “comes on the heels of ALEC’s threat in March to file suit against Common Cause and two other groups that have criticized ALEC’s positions on climate change and telecom issues.”

According to the Common Cause press release, their “new trove of documents includes statements by 20 corporations that admit that they joined and maintained membership in ALEC to influence legislation and gain access to lawmakers.” The corporate admissions, which are  reportedly included in the complaint, “are from Yelp, Pfizer, AT&T, Verizon, Comcast, Honeywell, Yahoo, eBay, Eli Lilly, Duke Energy, Altria, American Electric Power, Anheuser-Busch, BP, Chevron, Cox Communications, CSX Corporation, ExxonMobil, Overstock, and Peabody Energy.” Common Cause noted that a number of “those companies no longer are part of ALEC.”

David McCabe pointed out that Google left ALEC in September. He reported that the  chairman of Google had said that ALEC was “just literally lying” about climate change.


Common Cause:

The new filing also includes the recent finding of the Minnesota Campaign Finance and Public Disclosure Board that “ALEC’s primary purpose is the passage of state legislation in the various states and that all of its wide-ranging activities are in support of this primary purpose.”

Last Tuesday, Rapoport told reporters that his group had “gathered enough evidence to prove beyond a doubt that ALEC has always been a lobby group, not a charity.” Rapaport said, “We have no objection to ALEC lobbying, or for corporations to lobby, but they should not do it as a 501(c)3 organization. Corporations have the right to lobby, but it’s simply wrong for large, multinational corporations to do it under the table, through ALEC, and then stick taxpayers with the bill by claiming a tax write-off for their funding.”

Ludwig reported that the evidence that Common Cause included in its latest submission to the IRS included “statements by 20 corporations admitting that they maintained an ALEC membership to influence legislation and gain access to lawmakers.”

Lisa Graves, the Executive Director of the Center for Media and Democracy, said “Our powerful new evidence demonstrates that ALEC continues to operate as a ‘corporate lobbying group masquerading as a charity. Clearly, in their own words, many of the corporations that fund ALEC use it as a vehicle for their lobbying agenda.” Graves continued, “ALEC is a pay-to-play operation where corporate lobbyists pay for a seat and a vote as equals with legislators on model bills to benefit the legislative agenda of those very same special interests. Though ALEC claims that it is now a legislator-driven, bottom-up enterprise, our evidence shows that the corporations underwriting ALEC continue to drive its legislative priorities and do so to benefit their bottom lines. ALEC operates for the private gain of its corporate funders like a trade group, offering them one-stop shopping for lawmakers nationwide.”

Common Cause said that its most recent submission to the IRS was “the third challenge Common Cause and CMD have made against ALEC for masquerading as a charity at taxpayer expense.” Rapaport said, “It has been almost exactly three years since we uncovered ALEC’s tax misrepresentation and first reported it to the IRS. Three years later, the IRS Whistleblower Office has not taken action, despite its legal mandate to investigate complaints. Meanwhile, ALEC continues its secretive lobbying activities that often benefit the corporations’ bottom line.”

Click here for a fact sheet on Common Cause’s whistleblower complaint.

The following YouTube video was published on March 17, 2015


Wielding New Evidence, Watchdogs Push IRS to Investigate ALEC for Tax Fraud (Truthout)

Groups Add to Evidence in “Whistleblower” Tax Fraud Claim Against ALEC (Common Cause)

Good government group renews case against ALEC (The Hill)


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