IRS problems aren't as complicated as they look once you see the structure. I'm attorney Darrin Mish. I've represented taxpayers before the IRS for three decades — in Florida, Colorado, Texas, and internationally. Here's the plain-English breakdown.
The liberal group Common Cause has filed an official whistleblower complaint with the IRS contending that ALEC is merely a front for a lobby group masquerading as a charity. ALEC is known for its conservative stance on a range of issues and lawmakers pay a nominal membership fee while corporate membership is rather expensive. There is nothing legally prohibitive against lobbying provided such activities do not constitute the main activity of a non-profit organization.
According to Common Cause, they have acquired incriminating evidence to show lobbying activities in the form of documents from anonymous sources and state-level data requests. These documents are in the form of legislation-specific talking points drafted by ALEC, scorecards to track the progress of specific legislation, and model press releases. It is understood that these documents are freely circulated among state lawmakers.
“When you do those sorts of things, that’s the definition of lobbying,” said Eric Havian, who represents Common Cause in its complaint. In rebuttal, ALEC’s legal counsel, Alan Dye denies the group is involved in lobbying and claims Common Cause’s complaint is without merit. Dye insists that ALEC abides by the limits on lobbying as stipulated in the tax code.
In addition Dye says that the organization is otherwise free to communicate in ways that are not covered by the definitions in the tax code, mainly disseminating non-partisan research and analysis. Commenting on ALEC’s activities, Dye said, “Everything ALEC does is intended to take into account all points of view, and to result in a complete analysis, and is all based upon non-partisan research and analysis.”
Common Cause also has grouses against ALEC’s corporate members, saying they flout the rules, too. Common Cause’s stand is that if a business person has a meal with a legislator, it is considered a lobbying activity and thus should not be tax-exempt. But when such activities are carried out in ALEC’s corportate offices, ALEC is allowed to write off these and other expenses like travel expenses because ALEC portrays itself as an educational organization.
Of late, many corporate companies like McDonalds, Wendy’s, Kraft Foods and Coke have discontinued their ALEC membership when pressured by ColorOfChange, another organization that has pointed a finger on ALEC’s alleged support of a bill that would expand the use of deadly force in the case of slain Florida teenager Tray von Martin.
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