Gardner championed obvious dark-money group in IRS probe
Feds apparently still unconvinced that the Citizen Awareness Project was more about social welfare than electoral politics
The conservative group Cory Gardner has held up as a victim of what his party deems an IRS “witch hunt” seems to have been scrutinized not for its politics, as the Congressman repeatedly claimed, but rather because of legitimate questions about its nonprofit application.
Gardner made headlines last year when he posted on his congressional website a March 26, 2013 letter from the Internal Revenue Service to a Colorado-based conservative organization that was seeking 501(c)(4) non-profit, tax-exempt status. The four-page letter to a group whose name Gardner’s office redacted asked for “more information before we can complete your consideration of your application for exemption.”
Gardner denounced the IRS’s follow-up questions as excessive and “thuggish” – proof, he said, that the agency was unfairly targeting right-wing groups.
At the time, it was widely reported that the four Colorado conservative groups known to have received such follow-up letters were community-based, small-donor, grassroots groups.
“The Colorado groups affected are universally small…,” The Denver Post reported in May, 2013. “Their budgets are mostly in the single thousands of dollars a year and mostly derived form dues-paying members.”
That was hardly the case with the main group Gardner said was being harassed. Citizen Awareness Project, the organization whose letter he posted on his site and whose treatment by the IRS he repeatedly decried, was neither grassroots nor low budget.
Citizen Awareness Project is a textbook dark money group. Shortly after it was founded in 2012, it injected more than $1 million of its anonymous money into campaigns to defeat Democrats and Democratic causes in Colorado. Those efforts called into question the group’s purported public research and education activities – the mission it stated in applying as a tax-exempt social welfare group.
The group was represented by Charlie Smith, the former chairman of the College Republican National Committee, according to the Center for Public Integrity. Smith also is reported to have founded Solutions 2012, a pro-Newt Gingrich super PAC.
Public documents suggest that Smith chaired Citizen Awareness Project as part of his role at the Denver firm Zakhem Law LLC, run by John Zakhem who, according to open-government Sunlight Foundation, “served as an attorney for the state Republican Party and has helped the GOP play the campaign money game from every angle over the years.”
Details about who else might be involved with – or funding – the group remain unclear because, according IRS public records, there is no “letter of determination” on file that may have offered such details.
Citizen Awareness Project’s pending application information was among several that were leaked by the IRS to ProPublica, an online news site that was reporting a story about tax-exempt organizations. On the group’s behalf, Zakhem sued the IRS, which admitted the applications shouldn’t have been made public.
Zakhem has contributed to Gardner, and to many other Colorado Republicans.
In a report to the IRS, Citizen Awareness Project described its mission and activities as follows: “…To educate citizens and public official (sic) on issues of public policy and to give them the toolsnecessary (sic) to make a difference in their community on issues affecting the public at large. Specifically, it researches and distributes information to citizens and public officials concerning the economy, jobs, foreign policy, health care policy, government spending, taxes, government regulations, and waste, fraud and abuse of government resources…”
It reported that it “conducts extensive research to measure the current opinions of specific demographic groups and how such groups’ opinions change over time, whether such opinions might be changed, the most effective means for changing such opinions, and how to inspire such groups into action relative to the issues they are concerned about.”
The IRS asked for copies of the group’s research and informational materials published and distributed to the public. It asked who conducts the research and information distribution. It wanted to know what outside organizations it works with to conduct research. And it wanted to see contracts for the research.
Three tax lawyers interviewed by The Independent say it’s typical –- and the IRS’s due diligence – to ask such questions in the application process, especially of a group that spent more than $1 million on political campaigns shortly after being founded.
Gardner and Smith decried the letter as a form of harassment, proof of Democratic partisanship in denying tax-exempt status to conservative groups. But the IRS is obligated to investigate political nonprofit group applications, and that year it investigated more left-leaning groups than it did right-leaning groups, a fact buried under the conspiracy-theory-driven outrage on the right that surrounded the investigations of Tea Party-aligned groups. Ultimately, the IRS denial of 501(c)(4) status to a string of Tea Party groups led to the resignation in September of Lois Lerner, the agency’s director of exempt organizations.
“The revelation that the IRS targeted groups based on their political beliefs is deeply troubling, and we want to make sure that the IRS owns up to all the instances of discrimination and breaches of privacy,” read a statement from Gardner’s office last year.
“This is about trust in government,” Smith told CBS Channel 4 in Denver.
While the IRS “scandal” was making national headlines, the Smith-Gardner duo also tried to undermine confidence in the IRS’s ability to enforce the upcoming enactment of government managed health care.
“If we can’t trust them to handle basic information like a (form) 1024 or a tax exemption form, are we sure we want to trust them with our medical records and a complete medical history of our family?” Smith said.
A year later, Smith has gone silent — at least about the IRS, which seems not to have granted his group the non-profit status it sought. The agency’s public database shows no tax-exempt organizations with that group’s federal employer identification number. Public Awareness Project is not in “Publication 78,” a listing of charitable organizations. And it is not listed among the IRS “auto revokes” – groups whose charitable status have been revoked because they failed to file an annual report with the IRS called a form 990.
The website the IRS asked about in its follow-up letter doesn’t exist. The group’s domain name expired earlier this month.
Smith has not returned several phone calls about Citizen Awareness Project, the research it purported to have conducted and published and its plan – if any – this election cycle. The group maintains a Facebook page whose last post was in March.
Public records show that Smith moved from Zakhem’s law practice to Brownstein, Hyatt, Farber, Schreck, another Denver law firm that, among areas of practice, handles campaign finance issues for large donors. Meantime, records show the address of Citizen Awareness Project has been transferred from Zakhem’s firm to Smith’s home in Highlands Ranch.
Citizen Awareness Project is still registered with the Secretary of State, although it’s unclear how much “citizen awareness” it may be bankrolling this election year, as it did in 2012. In Colorado, the top race is for the U.S. Senate seat occupied by Democrat Mark Udall, whom Gardner has given up his congressional seat to try to defeat in November.
Udall, like Gardner and others in Congress, chimed in about last year’s IRS flap by calling for an investigation into how the agency handled thousands of political groups’ applications, including some in Colorado.
Gardner’s congressional and campaign offices would not respond to questions about why Gardner took particular interest in protecting Citizen Awareness Project.
Although the IRS controversy is no longer topping the news, it’s still playing out in Congress. On Friday, the House Ways and Means Committee held a hearing into how the IRS lost thousands of emails investigators sought. Republican Rep. Paul Ryan of Wisconsin accused IRS Commissioner John Koskinen of lying about the lost messages.
“That’s your problem. No one believes you,” Ryan said.
To that, Koskinen responded that, in his career, “that’s the first time anybody has said they do not believe me.” (Read Koskinen’s prepared testimony.)
Earlier this month, the conservative Center for Competitive Politics filed an ethics complaint against nine Democratic senators –- including Colorado’s Michael Bennet — who in 2012 signed onto a letter urging the IRS to examine how much “social welfare” work politically motivated nonprofit groups were doing during an election season. CCP and other conservative organizations say that letter led to increased scrutiny of right-wing groups by the IRS.
The ethics complaint says the senators “misused official resources for campaign purposes… interfered with executive branch agency proceedings, created the appearance of impropriety and engaged in conduct that reflects discreditably upon the Senate.”
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