Request for IRS probe of 501(c)4 group has donors nervous

Tuesday, when the Campaign Legal Center filed a complaint with the IRS against the 501(c)(4) group Crossroads GPS, alleging that it was abusing its tax-exempt status because its “primary purpose” was election related, GPS spokesman Jonathan Collegio dismissed the complaint as politically motivated:

“This is a baseless complaint, filed by a partisan group that fundraises off of the baseless complaints they file,” Collegio said. “Crossroads GPS carefully and cautiously follows all laws governing 501(c)(4) organizations. Meanwhile, liberal groups spent more than $400 million in undisclosed campaign money in 2008 alone, with nary a peep of protest from liberal lobbyist Fred Wertheimer.”

Crossroads GPS has been running ads attacking incumbent U.S. Sen. Michael Bennet.

Today, Politico’s Mike Allen reports that some potential corporate donors aren’t as sanguine about the potential investigation:

One of Washington’s best connected Republicans e-mailed the Washington Independent: “We are telling all of our clients, do not give a cent unless you accept the possibility that one day your contribution will be well be public. … i do not think you will see many blue chip companies, this is more for the wealthy.”

Because donations are not disclosed, the question of how much corporations are donating to groups like Crossroads GPS remains a guessing game. Indeed, one of the biggest draws of 501(c)s is the anonymity they can grant donors, which implies that corporations, especially those with a large direct consumer base, would choose them as their preferred outlet of giving. That a potential IRS investigation would have a chilling effect on such donations seems unlikely — lots of requests are filed with the IRS that simply go unanswered and uninvestigated — but certainly possible.

For what it’s worth, Collegio also emailed Allen with the subject line, “interestingly,” to say that “Despite the left’s coordinated … attacks, we received more new ‘likes’ on facebook today than on any day in our history.”

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