DSCC Asks IRS to Strip Conservative Group of Its Tax-Free Status

Posted April 23, 2008 at 4:39pm

The Democratic Senatorial Campaign Committee asked tax regulators Wednesday to investigate an outside political group that has run ads in Colorado’s Senate race.

The DSCC’s complaint against U.S. Term Limits comes as the Internal Revenue Service is stepping up its enforcement of nonprofit organizations that engage in political activity, particularly 527s and “social welfare” groups that register under section 501(c)(4) of the tax code.

The DSCC alleges that U.S. Term Limits, a 501(c)(4) organization, violated federal law and its nonprofit status by not disclosing on its Web site that contributions made to the group are not tax-deductible:

“On its Web site, [U.S. Term Limits] raises funds by asking contributors to mail checks directly to it,” the complaint reads. “The Web site … nowhere indicates that contributions are not deductible. “

“Web sites are treated as print media by the commission for purposes of this requirement,” the complaint continues. “We request that the service initiate an investigation and audit of respondent and impose the appropriate tax and penalties. … $1,000 for each day the failure occurred, up to $10,000 per calendar year.”

The DSCC’s complaint to the IRS is the first time that the committee has sought to strip an outside political group of its tax-free status.

U.S. Term Limits recently ran ads on behalf of former Rep. Bob Schaffer (R) in the highly competitive open-seat Senate race in Colorado.

— Matthew Murray