That the billionaire Koch brothers are spending upwards of $1 million to launch an election-year advertising campaign in Wisconsin to sing the praises of Governor Scott Walker's policies comes as no surprise. What might not be readily apparent to casual observers is that taxpayers are subsidizing this electioneering.
The ad is sponsored by an arm of the Kochs' operation that is organized as a 501(c)(3) charitable organization, meaning that the donations that went to pay for this advocacy are tax deductible. By blanketing the airwaves across Wisconsin with this pro-Walker message, the Kochs are reducing their tax liability.
IRS rules governing 501(c)(3) tax-exempt status – meant for charitable and educational organizations to promote “social welfare” – prohibit such groups from using any resources to participate or intervene in political campaigns.
On these grounds, the Democracy Campaign filed a complaint with the Internal Revenue Service in 2012 asking the IRS to investigate what appeared to us to be clear violations of the tax-exempt status of Americans for Prosperity Foundation and two other 501(c)(3) "charities." The IRS replied with a letter dated March 22, 2012 saying the agency "has an ongoing examination program to ensure that exempt organizations comply with the applicable provisions of the Internal Revenue Code. The information you submitted will be considered for this program." The letter went on to say "we cannot disclose the status of any investigation." That's the last we heard. Given that AFPF is doing more of the kind of advertising that prompted our 2012 complaint, one has to assume the IRS has blessed this activity. Evidently the IRS does not believe this kind of advertising serves any political purpose. Watch the ad and judge for yourself.
At the invitation of the IRS, we have followed up on our 2012 complaint with a letter calling the agency's attention to the AFPF's latest election-year advertising and requesting enforcement action. We await the taxman's response.