Conservative ‘dark money’ group faces IRS complaint over tax filings

Introduction

A conservative “dark money” organization hasn’t been filing its federal taxes, and two watchdog organizations are asking the IRS to levy penalties.

Americans for Job Security, a nonprofit trade organization that spent millions of dollars boosting Republican congressional candidates, hasn’t filed its taxes in three years, according to Issue One and the Campaign Legal Center, which filed a formal complaint this morning.

Not filing tax returns is a failure to comply with federal rules governing nonprofits, Issue One Executive Director Meredith McGehee said.

“The IRS should not let this, or any other dark money group, off the hook for failing to follow these simple rules,” she said.

Brendan Fischer, director of federal and Federal Election Commission reform at the Campaign Legal Center, said in a statement that Americans for Job Security “has long deprived the public of information about the sources of its funding as it spent tens of millions of dollars influencing elections.”

Americans for Job Security, which the Center for Public Integrity profiled in a series of articles earlier this decade, didn’t respond to requests for comment. Stephen DeMaura, then the president of Americans for Job Security, told the Center for Public Integrity in 2013 that “manufactured accusations from ideological opponents regarding our work will not distract Americans for Job Security from fighting for public policies that strengthen our economy and create more and better-paying jobs.”

In addition to allegedly not filing its taxes, Americans for Job Security has cooled its spending in recent years. During the 2011-2012 election cycle — the last election cycle it spent money to advocate for or against federal political candidates — it spent more than$15 million in an attempt to defeat President Barack Obama, according to data from the Center for Responsive Politics. In 2010, it spent more than $4 million to help defeat Democratic candidates.

Because Americans for Job Security is a nonprofit trade association organized under section 501(c)(6) of the federal tax code, it is not required by law to disclose its donors.

But Americans for Job Security and similar trade associations may, by law, engage in electoral politics as long as political engagement isn’t their primary activity, according to IRS guidelines.

Americans for Job Security says that promoting economic issues of the workplace is part of its mission, according to its 2013 tax return, the most recent on file.

Americans for Job Security is no stranger to complaints about its accounting.

In 2016, the FEC hit Americans for Job Security with a $43,000 fine for illegally hiding the source of its funding for political ads. The fine came after a 2014 complaint lodged by another campaign finance reform watchdog organization, Citizens for Responsibility and Ethics in Washington.

In 2012, it was involved in one of California’s largest campaign finance-related cases. Americans for Job Security was discovered to be the source of an $11 million contribution to an Arizona nonprofit that, in turn, made a contribution to a California campaign committee..

Fair Political Practices Commission of California called it “the largest contribution ever disclosed as campaign money laundering in California history.”

The two other groups involved had to pay $500,000 each, while Americans for Job Security was found to not be at fault because the money it had given to the Arizona group wasn’t designated for a specific purpose.

Marcus Owens, a partner at Loeb & Loeb and a former director of the IRS’ exempt organizations division, said it’s rare for an organization to go three years without filing its taxes.

Under the Pension Protection Act of 2006, organizations that don’t file their designated tax forms will lose their tax exempt status with the IRS.

Owens’ own review of IRS data indicates Americans for Job Security’s tax-exempt status has not yet been revoked.

Owens said it’s possible the group filed for an allowable six-month extension, or that the IRS records aren’t accurately reflecting Americans for Job Security’s tax-exempt standing.

But Issue One and the Campaign Legal Center aren’t waiting to find out.

Americans for Job Security’s 2015 tax return is at least 566 days late, its 2016 return is at least 201 days late and its 2017 return doesn’t appear to be filed, either, the groups said in a joint statement.

Owens said the complaint will put the IRS on notice of the missed deadlines, which “may or may not be effective in speeding up that process.”

Center for Public Integrity investigations into the IRS’ exempt organizations division detailed how a lack of funding and staffing have contributed to a decline in the division’s ability to investigate politically active nonprofit groups.

BACKGROUND READING:

Americans for Job Security — how a shadow group hustles for funds

IRS rarely audits nonprofits for politicking

How to fix the IRS nonprofit division

Hobbled IRS can’t stem ‘dark money’ flow