February 28, 2014 Hand-Delivered Internal Revenue Service ATTN: Patricia L. Thomas Tax Law Specialist Exempt Organizations Technical Group 1 1111 Constitution Avenue NW Washington, DC 20224-0002 Dear Ms. Thomas: On September 6, 2013, the Internal Revenue Service (the ?Service?) issued a proposed adverse determination letter (the ?Proposed Adverse Letter?) regarding Crossroads Grassroots Policy Strategies? application for recognition of exemption under section 501(c)(4) of the Internal Revenue Code (the ?Code?). (A copy of the Proposed Adverse Letter is attached as Exhibit 1.) On November 8, 2013, GPS submitted a protest statement (the ?Protest?) to the Service. A conference of right (the ?Conference?) was held on January 8, 2014. At the Conference, the Service explained its procedures and invited GPS to submit supplemental information that could aid the Service in making its determination; Although the Service?s procedures required GPS to provide a supplemental submission within 21 days, the Service graciously granted an extension to February 28, 2014. GPS has determined that the most effective and efficient way to provide this information both for GPS and for the Service is through a single, revised protest statement rather than a separate supplemental submission. This document is revised protest statement (this ?Revised Protest?); combines original Protest with (1) information addressing questions and concerns raised by the Service during the Conference and (2) certain other additional information. Obtained and Uploaded by the Center for Responsive Politics (OpenSecrets.org) Also at the Conference, GPS offered to meet with the Service to analyze in detail each GPS communication, one-by-one. It would be a time-consuming process, but it is exactly what the facts and circumstances test requires, and it is exactly what GPS did. It does not appear, however, that the Service engaged in this process. GPS hereby repeats its offer to discuss each of its communications in detail at the Service?s convenience. GPS further makes an important procedural request. While GPS is con?dent that it is entitled to tax-exempt recognition, if Exempt Organizations Technical Group 1 nevertheless decides to issue an adverse determination recommendation, GPS understands that the matter would be transferred to a newly?formed Advocacy Application Review Committee.1 Because of the importance of this matter and in the interest of avoiding the years of litigation that would surely follow GPS hereby requests the opportunity to speak directly with the Review Committee if it becomes involved. The Service?s procedures do not prohibit such a conference, and due process strongly supports affording GPS the opportunity to present its arguments to the individuals who will ultimately make the ?nal administrative determination. A previously ?led Form 2848 (Power of Attorney and Declaration of Representative) gives authority to Thomas J. Jose?ak, Michael Bayes, Jason Torchinsky, Jeffery L. Yablon, Alvin Dunn, and Stephen S. Asay. A ?Penalty of Perjury Statement? signed by Steven Law, President of GPS, is included as Appendix A. I See Interim Guidance on Optional Expedited Process for Certain Exemption Applications Under Section 501(c)(4), (June 25, 2013), at pages 3-5. ii Obtained and Uploaded by the Center for Responsive Politics (OpenSecrets.org) II. IV. TABLE OF CONTENTS INTRODUCTION .. 1 THE BACKGROUND OF ACTIVITIES .. 4 A. The Structure and Operations of GPS .. 4 B. GPS Did Everything Possible to Understand and Follow Service Guidance in Differentiating Between Its Social Welfare Activities and Its Campaign Intervention Activities .. 5 1. GPS Followed Service Guidance for Classifying Communications .. 5 2. GPS Followed Service Guidance for Classifying Grant-Making as Social Welfare Activity .. 11 C. GPS Carefully Tracked Its Activities to Ensure that It Would Engage Primarily in Social Welfare Activities .. 13 1. GPS Closely Scrutinized and Categorized Each Activity .. 13 2. GPS Tracked Its Activities at All Times .. 14 D. GPS Submitted an Application for Recognition of Tax-Exempt Status .. 16 THE SERVICE HAS MISHANDLED APPLICATION FOR RECOGNITION OF EXEMPTION .. 19 THE SERVICES PROPOSED ADVERSE DETERMINATION SHOULD BE REVERSED UNDER THE SERVICES OWN STANDARDS .. 21 A. The Service?s Use of Timing as a Determinative Factor Has No Basis in the Facts and Circumstances Test .. 21 l. The Service Improperly Applied a Per Se Eleven-Week Rule? .. 21 2. The Service Improperly Used Timing as a Proxy for Intent .. 22 B. The Service?s Determinations Regarding 2010 Television Advertisements Are in Error under the Service?s Standards .. 24 1. The Service Mischaracterized Features of Television Advertisements .. 24 2. Television Advertisements Directly Parallel the Service?s Approved Example of a Social Welfare Communication .. 26 3. Service Guidance Does Not Require That an Advertisement Discuss an Issue in Particular Detail .. 28 C. The Service?s Determinations Regarding 2010 Direct Mailings and Telephone Communications Are in Error under the Service?s Standards .. 31 Obtained and Uploaded by the Center for Responsive Politics (OpenSecrets.org) 3. The Service Mischaracterized Features of Direct Mailings and Telephone Communications .. 31 Direct Mailings and Telephone Communications Directly Parallel the Service?s Approved Example of a Social Welfare Communication 33 The Service Used Selective Quotes to Change the Meaning of Direct Mailings and Telephone Communications .. 35 D. Grant-Making Activities Complied with Available Service Guidance 37 E. The Service Should Have Considered the Time and Effort GPS Expends on Social Welfare Activities .. 39 F. The Service Should Have Extended Its Inquiry beyond First Year of Operations .. 41 V. THE FACTS AND CIRCUMSTANCES TEST IS NOT ENTITLED TO THE PRESUMPTION OF VALIDITY AND DEFERENCE ACCORDED TO THE CODE AND TREASURY REGULATIONS .. 45 VI. THE SERVICES STANDARDS ARE UNCONSTITUTIONAL .. 46 A. The Facts and Circumstances Test 15 Void for Vagueness .. 46 1. The Facts and Circumstances Test Fails to Provide the Clarity and Predictability Required by Applicable Constitutional Standards .. 47 2. The Service Applies the Facts and Circumstances Test 49 B. The Facts and Circumstances Test Impermissibly Burdens Free Speech .. 52 1. The Supreme Court Has Struck Down Multi-Factor Tests Restricting Protected Speech .. 52 2. The Supreme Court Has Held that Intent Cannot be a Factor for Differentiating Issue Advocacy and Campaign Intervention Activities 54 3. The Facts and Circumstances Test?s Reliance on the Timing of Communications Is Questionable .. 55 4. The Facts and Circumstances Test?s Reliance on Contextual Factors Is Questionable .. 56 VII. CONCLUSION .. 59 APPENDIX A: PENALTY OF PERJURY STATEMENT .. 62 APPENDIX B: TABLE OF EXPENDITURES THROUGH MAY 31, 2011 .. 64 APPENDIX C: TABLE OF EXPENDITURES THROUGH APRIL 30, 2012 .. 66 iv Obtained and Uploaded by the Center for Responsive Politics (OpenSecrets.org) APPENDIX D: ANALYSIS OF TELEVISION ADVERTISEMENTS MISCLASSIFIED BY THE SERVICE .. 68 APPENDIX E: TABLE OF ISSUE ADVOCACY AND SOCIAL WELFARE TELEVISION ADVERTISEMENTS .. 95 APPENDIX F: TABLE OF CAMPAIGN INTERVENTION TELEVISION ADVERTISEMENTS .. 121 APPENDIX G: STATEMENT OF STEVEN J. LAW, PRESIDENT OF GPS .. 130 APPENDIX H: SUPPORTING INFORMATION AND MATERIALS FOR GRANT- MAKING ACTIVITIES .. 133 APPENDIX 1: STATEMENT OF STEVEN DUFFIELD, VICE PRESIDENT FOR POLICY OF GPS .. 165 EXHIBIT 1: PROPOSED ADVERSE DETERMINATION LETTER (SEP. 6, 2013) .. 171 EXHIBIT 2: UPDATED PART FINANCIAL DATA .. 187 EXHIBIT 3: LETTER TO HOUSE COMMITTEE ON OVERSIGHT AND GOVERNMENT REFORM (SEP. 17, 2013) .. 189 EXHIBIT 4: LETTER TO JOHN KOSKINEN (FEB. 4, 2014) .. 209 EXHIBIT 5: VOTE AID FORM 1023 .. 230 EXHIBIT 6: LETTER TO LOIS LERNER (DEC. 14, 2007) .. 263 Obtained and Uploaded by the Center for Responsive Politics (OpenSecrets.org) I. INTRODUCTION GPS, a Virginia non-pro?t corporation, was formed on June 2, 2010. Unlike some organizations that are created in connection with a particular event such as an election or a referendum and may exist for only a short period of time, GPS has been active on a continuous basis since its formation and expects to be active for years to come. From the outset, GPS has been publicly maligned by opponents, many of whom have questioned its tax-exempt status and suggested that the Service act against it.2 Expecting this intense scrutiny from both the media and the Service, GPS has consistently taken great care to comply with all applicable laws, rules, and regulations, including Code section 501(c)(4), which, pursuant to Treasury Regulations, requires that social welfare organizations engage ?primarily? in ?social welfare activities,? a term of art that includes ?issue advocacy? but does not include ?campaign intervention activities.? Shortly after its creation, GPS ?led its Form 1024 (Application for Recognition of Exemption Under Section 501(a)). On February 16, 2012 nearly one and a half years later GPS received from the Service an extensive request for additional information. GPS responded by providing more than 1,000 pages of documents describing its many activities in detail. On September 6, 2013, the Service noti?ed GPS that it had analyzed some of this material under the facts and circumstances test established by Rev. Rul. 2004-63 and Rev. Rul. 2007?41,4 which See, Letter to Hon. Douglas H. Shulman, Commissioner of Internal Revenue, from Sen. Richard J. Durbin (Oct. 11, 2010), 706f0cb9cb99 (last visited Oct. 30, 2013); Letter to Hon. Douglas H. Shulman from Sen. Carl Levin (July 27, 2012), reprinted in Cong. R., Vol. 158, Issue 127 (Sept. 19, 2012); Letter to Hon. Douglas H. Shulman and Lois Lerner, Director, Exempt Organizations, from J. Gerald Hebert, Executive Director, Campaign Legal Center, and Fred Wertheimer, President, Democracy 21 (Sep. 27, 2012), (last visited Oct. 30, 2013). 3 2004?1 CB. 328. 4 2007-1 CB. 1421. Obtained and Uploaded by the Center for Responsive Politics (OpenSecrets.org) present criteria for distinguishing between issue advocacy and campaign intervention activities. The Service concluded that, measured in dollars, 54.1% of activities during the ?rst year of its existence should not be characterized as social welfare activities and therefore GPS did not qualify for recognition under Code section 501(c)(4). The Proposed Adverse Letter provided no analysis of activities or. expenditures beyond ?rst taxable year. GPS submitted its Protest on November 8, 2013. Three weeks later, on November 29, 2013, the Service issued a Notice of Proposed Rulemaking that would radically change the rules governing tax-exempt social welfare organizations.5 A Conference of Right was held on January 8, 2014. The attendees were Janine Cook, Elizabeth Henn, Judith Kindell, Patricia Thomas, and Emily Mingram representing the Service; and Thomas Jose?ak, Michael Bayes, Jason Torchinsky, Jeffery Yablon, Alvin Dunn, and Stephen Asay representing GPS. As demonstrated below, the Service misinterpreted and misapplied the facts and circumstances test and, as a result, misclassi?ed certain issue advocacy activities as campaign intervention activities. Among other errors, the Service (1) improperly classi?ed as per se campaign intervention activities any communications that mentioned an incumbent Officeholder within eleven weeks of an election if the incumbent was also running for re-election and (2) did not consider non-monetary measures of social welfare activities. Under a proper application of the facts and circumstances test, appreciably more than half of activities in its ?rst taxable year qualify as social welfare activities. Moreover, the Service based its proposed adverse determination on an examination of activities only in its ?rst taxable year, even though the Service requested, and was 5 See Notice of Proposed Rulemaking, Guidance for Tax-Exempt Social Welfare Organizations on Candidate- Related Political Activities, REG-1 3441 7- 13, I.R.B. 2013 -5 2, at page 856 (Dec. 23 2013). Obtained and Uploaded by the Center for Responsive Politics (OpenSecrets.org) provided with, information on all of activities from its inception in June of 2010 through April of 2012.6 In this case, the Service is bound by law and its own procedures to look beyond ?rst year. If the Service looks beyond start-up year by even a few months and applies the facts and circumstances test precisely as it applied the test in the Proposed Adverse Letter, the Service would recognize tax-exempt status. GPS has established a multi?year track record of effective advocacy on critical national policies and legislative issues and is committed to defending its prior actions and to continuing its mission as a tax-exempt organization. If the Service does not extend recognition to GPS under the facts and circumstances test, GPS would be forced to challenge that decision in court. GPS would show that the Service has misapplied its own facts and circumstances test by, among other things, misclassifying certain activities of GPS and in violation of the law and the Service?s own established procedures erroneously considering the activities of only ?rst taxable year. In addition, GPS would demonstrate that the facts and circumstances test itself is unconstitutional under (1) the void-for-vagueness doctrine and (2) other rules of constitutional law set forth in recent Supreme Court decisions? Such a court action would have profound rami?cations beyond this matter. 6 On February 16, 2012, the Service made its only request for detailed additional information regarding all of activities through that time. GPS responded to that request in full, providing information regarding its operations through April 30, 2012, yet the Proposed Adverse Letter only addressed a fraction of the information provided. The Service itself has questioned the facts and circumstances test. See, 2. g. Notice of Proposed Rulemaking, at page 856; Daniel Werfel, Charting a Path Forward at the IRS: Initial Assessment and Plan of Action, at page 28 (June 24, 2013). Obtained and Uploaded by the Center for Responsive Politics (OpenSecrets.org) II. THE BACKGROUND OF ACTIVITIES A. The Structure and Operations of GPS GPS incorporated on June 2, 2010, and began operations shortly thereafter. GPS focuses primarily on issues- and policy?based research, education, and advocacy related to important national policy and legislative issues, including health care reform, cap and trade legislation, federal taxation, energy policy, immigration, government spending, and debt. GPS also conducts in?depth issue research, makes grants to further its social welfare purposes, conducts public opinion surveys on national issues, and distributes advertising and other communications to shape public opinion on these issues and to urge lawmakers to take speci?c legislative actions.3 As described below, GPS has been effective in many areas.9 From its inception, GPS planned to engage in (1) ?social welfare activity,?10 primary purpose, and (2) limited ?campaign intervention activity,? consistent with the Code and the Service?s regulations.? Because it planned to engage in some campaign intervention activity, and because ?independent expenditure only? committees registered with and reporting to the Federal Election Commission were already the subject of substantial scrutiny, GPS assumed that its own activities would also be the subject of substantial scrutiny. It was thus extremely important to GPS to examine carefully and understand the Service?s guidance for GPS is related to American Crossroads which focuses on candidate-based, independent political activity and was initially formed as a Code section 527 political organization. AC later registered with the Federal Election Commission as an independent expenditure-only committee,gbecoming one of the ?rst so- called FEC ?Super Social welfare organizations and political action committees across the political spectrum use this kind of ?complex structure.? 9 See infra Section IV.B.3. social welfare activities have taken many forms, primarily issue advocacy (in large part through the use of advertising in different media) and grant-making. GPS also conducts research,1 engages in public education, creates policy platforms, interacts with the news media, maintains a robust online presence (website, Facebook page, Twitter account, YouTube channel), holds public events, and communicates with legislators. Code section 501(c)(4) organizations are permitted to engage in campaign intervention activity under the Code and Treasury Regulations. Obtained and Uploaded by the Center for Responsive Politics (OpenSecrets.org) social welfare organizations to make certain that GPS would at all times be engaged ?primarily? in social welfare activities. B. GPS Did Everything Possible to Understand and Follow Service Guidance in Differentiating Between Its Social Welfare Activities and Its Campaign Intervention Activities 1. GPS Followed Service Guidance for Classifying CommunicationsE I For the purpose of classifying communications as either issue advocacy or campaign intervention activities, the Service has set forth only one bright-line rule: ?When an advocacy communication explicitly advocates the election or defeat of an individual to public of?ce, the expenditure clearly is for [campaign intervention Advocacy communications that do not explicitly advocate the election or defeat of a candidate for of?ce may be classi?ed as either issue advocacy or campaign intervention activities depending upon ??all the facts and circumstances? of the communications.? Rev. Rul. 2004?6 provides that, in addition to any other relevant facts and circumstances, six factors ?tend to show? that a communication is a campaign intervention activity: 15 (C) The communication identi?es a candidate for public of?ce; The timing of the communication coincides with an electoral campaign; The communication targets voters in a particular election; The communication identi?es that candidate?s position on the public policy issue that is the subject of the communication; advocacy communications included numerous forms of communication with the public: television advertisements, radio advertisements, print media, direct mailings, Internet advertisements, and telephone communications. ?3 Rev. Rul. 2004-6. 14 GPS and this Revised Protest refer to each of these six factors as a ?Campaign Intervention Factor? or Obtained and Uploaded by the Center for Responsive Politics (OpenSecrets.org) The position of the candidate on the public policy issue has been raised as distinguishing the candidate from others in the campaign, either in the communication itself or in other public communications; and The communication is not part of an ongoing series of substantially similar . . . . . advocacy commumcatlons by the organization on the same issue. On the other hand, again in addition to any other relevant facts and circumstances, Rev. Rul. 2004-6 lists ?ve factors that ?tend to show? a communication is not a campaign intervention activity the communication quali?es as issue advocacy:l6 The absence of any one or more of the factors listed above; The communication identi?es speci?c legislation, or a speci?c event outside the 3 control of the organization, that the organization hopes to in?uence; The timing of the communication coincides with a speci?c event outside the control of the organization that the organization hopes to in?uence, such as a i legislative vote or other major legislative action (for example, a hearing before a legislative committee on the issue that is the subject of the communication); The communication identi?es the candidate solely as ;a government of?cial who is in a position to act on the public policy issue in connection with a speci?c event (such as a legislator who is eligible to vote on the legislation); and The communication identi?es the candidate solely in the list of key or principal I sponsors of the legislation that is the subject of the communication. ?6 GPS and this Revised Protest refer to each of these five factors as a ?Social Wdlfare Factor? or Obtained and Uploaded by the Center for Responsive Politics (OpenSecrets.org) Similarly, Rev. Rul. 2007-41 lists seven factors that help to determine whether a communication quali?es as issue advocacy or campaign intervention activity:17 (1) (2) (3) (4) (5) (6) (7) Whether the statement identi?es one or more candidates for a given public of?ce; Whether the statement expresses approval or disapproval for one or more Whether the statement is delivered close in time to the election; Whether the statement makes reference to voting or an election; candidates? positions and/or actions; Whether the issue addressed in the communication hals been raised as an issue distinguishing candidates for a given of?ce; i Whether the communication is part of an ongoing series of communications by the organization on the same issue that are made independent of the timing of any i Whether the timing of the communication and identi?cation of the candidate are related to a non-electoral event such as a scheduled vote on speci?c legislation by election; and an Of?ceholder who also happens to be a candidate foi' public of?ce. Rev. Rul. 2004-6 Situation 5 describes facts and circumstances under which an I advertisement by a Code section 501(c)(4) tax-exempt organization y'vould constitute social welfare activity: I S, an entity recognized as tax exempt under 501(c)(4), advocates to abolish the death penalty in State Y. Governor is the governor of State Y. regularly prepares and ?nances television advertisements opposing the death penalty. These advertisements appear on several television stations in State shortly before each scheduled execution 17 GPS and this Revised Protest refer to each of these seven factors as a ?Factor.? Obtained and Uploaded by the Center for Responsive Politics (OpenSecrets.org) in State Y. One such advertisement opposing the death penalty appears on State television stations shortly before the scheduled execution of and shortly before an election in which Governor is a candidate for re-election. iThe advertisement broadcast shortly before the election provides statistics regarding developed countries that have abolished the death penalty and refers to studies indicating inequities related to the types of persons executed in the United States. Like the advenisefnents appearing shortly before other scheduled executions in State Y, the advertisement notes that Governor has supported the death penalty in the past and ends with the statement ?Call or write Governor to demand that he stop the upcoming execution iof Under the facts and circumstances in Situation 5, the advertisement is not for an exempt function under 527(e)(2). S?s advertisement identi?es Golvernor F, appears shortly before an election in which Governor is a candidate, targeis voters in that election, and identi?es Governor F?s position as contrary to 8?3 position. iHowever, the advertisement is part of an ongoing series of substantially similar advocacyI communications by on the same issue and the advertisement identi?es an event outsideithe control of the organization (the scheduled execution) that the organization ihopes to in?uence. Further, the timing of the advertisement coincides with this speci?c event that the organization h0pes to in?uence. The candidate identi?ed is a governmenit of?cial who is in a position to take action on the public policy issue in connection with the speci?c event. Based on these facts and circumstances, the amount expended by onithe advertisements is not an exempt function expenditure under 527(c)(2) and, therefore, is not subject to tax under 527(00)- Obtained and Uploaded by the Center for Responsive Politics (OpenSecrets.org) GPS relied on the standards established in these two revenue rulings particularly the template provided by Rev. Rul. 2004-6 Situation 5 in evaluating each of its communications. Based on those standards, GPS concluded that its communications would be classi?ed as issue advocacy, even if the communications mentioned an Of?ceholder wiio was running for re- election (or election to a different of?ce), and even if the communications occurred at some point prior to an election, as long as the following self-imposed rules applied: 0 First, the communication could identify an incumbent Of?ceholder and discuss that of?ceholder?s legislative record or policy positions but could not comment on the incumbent of?ceholder?s character, quali?cations, or ?tness for of?ce. Generally such a communication would identify speci?c legislation or policy;18 would identify an individual as a government of?cia in a position to act on the legislation or policy;19 and would not identify an electoral opponent.20 0 Second, the communication could urge citizens to ad opt a certain position on that legislation or policy and contact their elected representative at an of?cial government of?ce to urge him or her to take some official action on that legislation or policy. Generally such a communication would identify speci?c legislation or policy;21 would coincide with a non-electoral event, such as a legislative vote, outside of the organization?s control 22 would identify the of?cial as someone in a position to act on the legislation or 20 Zl 22 23 Rev. Rul. 2004-6 SWF Rev. Rul. 2004-6 SWF and Situation 5. See Rev. Rul. 2004-6 CIF Rev. Rul. 2007-41 Factor (5). Rev. Rul. 2004-6 SWF Rev. Rul. 2004-6 SWF and Situation 5. Rev. Rul. 2004?6 SWF and Situation 5; Rev. Rul. 2007-41 Factor (7). olicy;23 and would urge the Obtained and Uploaded by the Center for Responsive Politics (OpenSecrets.org) official to take action rather than simply approve or disapprove of the of?cial?s past actions.24 0 Third, the communication could not reference any candidacy, electoral opponent, political party, election, or voting in an election. Generally such a communication would not make reference to voting or an election;25 would not identify the government of?cial as a candidate for of?ce;26 and would not identify an electoral opponent.27 0 Finally, the legislative and policy issues discussed in the communication should be part of an ongoing series of communications by GPS advancing goals set forth in established legislative and policy agendas (the 2010-11 ?7 in ?11 National Action Plan? and the 2012-13 ?New Majority Agenda?). Generally such a communication would not simply coincide with an electoral campaign28 and would be part of an ongoing series of communications that addresses substantially similar topics.29 GPS was well aware that one of the Service?s factors tending to show that a communication is a campaign intervention activity is that the organization distributes the communication close 1n time to an election.3 However, the r1g1d application or predominance of that one factor would effectively prohibit any communications on important legislative and policy issues during campaign periods. Nothing in Rev. Rul. 2004?? indicates that the timing Rev. Rul. 2007-41 Factor (2). Rev. Rul. 2007-41 Factor (4). Rev. Rul. 2004-6 CIF Rev. Rul. 2007-41 Factor (1). See Rev. Rul. 2004-6 CIF Rev. Rul. 2007-4] Factor (5). Rev. Rul. 2004-6 CIF and Situation 5; Rev. Rul. 2007-41 Factor (3). Rev. Rul. 2004-6 CIF and Situation 5; Rev. Rul. 2007-41 Factor (6). Rev. Rul. 2004-6 CIF Rev. Rul. 2007-41 Factor (3). 10 Obtained and Uploaded by the Center for Responsive Politics (OpenSecrets.org) a communication is to be given more weight than any other factor. Indeed, Rev. Rul. 2004-6 states that, even when a communication appears ?shortly? before an election, ?the remaining facts and circumstances must be analyzed in each situation.? In addition, Rev. Rul. 2004-6 Situation 5 makes clear that even a communication that identi?es a candidate, appears ?shortly? before an election, and targets voters may still be categorized as iss 'e advocacy. The Service?s guidance does not explain what the phrases ?tlipe timing of the communication coincides with an electoral campaign? or ?close in time to the election? mean, but neither can mean that a communication regarding an incumbent made within eleven weeks of an election must be treated as per se campaign intervention activity. Based on the Service?s established guidance and the lack of any de?nitive statement limiting issue advocacy to periods not ?close in time to the election? GPS concluded that communicz?itions made at any time could qualify as issue advocacy, regardless of whether an election was close in time?1 Had the Service properly applied Rev. Rul. 2004-6 Situation 5 to issue advocacy communications that were made preceding an election but that focused on issues and did not expressly advocate the election or defeat of a candidate, the Service would have recognized tax-exempt status, even if the Service examined only ?rst taxable year. i 2. GPS Followed Service Guidance for Classifying Grant-Makingas Social Welfare Activity The Service has made clear that organizations that are tax-exempt under Code sections 501(c)(3), 501(c)(4), and 501(c)(6) may generally make grants to other tax?exempt organizations 3] The Service has now created an ?optional expedited process? for certain social welfare organizations seeking recognition of exemption. This new process adopts a per se pre-election periop of 60 days prior to a general election or 30 days prior to a primary election, which parallels the ?ele tioneering communications? periods. See Letter 5228 (6-2013), Catalog No. 64005T, at page 5. GPS is un ware of any prior guidance issued by the Service that references such periods for any regulatory purpose, and the' periods apply only to select organizations and only in the context of this optional expedited process. See i . at page 3. Moreover, such a safe harbor, by de?nition, is more stringent than applicable legal standards. I 11 Obtained and Uploaded by the Center for Responsive Politics (OpenSecrets.org) i I in furtherance of their purpose and without jeopardizing their tax-eqempt status. Indeed, Service guidance provides that tax-exempt organizations may even make grants to organizations that are not tax-exempt, provided that there is a mechanism known as ?earpnarking? that ensures the i grant funds are used for an appropriate purpose.32 For example, a charity may transfer funds to a i foreign organization that is not quali?ed under Code section 501(c)(23), provided that appropriate safeguards are in place to ensure that the funds will be used for charitable purposes.33 These safeguards usually entail providing the recipient organization with ajwritten grant letter that contains express restrictions regarding how the funds may or may be used. Because the inappropriate use of grant funds can jeopardize [Ia grantor organization?s tax- exempt status and/or trigger penalty taxes, grants from a tax?exemptl organization are commonly earmarked both positively and negatively; the grantor may require that the money be used for certain purposes or may require that the money not be used for ciertain purposes. Such restrictions are generally though not always contained in a transmittal letter, which functions as a bilateral contract. The Service has approved of earmarking as a?lway to ensure that a tax- exempt organization may make grants without jeopardizing its tax-ehempt status.34 GPS understood and followed these rules when engaging in grant-making activities. GPS viewed its grant-making activity as a means of furthering its social vlyelfare purpose by i 32 See, Rev. Rul. 68-489, 1968-2 013. 210. 3 33 See Frances R. Hill Douglas M. Mancino, Taxation of Exempt Organizationjls (hereinafter Hill Mancino) 11 36.03 Public charities are allowed to lobby to a limited extent, but private foundationEs cannot lobby at all. Treas. Reg. section provides that a private foundation may make a gram} to a lobbying public charity 34 provided that the grant is not ?earmarked? for in?uencing legislation. See als Virginia G. Richardson John Francis Reilly, Public Charity or Private Foundation Status Issues under 5 09(a) 49420) (3), and 507, 2003 E0 CPE Text, at page 3-93. Similarly, dues paid to a labor union or a trade association are not deductible to the extent that the funds are used for lobbying or for campaign intervention ctivities; earmarking will be respected. See Treas. Reg. section Congress has also approve; of earmarking. See H. R. Rep. No. 213, 103d Cong. Sess. 607, n. 64 (1993) (allows ?special assessments for grass roots lobbying or campaign expenses?). 12 Obtained and Uploaded by the Center for Responsive Politics (OpenSecrets.org) empowering other organizations with substantially similar policy agendas and complementary organizational such as grassroots networks, lobbying resources, ability to conduct policy-related litigation, and subject-matter expertise. GPS relied on the Service?s approval of earmarking and was con?dent that it could make grants to other tax-iexempt organizations in furtherance of own social welfare purpose without jeopardizing its tax-exempt status, provided that GPS imposed appropriate limitations on the grantee?s use of the funds. Prior to the Proposed Adverse Letter, the Service had provided no reason to suspect that the characterization i of a grant would be altered if the grantee organization also engaged in campaign intervention activities using other funds obtained from other sources. C. GPS Carefully Tracked Its Activities to Ensure that It Would Engage Primarily in Social Welfare Activities 1. GPS Closelv Scrutinized and Categorized Eadh Activity From its inception, and as stated in its Form 1024, GPS planr?ied to advance substantive policy and legislative goals through advertising, research on issues and public attitudes, and public education, as well as some campaign intervention activity. GPS subsequently decided to engage in grant-making activities to other organizations with similar! policy agendas and complementary and activities. GPS knew that its planned research and public education activities, based on the Service?s guidance, would qualify as social welfare activities without question. GPS also knew that its planned grants, based on the Service?s guidance, would qualify as social welfare activities as long as the funds were appropriately restricted. GPS was also well aware that its planned communications cduld be classified as either issue advocacy or campaign intervention activities, depending upon ihe facts and circumstances. Therefore, GPS, its employees, its vendors, and its legal counsel took great care to understand and apply the Service?s guidance when classifying each communication as either issue advocacy 13 Obtained and Uploaded by the Center for Responsive Politics (OpenSecrets.org) i or campaign intervention activity. Each planned communication was prepared by GPS with full knowledge that it would be classi?ed as either as issue advocacy or campaign intervention activity. For many communications, the proper classi?cation was clear. For certain communications, however, the proper classi?cation was less clear. In particular, the Service?s guidance permits issue advocacy communications that are close in time to an election and that mention an incumbent who is running for re-election but does not forth any bright-line rules for ensuring that such communications will be treated as issue advocacy and not be classi?ed as campaign intervention. For any such communications, GPS took great care to follow the Service?s guidance for issue advocacy close to an election, even if it?had to painstakingly work and rework a communication until GPS was completely comfortable that a communication would qualify as issue advocacy. 2. GPS Tracked Its Activities at All Times GPS always knew that it would devote the majority of its time and effort to social welfare activities. However, because time and effort are not easily quanti?able for tax purposes, GPS decided to use its social welfare and campaign intervention expenditures as a conservative approximation of its overall activity.35 To ensure that its tax-exempt status would not be placed in jeopardy, GPS continually tracked all of its expenditures and made certain that, in each of its years of operation since inception, at least 60% of its expenditures were for social welfare activities and no more than 40% of its expenditures were for campaign intervention activities. 35 Because GPS spends the majority of its time and effort on social welfare activities, and because GPS engages in various activities that are not captured as a part of its expenditures - such as issuing press releases, conducting surveys, or meeting with elected of?cials about policy and legislation - GPS knew that it would be engaged in a greater amount of social welfare activities overall than what would be represented by calculating the percentages of its social welfare and campaign intervention expenditures. 14 Obtained and Uploaded by the Center for Responsive Politics (OpenSecrets.org) Because ?primarily? commonly means more than 50%,36 GPS believed that its tax-exempt status would be safe if it ensured that at least 60% of its expenditures were for social welfare . . . 37 activmes. In fact, over time, the amount of social welfare activity expenditures increased to appreciably more than 60% of its total expenditures: 0 For the taxable year ending May 31, 2011 the one-year period used in the Proposed Adverse Letter GPS spent a total of $42,344,884 on its various activities.38 Based on the classi?cations it made by following Service guidance, 36 See Lindsey McPherson, E0 Training Materials Suggest 51 Percent Thresholdfor Social Welfare Activity, The 37 38 Exempt Organization Tax Review, February 2014, Vol. 73, No. 2, at page 122 (quoting an exchange between Rep. Charles B. Rangel (D-N.Y.) and former acting IRS Commissioner Steven: Miller during a House Ways and Means Committee hearing): Rangel: You can [make political contributions] for 49 percent of whatever the activities are, without technically violating the law? Miller: That test is whether your primary activities are social welfare in nature. Range]: Primary means that technically you could [go up] to 49 percent political. Miller: We?ve never been that precise. See also Tax Rosenberg?s Rules, Doc. 2014-103 9, IRSTR-B-OIOOS, %20Defmitions.pdf (last visited Feb. 24, 2014) (posting internal Service training document that de?nes ?primarily? as either 51% or ?more than half?). See Erika K. Lunder L. Paige Whitaker, Cong. Research Serv., R40183, 501 (4)3 and Campaign Activity: Analysis Under Tax and Campaign Finance Law (May 17, 2013) (hereinafter Lunder Whitaker), at page 5. The Service?s new ?optional expedited process? establishes a 60% threshold for determining whether to recognize the tax-exempt status of social welfare organizations, though this threshold applies only to select organizations and only in the context of this optional expedited process. See Letter 5228, at pages 3-4. calculations re?ect its actual expenditures, including overhead costs, which are not simply allocated based on the percentage of expenditures otherwise classi?ed as social welfare or campaign intervention expenditures. The Proposed Adverse Letter ignored nearly $2 million of overhead costs when making its calculations, dismissing this discrepancy in a single footnote. See Proposed Adverse Letter, at page 5 n. 2. The Service determined that 54.1% of arti?cially-capped expenditures were for campaign intervention activities. However, that same amount of spending is only 51.6% of actual expenditures. Using the correct numbers might not have changed the Service?s conclusion, but GPS questions a process (that rests a determination of this magnitude on a difference of 1.6% only $690,865 out of more than $42 milliOn when that difference is based on the subjective opinions of Service staff relying on a test the Service itself has questioned. 15 Obtained and Uploaded by the Center for Responsive Politics (OpenSecrets.org) GPS determined that it spent $15,890,005 (or 37.5%) on campaign intervention activities and $26,454,879 (or 62.5%) on social welfare activities.39 0 From its inception in 2010 through April 30, 2012 the period for which the Service requested and received information GPS spent a total of $71,424,708 on its various activities. Based on the classi?cations it made by following Service guidance, GPS determined that it spent $17,919,199 (or 25.1%) on campaign intervention activities and $53,505,509 (or 74.9%) on social welfare activities.40 D. GPS Submitted an Application for Recognition of Tax-Exempt Status New organizations typically ?le Form 1024 before they become fully operational. Accordingly, the contents of Form 1024 applications are generally prOSpective and aspirational in nature; the application may focus almost exclusively upon what the organization says that it intends to do in the future. If an organization delays in ?ling its Form 1024, however, it will have established a history of activities that the Service can review, thereby potentially transforming the process into an audit of sorts. The same transformation can occur if the Service receives a Form 1024 but fails to review it until a substantial period of time has elapsed. On September 3, 2010, GPS submitted Forms 1024, 2848, and 8718 (User Fee for Exempt Organization Determination Letter Request), along with all necessary attachments. application described GPS as a non-pro?t public advocacy organization and laid out three primary activities: research, public education, and activity to in?uence legislation and policymaking. The application also stated that GPS would develop and/or distribute independent political communications but that such activity would not constitute the organization?s primary 39 A chart showing the breakdown of expenditures from its inception through May 31, 2011, is included as Appendix B. 40 A chart showing the breakdown of cumulative expenditures from its inception through April 30, 2012, is included as Appendix C. 16 Obtained and Uploaded by the Center for Responsive Politics (OpenSecrets.org) purpose. The Service con?rmed receipt of application on September 20, 2010, but then did not communicate with GPS for nearly one and a half years. On February 16, 2012, GPS received a request for additional information from the Service. The Service?s request did not focus on the information GPS provided in its Form 1024 application, which was a forward-looking statement of the organization?s intended activities. Instead, the Service sought from GPS detailed records of operations since its inception. The Service requested, and on May 21, 2012, GPS provided, the following: A more detailed description including time and ?nances of research, public education, and activities to in?uence legislation and policymaking; - Policies and controls to track expenses related to primary activities; 0 Descriptions of sources of income; 0 Updated actual ?nancial data for 2010 and 2011 and a proposed budget for 2012;? I A description of employees, paid consultants, and volunteers; 0 Descriptions of news media activities, including press releases, interviews, letters to the editor, and op-ed pieces; 0 Printouts of website, Facebook page, and Twitter account; and All advocacy communications prepared and ?nanced by GPS, including a copy or transcript of the communication and information regarding the dates the communication was aired or available; the geographic area in which the 4? The Service?s February 16, 2012, additional information request number 4 sought updated ?nancial data for Parts A on page 5 of Form 1024. In response, GPS provided an updated Part 111 Financial Schedule as Exhibit 4 to its submission. It appears that, during the compilation of this voluminous submission, the Part 111 Financial Schedule may have been placed in an incorrect exhibit. Based on the Service?s questions during the Conference, GPS believes that the Service is in possession of the document at issue. However, for the Service?s convenience, the updated Part Financial Schedule is included as Exhibit 2 to this Revised Protest. 17 Obtained and Uploaded by the Center for Responsive Politics (OpenSecrets.org) communication was disseminated; whether the communication was part of an ongoing series of communications; whether the communication identi?ed speci?c legislation or issues; considerations in?uencing the timing of the communication; and the expenses used to prepare and disseminate the communications. The Service made no further requests for information. On September 6, 2013 more than three years after GPS submitted its application the Service issued the Proposed Adverse Letter to GPS. In reaching its decision, the Service limited its assessment to ?rst taxable year ending May 31, 2011; determined that virtually all of televisions advertisements, and all of telephone contacts and direct mailings, were campaign intervention activities; and thus determined that more than half of activities for its ?rst year of Operations constituted campaign intervention activities. GPS submitted its Protest on November 8, 2013, demonstrating that (1) under a proper application of the facts and circumstances test, more than half of expenditures during its ?rst year qualify as social welfare activities; (2) the Service should have considered all materials that had been provided by GPS in response to the Service?s request, instead of limiting its consideration to initial taxable year; and (3) the facts and circumstances test is unconstitutional. GPS reiterated these points in detail at the Conference and explained that the Proposed Adverse Letter?s conclusion is only supported if one accepts both the Service?s misapplication of the facts and circumstances test and the Service?s arti?cial cut-off after ?rst taxable year. If the Service does not believe it can defend both of those positions, the Service must issue a favorable determination letter to GPS. 18 Obtained and Uploaded by the Center for Responsive Politics (OpenSecrets.org) THE SERVICE HAS MISHANDLED APPLICATION FOR RECOGNITION OF EXEMPTION Application for Recognition of Exemption is part of what is now generally known as the Targeting Scandal,? the admitted actions of the Service to subject the applications of conservative organizations to onerous delays, repetitilve questions, intrusive inquiries, illegal leaks of information, and other abusive actions.?43 On December 14, 2012, Form 1024 was disclosed online with an accompanying article stating that the application had been provided in response to a public records request.44 A later article said that the same of?ce that had been deliberately targeting conservative groups had released nine pending con?dential applications of such organizations.45 Service of?cials told GPS that they were looking into the matter, but GPS has heard nothing more. Subsequently, on September 17, 2013, USA Today published a list of organizations from 2011 that reportedly originated from the Service and named organizations that faced delay and scrutiny because the Service labeled them ?political advocacy cases.? GPS was on this list. 42 See generally Statements by Lois Lerner, Director, Exempt Organizations, to American Bar Association (May 2013), (last visited Feb. 27, 2014); Treasury Inspector General for Tax Administration, Inappropriate Criteria Were Used to Identi?l Tax-Exempt Applications for Review, Ref. No. 2013-10-053 (May 14, 2013) (?nding that beginning early in 2010, the Service identi?ed organizations for inappropriate review based upon their names or policy positions, rather than upon objective indicators of campaign intervention activities). 43 Ms. Cook, who represented the Service at the Conference, has a long history with this issue. She has described the treatment of conservative tax-exempt organizations as a ?very hot button issue ?oating around? and has been included in internal discussions regarding those organizations? applications for exemption since before the Service?s request for additional information from GPS. See Letter to Members, Committee on Oversight and Government Reform, from Majority Staff (July 27, 2012), at pages 7?8, 14-15 (attached as Exhibit see also Letter to Hon. John Koskinen, Commissioner of Internal Revenue, from Rep. Darrell E. Issa, Chairman, House Committee on Oversight and Government Reform (Feb. 4, 2014), at pages 10-11 (referring to Ms. Cook?s involvement with proposed regulations) (attached as Exhibit 4). Kim Barker, Karl Rove ?s Dark Money Group Promised IRS It Would Spend ?Liimited Money on Elections, ProPublica (Dec. 14, 2012, 11:19 AM), nonpro?t-told-the-irs. Kim Barker Justin Elliott, IRS O??ice That Targeted Tea Party Also Disclosed Con?dential Docs From Conservative Groups, ProPublica (May 13,2013, 5:40 PM), 44 45 19 Obtained and Uploaded by the Center for Responsive Politics (OpenSecrets.org) Because of these disclosures which may constitute violatioris of federal law GPS has been forced to take extraordinary measures. Indeed, as GPS described at the Conference, GPS was so concerned about these repeated leaks that, when it ?led its most recent Form 990, it attached to each Schedule page that itemized donors a page that stated as follows: DO NOT DISCLOSE THIS DOCUMENT. Public disclosure of the names and addresses of contributors presented on the attached IRS Form 990 Schedule is prohibited by federal law under 26 U.S.C. 6103-6104. Any person responsible for such illegal disclosure is subject to prosecution under 26 7213. Something has gone wrong when taxpayers feel compelled to resort to measures of this type simply to protect rights afforded to them by federal law. Despite these violations of its rights, GPS has not responded the manner that other organizations have responded to similar abuses. Because GPS sees itself as a long-term national advocacy organization with a primary social welfare purpose, GPS has chosen to refrain from: Suing the Service for the unlawful disclosure of its Joining in lawsuits against the Service initiated by other organizations; 0 Taking its story to the media; or - Seeking the assistance of friendly politicians. GPS has no desire to be at the center of the IRS Targeting Scandal. GPS wants to be a social welfare organization, not a cause c?l?bre. But it will ?ght, if necessary, to preserve its ability to shape the direction of policymaking and legislation. 20 Obtained and Uploaded by the Center for Responsive Politics (OpenSecrets.org) IV. THE PROPOSED ADVERSE DETERMINATION SHOULD BE REVERSED UNDER THE OWN STANDARDS A. The Service?s Use of Timing as a Determinative Factor Has No Basis in the Facts and Circumstances Test 1. The Service Improperly Applied a Per Se Eleven-Week Rule The facts and circumstances test requires the Service to examine each communication individually, considering all of the facts and circumstances related to that communication before determining whether it should be classi?ed as issue advocacy or campaign intervention activity. Here there is no indication that the Service did so. Rather, the Service appears to have considered communications in three groups television advertisements, direct mailings, and telephone communications and applied a per se eleven-week rule to each group. Under this rule, any advertisement that both aired during the eleven weeks preceding the general election and identi?ed a candidate for of?ce would be classi?ed as a campaign intervention activity, even if the communication did not advocate the election or defeat of a candidate. There is no legal basis for the Service to apply any per se test in place of the facts and circumstances test and certainly not without ?rst disclosing to taxpayers that a new test is being applied. The Service?s own guidance on the subject makes clear that no per se timing test exists and that a communication may qualify as an issue advocacy communication even if it is distributed ?close? to an election.46 The only apparent basis for this rule is that this time period encompasses all of issue communications prior to the 2010 general election. If the Service had applied a 46 While the Service?s new expedited process does adopt a 30-day pre-primary or 60-day pre-general election framework which applies only to select organizations and only in the context of this optional expedited process GPS is unaware of any such de?nitive time periods offered in any relevant context by the Service prior to 2013. Indeed, the fact that the Service needed to craft this new process indicates that no per se timing test has previously been used. 21 Obtained and Uploaded by the Center for Responsive Politics (OpenSecrets.org) shorter pre-election period, it would have reached a different conclusion about tax-exempt status. GPS included these observations in its original Protest, but the Service?s representatives seemed to be taken completely by surprise at the suggestion of such a per se rule when GPS again raised this issue during the Conference and denied that they applied an eleven-week per se rule. But the Proposed Adverse Letter speaks for itself, referring to the eleven-week ?pre- election? period no fewer than twenty-?ve times. 2. The Service Improperly Used Timing as a Proxy for Intent The Service?s focus on timing is evident not only eleven-week rule but also in its use of timing as a proxy for intent. For example, the Proposed Adverse Letter attempts to justify its conclusions by asserting that (1) GPS ?did not run any advertisements urging . . . officials to challenge the legislation either prior to the eleven-week period before the 2010 general election . . . or after the 2010 general election?47 and (2) ?after the 2010 general election, advertising expenditures in taxable year ending Meiy 31, 2011 dropped off sharply.H48 These justi?cations are rife with problems: - initial television advertisement began airing on August 17, 2010 the very earliest day encompassed by the Service?s the eleven?week rule. The Service implies that GPS should have been running advertisements at an earlier date, but GPS had only been formed two months earlier. It is simply not realistic to expect a newly-formed organization to generate advertisements and raise the necessary funds49 within a signi?cantly shorter time frame. 47 Proposed Adverse Letter, at page 12. 43 1d. at page 13. 49 Television and radio stations generally demand that advertisers provide full payment before the stations will broadcast any advertisements. 22 Obtained and Uploaded by the Center for Responsive Politics (OpenSecrets.org) The assertion that GPS did not run any advertisements after the general election is factually incorrect. As explained during the Conference, GPS continued to engage in communications on substantially similar issues throughout the ?lame duck? session of Congress following the 2010 general election and into the beginning of 201 1.50 expenditures may have declined following the igeneral election, but shortly after the Service?s cut-off date of May 31, 201 1, GPS resumed its intensive advocacy on substantially similar issues. No prior Service guidance has made timing a determinative factor under the facts and circumstances test; indeed, except for express advocacy or ?nancial contributions, there are no determinative factors under the facts and circumstances test. The fact that GPS chose to engage in issue advocacy during an electoral period or its decision to reduce its activities following an I election (if that were the case) does not justify treating issue advociacy as campaign intervention activity. spending pattern is only indicative of the cyclical nature of funding available to organizations that depend upon donations. Donors simply tend to be more active during the periods preceding elections. If the Service appropriately would consider each communication individually, it would reach the proper conclusion that communications are issue advocacy. 50 See, May 21, 2012, response to the Service?s additional information request (the ?May Submission?), Exhibit 6?a Exhibit 6-b R-OZ, R-03, Exhibit 6-c (Print-01, Print-02). The 2010 lame duck session had been planned in advance of the 2010 general election period, and regardless of the election?s outcomes, all incumbent Members of Congress would participate. GPS was well aware that signi?cant legislation could be addressed during this period. Indeed, the 2010 lame duck session was described in the media as ?unlike any lame duck session before? because ?[m]ore pieces of major legislation passed in the month of December than since March.? Matthew Jaffe Z. Byron Wolf, Despite Bruising Election, Democrats and GOP Pass Major Legislation, ABC News (Dec. 22, 2010), 845 3&singlePage=true (last visited Feb. 25, 2014). 23 Obtained and Uploaded by the Center for Responsive Politics (OpenSecrets.org) B. The Service?s Determinations Regarding 2010 Television Advertisements Are in Error under the Service?s Standards issue advocacy activities during the ?scal year ending ?May 31, 2011, included eleven separate television advertisements at a total cost of $6,020,463.33. The Service agreed with GPS that one of these advertisements the only advertisement that the Service considered from 201 1 was issue advocacy. The remaining ten advertisements account for $5,241,659.75 of expenditures from its inception through May 31, 2011. These ten advertisements should have been classi?ed as issue advocacy. 1. The Service Mischaracterized Features of Television Advertisements In addition to the per se eleven-week rule, the Service set forih several purported justi?cations for its classi?cations of television advertisements. However, each of these alleged justi?cations mischaracterized advertisements. Indeed, under the facts and circumstances test, many of the features cited by the Service require ithat the advertisement be classi?ed as issue advocacy. Moreover, the Service ignored other features of the advertisements that supported issue advocacy classi?cations. Among the features that the Service ignored or mischaracterizized were the following: 0 The television advertisements did not target ?voters? as the Service asserted.S 1 Rather, the advertisements accurately re?ected the legislative records and policy positions of the incumbent of?ceholders in various states on the legislation or . . . 1 . policy that GPS Wished to In?uence through the advertisement. 5' See Proposed Adverse Letter, at pages 12-13. 24 Obtained and Uploaded by the Center for Responsive Politics (OpenSecrets.org) The television advertisements were related to non-electoral events, even if they did not ?appear to be? to the Service.52 Each advertisement discussed one or more matters of current policy or legislative debate arid was timed to coincide with both heightened public interest in those matters and pending or upcoming . . . 53 consrderation of those matters in Congress. 0 The television advertisements did not identify candidates for public of?ce as the Service asserted.54 Nor did the advertisements reference a campaign, election, or electoral opponent. While the advertisements may have named incumbent candidates for of?ce, each of those individuals was iienti?ed ?solely as a government of?cial who is in a position to act on the public policy issue.?55 Indeed, GPS took special care to obscure any campaign logos or other visuals that might indirectly present the government of?cial as a political candidate. 0 The television advertisements did not express approvitl or disapproval of candidates for of?ce as the Service asserted.56 Rather, the advertisements critiqued incumbent of?ceholders? legislative and policy positions for the purpose of educating viewers and encouraging them to contac:t the Of?ceholder at a legislative of?ce in hopes of changing the of?ceholder?s positions on important legislative and policy issues. 52 53 S4 55 56 See Proposed Adverse Letter, at page 12. For example, certain advertisements during this period urged U.S. Senate Maj drity Leader Harry Reid who exercises principal control over the Senate?s legislative calendar to act on legislation pending before the Senate. See Proposed Adverse Letter, at page 12. Rev. Rul. 2004-6 SWF See Proposed Adverse Letter, at page 12. 25 Obtained and Uploaded by the Center for Responsive Politics (OpenSecrets.org) The television advertisements did clearly identify a eci?c piece of legislation or current policy issue, even if the Service did not think so.57 The advertisements did not criticize the of?ceholder?s character, quali?cations, or ?tness for office,58 but rather provided background to encourage the public to contact the Of?ceholder and urge that of?cial to take action on a ew piece of legislation or policy issue. 2. Television Advertisements Directly Pariallel the Service?s Approved Example of a Social Welfare Communication i In crafting its issue advocacy communications, GPS did everything possible to adhere to the Service?s guidance as set forth in the various factors of the facts ind circumstances test. In I a particular, GPS relied heavily on Rev. Rul. 2004-6 Situation 5. GPS admits that certain aspects of its advertisements implicate Campaign Intervention Factors. For example, the advertisement ?Calendar?:59 Identi?ed incumbent US Senator Michael Bennet, ?who also happen[ed] to be a candidate? for re-election;60 Aired from August 17 to August 23, 2010, between and eleven weeks before the November 2010 general election; Was distributed to residents of Colorado, all of whoml are Senator Bennet?s constituents and some of whom arealso Colorado voters; and See Proposed Adverse Letter, at page 12. See Citizens United v. FEC, 558 US. 310, 325 (2010). See Appendix E, Exhibit Code The ?exhibit codes? used in Appendix and Appendix correspond to the exhibit codes used in May Submission. Rev. Rul. 2007-41 Factor (7). 26 Obtained and Uploaded by the Center for Responsive Politics (OpenSecrets.org) Described Senator Bennet?s legislative record on spending and debt as contrary to positions. However, advertisements include countervailing Socil Welfare Factors that, under all of the facts and circumstances, warrant classifying aldvertisements as social welfare activities. For example, ?Calendar?: - Did not reference any election, campaign, or opposing candidate; 0 Did not advocate the election or defeat of any candidate; 0 Did not encourage any action in connection with a campaign or election; 0 Was part of an ongoing series of substantially similarl communications by GPS on the same issue of government spending and speci?c, pending legislation (Senate Amendment 4594); Identi?ed an event outside the control of GPS a voile on Senate Amendment 4594 that GPS hoped to influence; 0 Was made close in time to a ?oor vote on Senate Am?endment 4594 scheduled for September 14, 2010; 0 Referred to Senator Bennet, who was identi?ed solely as an incumbent 5 government of?cial who was in a position to vote against that legislation; and 0 Provided Senator Bennet?s legislative of?ce phone mber and encouraged viewers to contact Senator Bennet and urge him to ,te against the identi?ed legislation. This combination of factors both campaign intervention and social welfare presents exactly the same facts and circumstances as Rev. Rul. 2004-6 Situation 5. Therefore, ?Calendar? must be classi?ed as issue advocacy, not campaign intervention activity. The other nine television 27 Obtained and Uploaded by the Center for Responsive Politics (OpenSecrets.org) advertisements in dispute similarly parallel the advertisement in Rev. Rul. 2004-5 Situation 5 and should also be classi?ed as issue advocacy.61 The one advertisement that the Service agreed was social welfare activity is in all material respects the same as the ten advertisements the Service asserts must be classi?ed as campaign intervention activities. The only difference is the timing of the advertisements. This is added proof that the Service did in fact apply a per se eleven-week rule in the Proposed Adverse Letter. A detailed assessment of each of the ten advertisements inappropriately classi?ed by the Service as campaign intervention activity leads to the same conclusion: the Service misapplied, or disregarded, its own facts and circumstances test to reach the conclusion that GPS is primarily engaged in campaign intervention activities.62 3. Service Guidance Does Not Require That an Advertisement Discuss an Issue in Particular Detail No Service guidance requires issue advocacy advertisements to describe or discuss the issue in a particular amount of detail. However, based on the statements made by the Service?s representatives during the Conference, just such an ad hoc requirement seems to. have been imposed on GPS. GPS is unaware of the Service ever asserting this kind of ?suf?ciency? requirement in any regulation, ruling, procedure, or litigation. Many of advertisements were designed to in?uence Congressional votes on pending legislation; those advertisements always speci?cally referred to the legislation at issue. 6' All of these advertisements identify an incumbent Officeholder, describe that of?ceholder?s record on particular issues, express disagreement with that record, and urge viewers to contact the Of?ceholder to tell him or her to take a speci?c of?cial action with respect to a pending or current legislative or policy matter. A detailed analysis of the ten television advertisements at issue is included as Appendix D. Detailed tables of information regarding all of television advertisements through April 30, 2012, are included as Appendix (Issue Advocacy and Social Welfare) and Appendix (Campaign Intervention]. 62 28 Obtained and Uploaded by the Center for Responsive Politics (OpenSecrets.org) Yet both the Proposed Adverse Letter63 and the Service?s represent tives during the Conference made clear that, in the subjective determination of certain Service ployees, advertisements did not sufficiently describe or discuss the legislatio Service?s representatives argued that in their own opinions GPS the proper format for advertisements designed to in?uence public While the facts and circumstances test allows for many consideratim should be an objective measure of an organization?s activities, not a subjective determination that he or she would do things differently. The Service?s representatives appeared to take the position tl GPS to ?merely? include a call to action referring to speci?c legislat at issue. Moreover, the ?s advertisements were not in inion on pending legislation. as, those considerations Service employee?s at it was insuf?cient for ion on screen at the end of an advertisement.64 As GPS explained during the Conference, television advertisements offer limited time and space to make a point. It is simply not possible to include an in?depth discussion of pending legislation in such advertisements.65 Moreov r, advertisements exactly duplicate the parameters established by Rev. Rul. 2004-6 Si example of social welfare activity: entity . . . advocates to abolish the death penal GPS advocates against government spending and inc regarding developed countries that have abolished the studies indicating inequities related to the types of pe 53 See Proposed Adverse Letter, at page 3. 64 on S. Amdt. 4594.? 6S pending legislation that GPS hoped to in?uence. 29 ?The advertisement broadcast shortly before the elect See, This advertisement concludes with the text ?Tell Senator Be advertisements included the address for website, which included ation 5, the Service?s own ty in State reased taxes. ion provides statistics 3 death penalty . . . refers to rsons executed in the United nnet/ Stop the Spending Vote No detailed information about Obtained and Uploaded by the Center for Responsive Politics (OpenSecrets.org) States . . . . [and] notes that Governor has supported the death penalty in the past . . . GPS ?s advertisements not all ?shortly? before an election include information regarding prior legislation that has increased spending and taxes and note that an o??iceholder has supported such legislation in the past. 0 The advertisement ?ends with the statement ?Call or write Governor to demand that he stop the upcoming execution of In this aTvertisement, the person is never mentioned earlier, nor are the person?s speci?c crimes or circumstances leading to the imposition of the death penalty discussed in any way. Rather, the advertisement includes a more general discussion of the death penalty. GPS ?s advertisements end with statements such as ?Tell Senator F, stop the spending, vote no on Bill G. Bill is not necessarily mentioned by number earlier in the advertisements. Rather, the advertisements include a more general discussion of economic legislation and policy. The Service may wish to create new ?suf?ciency? requirements for issue advocacy communications in the future, but until the Service issues formal gui :lance, the Service is bound by and must apply the standards it has announced. communications directly parallel Rev. Rul. 2004-6 Situation 5 and are therefore appropriately characterized as social welfare activities. During the Conference, the Service?s representatives also implied that, in their judgment, communications would not be effective in in?uencing legislation. Once again, this appears to be an ad hoc requirement applied to GPS that has no basis in published Service guidance. Moreover, issue advocacy efforts were indeed successful in in?uencing several 30 Obtained and Uploaded by the Center for Responsive Politics (OpenSecrets.org) pieces of important legislation.66 With all due respect, it seems absolutely clear that the opinion of Service employees on issues such as how communications should be crafted or what communications are effective should have no impact on the recognition of tax-exempt status. C. The Service?s Determinations Regarding 2 10 Direct Mailings and Telephone Communications Are in Error under Service?s Standards issue advocacy during the ?scal year ending May 31, 2011, included 30 separate direct mailings at a total cost of $876,514, and 47 different telephone communications at a total cost of $178,942. Together, these activities accounted for $1,055,45 6 of expenditures on social welfare activities. These 77 communications should have been classi?ed as issue advocacy. 1. The Service Mischaracterized Features of Direct Mailings and Telephone Communications As with television advertisements, the Service purported to provide several justi?cations for its classi?cations of direct mailings and telephone communications. Again, however, the Service mischaracterized or ignored features of the communications that supported classi?cations, including the following: The communications did not simply occur during the period preceding an election as the Service asserted.? Rather, the communicationls coincided with heightened awareness of speci?c legislative and policy issues and pending or upcoming consideration of those issues in Congress. 66 For example, GPS conducted advocacy regarding the debt limit extension in 201 1 (building on its advocacy regarding the national debt during 2010). These efforts contributed to securing a ?nal resolution in Congress that re?ected stated advocacy goals. 67 See Proposed Adverse Letter, at page 13. 31 Obtained and Uploaded by the Center for Responsive Politics (OpenSecrets.org) However, direct mailings and telephone communications have countervailing Social Welfare Factors that, under all of the facts and circumstances, warrant classifying communications as social welfare activities. For example, - Did not reference any election, campaign, or opposing candidate; 0 Did not advocate the election or defeat of any candidate; 0 Did not encourage any action in connection with a campaign or election; 0 Was part of an ongoing series of substantially similar communications by GPS on the same issues of government spending, low taxes, and job creation; - Identi?ed an event outside the control of GPS a vote on the Tax Hike Prevention Act of 2010 (S. 3773) that GPS hoped to in?uence; 0 Was close in time to this vote the existing tax cuts were scheduled to terminate on December 31, 2010;74 Referred to Senator Reid, who was identi?ed solely as an incumbent government of?cial who was in a position to vote in favor of that legislation;75 and 0 Provided Senator Reid?s legislative of?ce phone number and encouraged recipients to contact Senator Reid and urge him to support the legislation. This combination of factors both campaign intervention and social welfare presents exactly the same facts and circumstances as Rev. Rul. 2004-6 Situation 5. Therefore, must be classi?ed as issue advocacy, not campaign intervention activity. The other 76 communications 74 Congress intended to address tax cuts shortly after the 2010 general elections during the lame duck session in November and December of 2010. GPS continued to advocate against tax increases during that time. 75 As the Senate Majority Leader, Senator Reid was not only in a position to vote in favor of the legislation but also in a position to schedule the vote for the legislation by placing it on the Senate?s calendar. 34 Obtained and Uploaded by the Center for Responsive Politics (OpenSecrets.org) (BJO'SieJoesuedo) sonnod eAgsuodsea Jo; J91U93 eqi Aq pepeoldn pue peugeiqo in dispute similarly parallel the advertisement in Rev. Rul. 2004-6 Situation 5 and should also be classi?ed as social welfare activities.76 3. The Service Used Selective Quotes to Change the Meaning of Direct Mailings and Telephone Communications The Proposed Adverse Letter contains lists of quotations in support of the Service?s assertion that communications ?expressed disapproval? of a speci?c candidate.77 However, direct mailings and telephone communications concerned past legislative actions and current policy positions of incumbent of?ceholders; they did not express disapproval of a speci?c candidate. Furthermore, as GPS explained in both the Protest and during the Conference, the quoted language is incomplete and taken out of context, changing the actual meaning of communications. For example, not one of mailings asserts that ?[State] can?t afford [Candidate]? or ?[Candidate] made the problem worse.? Rather, the direct mailing identi?ed as DM-NH-02 stated that ?New Hampshire Can?t Afford Paul Hodes? Big Spending Plans,? and the direct mailing identi?ed as stated that ?Senator Bennet?s Record Has Made The Spending Problem Worse.? The Proposed Adverse Letter?s selective quotations fundamentally change the meaning of statements. These mailings included extensive reviews of the of?ceholders? legislative positions on ?scal matters of continuing interest and concern to GPS and urged recipients to call the of?ceho ders and tell them to support the Tax Hike Prevention Act of 2010. 76 These communications identify an incumbent Of?ceholder, describe that of?ceholder?s record on particular issues, express disagreenient with that record, and urge viewers to contact the Of?ceholder to tell him or her to take a speci?c of?cial action with respect to a pending or current legislative or policy matter. See Proposed Adverse Letter, at pages 6-7. According to the Service, ?[s]ubstantially all of the [direct mail] communications expresscd disapproval of a speci?c candidate,? and ?[a]ll of the [telephone] calls that named US. Senate candidates expressed disapproval of the individual candidate named in the call.? 1d. With respect to direct mailings, the Service impossibly concludes that ?substantially all? of them expressed disapproval of a candidate because one?third ol?them contain the selectively quoted language appearing in the Proposed Adverse Letter. 77 35 The communications did not identify candidates for public of?ce as the Service asserted.68 Nor did the communications reference a campaign, election, or electoral opponent. The communications identi?ed incumbent of?ceholders solely as of?cials in a position to act on the speci?c issues and legislation referenced in the communications. 0 The communications did not express approval or disapproval of candidates as the Service asserted.69 Rather, the communications critiqued past legislative actions and policy positions of incumbent of?ceholders for the purpose of encouraging recipients to contact the Of?ceholder at a legislative f?ce in hopes of changing the of?ceholder?s positions on similar or related legislative and policy matters. - The Service failed to recognize that each of the communications identi?ed a speci?c piece of pending legislation or a current policy issue and urged of?cial action on that legislation or policy issue.70 Moreover, the Service apparently concluded that the mention of an Of?ceholder in more than one type of communication television advertisements, telephone communications, and direct mailings) weighs against classifying the communication as issue advocacy?1 In so doing, the Service ignored its own guidance under the facts and circumstances test. Rev. Rul. 2004-6 states that a communication is more likely to be classi?ed as campaign intervention activity if it 68 See Proposed Adverse Letter, at page 13page 6 (?More than half of the candidates you identi?ed in your dire it mail communications were also identi?ed in your television advertisements?) and page 7 (?All but one of the candidates you identi?ed in your telephone messages were also identi?ed in your television communications, your direct mail communications, or both?) 32 Obtained and Uploaded by the Center for Responsive Politics (OpenSecrets.org) is not part of an ongoing series of similar communications.72 The 0v advertisements shows that GPS was in fact engaged in distributing a communications. These communications are properly treated as issu Service?s standards and guidance. 2. the Service?s Approved Example ofa Social As always, GPS paid careful attention to Service guidance mailings and telephone communications. Indeed, if the Service had Direct Mailings and Telephone Comml erlap in 1 ongoing series of similar advocacy under the inications Directh Parallel Velfare Communication hen creating its direct actually considered each communication, it would have concluded that many, if not most, of them present exactly the same balance of facts and circumstances as Rev. Rul. 2004-6 Situati direct mailings and telephone communications that implicate 5,73 Factors. For example, the telephone communication candidate for re-election; election; and some of whom are also Nevada voters; and positions. 72 Rev. Rul. 2004-6 CIF ?The communication is not part of an ongoing serie communications by the organization on the same issue.? See also Rev. Rul. 2C communication is part of an ongoing series of communications by the organiza made independent of the timing of any election.? 73 33 Identi?ed incumbent US. Senator Harry Reid, who a Was made on October 15, 2010, three weeks before tl Was made to residents of Nevada, all of whom are Se Described certain of Senator Reid?s legislative and pc This identifying code and any similar identifier for a telephone communicatii with the exhibit code used in the telephone messaging table that GPS created on 5. There are aspects of Campaign Intervention [so happened to be a 1e November 2010 general nator Reid?s constituents licy positions as contrary to a of substantially similar advocacy 07-41 Factor (6): ?Whether the tion on the same issue that are an or direct mailing corresponds )r the May Submission. Obtained and Uploaded by the Center for Responsive Politics (OpenSecrets.org) Neither mailing referenced a candidate, campaign, election, or electc ral voting. Both mailings are therefore consistent with Rev. Rul. 2004-6 Situation 5. Similarly, not one of telephone communications asserts that ?[Candidate] has failed.? The telephone communication identi?ed as PH-23 stated that ?Harry Reid has failed to create jobs, and he promised that spending billions of dollars on the stimulus bill would save our jobs.? Again, the Service?s selective quotation materially changes the meaning of this statement. This telephone communication discussed jobs again, an issue of continuing interest and concern to GPS and Nevada?s high unemployment rate. The communication encouraged recipients to call Senator Reid and tell him to support the Tax Hike Prevention Act of 2010. It did not reference a candidate, campaign, election, or electoral voting. It is therefore consistent with Rev. Rul. 2004-6 Situation 5. Moreover, while the Proposed Adverse Letter makes sweepirig generalizations that encompass ?all? of telephone communications, the Proposed Adverse Letter actually ignores most of telephone communications. For example, the telephone communications identi?ed as PH-20 through (1) refer to Senator Reid; (2) discuss a speci?c portion of Senator Reid?s legislative or policy record; (3) explain why the call recipient should adopt view of that legislative or policy matter; and (4) urge the recipient to contact Senator Reid at his legislative of?ce to deliver messages to him on speci?c legislative or policy matters. Not one of these ?ve telephone communications contains an electoral or campaign reference, and each is consistent with Rev. Rul. 2004-6 Situation 5.78 78 telephone communications that refer to US. Senator Patty Murray through PI-I-30), US. Representative Joe Sestak (PH-31 through and Senator Bennet (PH-36 through are all substantially similar to the communications regarding Senator Reid?s positions on legislative and policy issues and are consistent with Rev. Rul. 2004-6 Situation 5. 36 Obtained and Uploaded by the Center for Responsive Politics (OpenSecrets.org) D. Grant?Making Activities Complied with Av The Service?s guidance regarding the grant-making activities is clear: organizations, and organizations as social welfare expenditures if the gra welfare purposes. GPS has always understood and properly applied this guidanc broaden its impact by empowering other organizations with substant and complementary organizational Because GPS knew th jeopardize its tax-exempt status, GPS made every effort to comply and restrict its grants to activities consistent with social welfa grant that GPS has made since its inception was subject to an explicit and the grantee that the grant funds would be used only for social we The agreements between GPS and grantee organizations were memorialized in a transmittal letter to the grantee organization that rr would be required to use the funds for activities consistent with Code welfare activities. These transmittal letters appropriately earmarked grants by expressly stating that the funds could only be used function purposes or could not be used for campaign intervention act 79 See Statement of Steven J. Law, President of GPS, included as Appendix G. perjury that all grants were subject to such restrictions. See also May Submiss evaluates the activities of grantee organizations; makes grants to organizations and obtains the commitment of the organization to restrict use of the grant to sc 37 Code section 501(c)(4) organizations may make grant Code section 501(c)(4) organizations may classify the ailable Service Guidance of tax-exempt organizations 5 to other tax-exempt ir grants to other tax-exempt are restricted to social GPS made grants to ially similar policy agendas at inappropriate grants could ith the Service?s guidance re activities. Indeed, every agreement between GPS lfare purposes.? 3, in nearly all instances, iade clear that the grantee section 501(c)(4) social or restricted the use of or the grantee?s exempt ivities. For example, on r. Law con?rms under penalty of ion, at page 18 (GPS carefully with complementary missions; cial welfare purposes). Obtained and Uploaded by the Center for Responsive Politics (OpenSecrets.org) September 17, 2010, GPS made a grant of$300,000 to American Just section 501(c)(4) organization. In the transmittal letter, GPS earmark use for campaign intervention or other non-exempt activity: Crossroads Grassroots Policy Strategies (GPS), a non-pro?t 5 organization, is pleased to make this general support grant in 1 $300,000 to American Justice Partnership (AJP), also an IRS pro?t 501(c)(4) organization. The sole purpose of this grant is to further your organization? purpose as a legally qualified social welfare tax exempt orgai AJP agrees that funds provided by this grant will not be used. purpose including any political activity. This grant is being assurance. (Emphasis added.)80 "ice Partnership, a Code ed the grant to prohibit its 01(c)(4) tax exempt he amount of tax exempt non- 3 stated mission and zizatz'on. As a result, for any other ade based upon that No other restriction or oversight is required for grants 0 be properly classi?ed as social welfare activity. Indeed, the Service has never issued guidanc imposing an additional oversight requirement on grantor organizations, and GPS is not awar of any oversight requirement being imposed on other tax-exempt organizations. The act that some grantees may have engaged in direct or indirect campaign intervention activities us funding is irrelevant. A grantor organization is entitled to reasonably earmarking agreement with a grantee organization. Indeed, even if a to subsequently breach such an agreement, the grantor organization grantee?s breach.81 Because GPS is not aware of the Service previously questioni 'ng other sources of rely upon an explicit grantee organization were vould not be liable for the mg the propriety of tax- exempt organizations making grants to other tax-exempt organizatiorlis, GPS believed that the information included in its May Submission to the Service was more demonstrate that its grants are appropriately classi?ed as social welfa so A copy of this transmittal letter is included in Appendix H. 3' See Hill Mancino?l 38 than adequate to re expenditures. However, Obtained and Uploaded by the Center for Responsive Politics (OpenSecrets.org) the Proposed Adverse Letter and comments made by the Service?s re Conference make clear that the Service does not believe that it has 3 properly classify grants. Indeed, at the Conference, the Servi that, even if the Service changes its opinion as to communica period for consideration, the grants may be used as an entirely new Ii recognition of tax-exempt status. Appendix to this Revised Protest includes detailed inform materials for, all of grants from its inception through April 36 include descriptions of the grantee organizations and the restrictions as copies of the grant transmittal letters from GPS to the grantee org is more than suf?cient for the Service to con?rm that grants social welfare expenditures. The Proposed Adverse Letter also raises ?the possibility of a Again, the Service takes it upon itself to infer a nefarious intent whe the Service?s guidance, GPS required explicit agreements that its gra promote social welfare and not for any non-exempt purpose. Nothin more tax-exempt organizations from making otherwise proper grant. ?scal year. Even disregarding the allegedly ?circular? grants for pu activities, GPS would still qualify as tax-exempt under Code section E. Social Welfare Activities The Proposed Adverse Letter states that GPS ?did not provid information regarding other possible measures, such as the amount 82 Proposed Adverse Letter, at page 13. 39 The Service Should Have Considered the Time an :presentatives at the af?cient information to ce?s representatives implied tions or the appropriate basis upon which to deny zition about, and supporting 2012. These materials placed on the grants, as well anizations. This information are properly classi?ed as circular ?ow of funds.?82 re none exists. Following mt funds would be used to in the law prevents two or to each other in a single rposes of calculating 501(c)(4). Effort GPS Expends on ?e suf?ciently detailed time and effort that was Obtained and Uploaded by the Center for Responsive Politics (OpenSecrets.org) expended for each activity.?83 This is simply not the case. It is true breakdown of every hour spent by its employees on social welfare ac two years of operations. But GPS is not aware of any organization tl normally makes its determination based on no more than the Form 1 matter the Service is simply creating obstacles in order to reach a neg Nevertheless, May Submission to the Service includec information that demonstrate the signi?cant amount of time and effo welfare activities. Among the information already in the Service?s warrants particular attention: . . . . 4 Views on current legislatlve and policy matters;8 of?ceholders to inform them of priorities, and directed at the public;85 upcoming votes;8?5 GPS issues press releases on its advocacy activities;3 83 Proposed Adverse Letter, at page 14. 84 policymaking. See id at page 14 and Exhibit The agendas included the 2010-11 ?7 the 2012-13 ?New Majority Agenda.? See id. at Exhibit 6-g. These e-mails reach approximately 1,200 people. 85 86 87 policy goals outlined in issues agendas. 40 GPS engages in research activities to better inform lat GPS creates ?issues agendas,? which guide act GPS sponsors an ?Issue Directions? e-mail series adv 7 See May Submission, at page 9. These activities include public opinion polling Freedom of Information Act efforts, and in-depth policy research on issues of 5 See id. at Exhibit 7. GPS created more than 100 press releases during the relev that GPS did not provide a tivities during more than lat does, and the Service 024. It seems that in this gative conclusion. hundreds of pages of rt GPS expends on its social ossession, certain material Nmakers of the public?s ivities, are distributed to are featured in advertising ocating legislative action on on legislative and policy issues, igni?cant impact on government ?11 National Action Plan? and ant period, all focusing on the Obtained and Uploaded by the Center for Responsive Politics (OpenSecrets.org) 0 Representatives of GPS regularly engage in media con GPS has an extensive online presence, including a wel Twitter account,91 and a YouTube channel.92 GPS has also provided the Service with the statement of Steve President for Policy, included as Appendix I. This statement explain welfare activities that would not be obvious from an examination of providing additional background regarding agenda deveIOpme interactions with policymakers, advocacy and coalition-building with and public events and writings. When the Service fully evaluates the voluminous information will ?nd that GPS expends a signi?cant amount of time and effort on that is not otherwise re?ected in expenditures. This informati for the proper conclusion that the Service must recognize tax- F. The Service Should Have Extended Its Inquiry bey Operations The Proposed Adverse Letter is based on a single year GPS May 31, 2011. The Service, however, requested and obtained inform 88 See May Submission, at page 28 and Exhibits and Th: providing statements to members of the news media and authoring op-ed pieces 39 See id at Exhibit 8. The website explains the organization, introduces its leade explanations of the issues agendas, and provides the means by which individual representatives. See id. at Exhibit 9-a. As of late January 2014, Facebook page had more included hundreds of individual posts, almost every one of which had received comments. See id. at Exhibit 9-b. As of late January 2014, Twitter account had mor had posted nearly 1,000 ?Tweets.? See id at pages 27 and 30. As of late January 2014, YouTube channel than 1,200 subscribers, and had accumulated more than 2.3 million viewsnmumcations; and )site,89 a Facebook page,90 a :n Duf?eld, Vice 3 some of social expenditures, nt, issue surveys, direct in the policy community, already in its possession, it social welfare activities on provides further support exempt status. 0nd First Year of ?s ?rst taxable year ending ation on extensive :se communications include for various publications. rship, provides detailed may contact their elected than 66,000 ?Likes? and multiple ?Likes,? ?Shares,? and than 5,100 followers and GPS ontained 187 videos, had more Obtained and Uploaded by the Center for Responsive Politics (OpenSecrets.org) social welfare activities through April 30, 2012. The Service?s decis additional activities deviates from the Service?s normal procedure: a considers all of the facts and circumstances concerning the organizat Because the Service delayed in reviewing Form 1024, what should have been a review of the Form 1024 (Le, a considerati into a de facto audit a review of past actions). This kind of de f: with the policies and procedures that the Service applies to audits of nor does it comply with the tests and analysis that courts typically ap determination letters. By de?nition, audits are for a speci?c taxable on audit is whether an organization is tax-exempt, the Service consid activities if information regarding such activities is available.93 This properly consider all probative and possibly determinative eviden Consider a hypothetical social welfare organization that recei? contributions of $1,000,000 for three years. In Year One and in Yea $1,000,000 on social welfare activities. In Year Two (an election ye campaign intervention activities and $490,000 on social welfare activ this organization?s existence, it would have spent $510,000 out of $3 campaign intervention activities.95 Logically and rationally, this org under Code section 501(c)(4). It would not qualify, however, if the 93 The Service always considers more than one year unless the issue is whether a occurred, a political endorsement by a charity. 94 group?s big ad buy or several months of pre-election 95 $510,000 out of $2,000,000 only 25.5%. 42 See, Lunder Whitaker, at page 7 is not possible to make the If Year One and Year Two are considered and Year Three is ignored, the organ, on to ignore these multi-year analysis that ion?s activities. it effectively converted on of proposed activities) 1cto audit does not comply tax?exempt organizations, ply when reviewing adverse year. But when the question ers more than one year of approach is necessary to ce.94 ves and spends total annual 1 Three, it spends ar), it spends $510,000 on ities. Over the course of 000,000 only 17% on anization should qualify ervice delayed single disqualifying event iination by looking solely at a zation would have spent Obtained and Uploaded by the Center for Responsive Politics (OpenSecrets.org) consideration of the organization?s Form 1024 application for three years and then limited its review to Year Two. Nothing in the Service?s rules or guidance suggests that the 'u acts and circumstances test requires the Service to limit its inquiry to an organization?s ?rst yea? of existence or permits the Service to select a particular year of an organization?s operations. I+deed, by stating that it will consider ?all the facts and circumstances? of each case, the Service states that it will not ignore any relevant information. ?Where the Service considers it warrantec operations may be required before a ruling or determination will be 1, a record of actual issued.?96 When an organization has been operating for one and a half years before the Service even contacts the organization about its Form 1024 application and has been operating for more than three years before the Service issues its proposed adverse determination logic, Service to consider the entire record of the organization?s operations and received as part of the Service?s determination process. The Service has historically considered all evidence in its p0 facts and circumstances test even evidence deve10ped after it make For example, while evaluating the tax-exemption application at issue case,97 the Service considered more than a single taxable year. Indei issued an adverse determination letter on October 17, 1974, the adm 96 Treas. Reg. (emphasis added): ruling or determination organization provided its application and supporting documents establish that i of the section under which exemption is claimed. Exempt status will be recogr proposed operations can be described in suf?cient detail to permit a conclusion the particular requirements of the section under which exemption is claimed . . warranted, a record of actual operations may be required before a ruling or det Big Mama Rag, Inc. v. United States, 631 F.2d 1020 (DC. Cir. 1980). 97 43 fairness, and law require the that the Service requested ssession when applying the its initial determination. in the Big Mama Rag ed, although the Service nistrative record presented etter will be issued to an meets the particular requirements .ized in advance of operations if that the organization will meet . . Where the Service considers it ermination letter will be issued.? Obtained and Uploaded by the Center for Responsive Politics (OpenSecrets.org) to the court what the Service agreed was relevant included a organization nine months after the Service had issued its adverse det By ?ling a Form 1024, an organization seeks recognition of story published by the termination letter.98 ax-exempt status generally and inde?nitely, not recognition for a particular year. GPS presumed that this was the reason the Service requested such a signi?cant amount of additional info?rmatio activities subsequent to May 31, 2011. GPS provided all of the infor than 1,000 pages of documents but the Service ignored nearly all 0 Letter. If the Service had considered the additional information and based on activities through April 30, 2012, the Service would exempt status. Even based on the improper per se rule that the Service appea advertisement during the eleven weeks before a general election that se campaign intervention activity), GPS remains primarily engaged i concerning mation requested more fit in the Proposed Adverse made its determination have recognized tax- to apply any mentions a candidate is per [1 social welfare activities. From its inception through April 30, 2012, GPS spent a total of $71,424,708 on its activities. As it was conducting and categorizing those activities diligently and in that it spent $17, 919,199 (or 25.1%) on campaign intervention activ1 74.9%) on social welfare activities. Even applying the Service?s errc calculated that, from its inception through April 30, 2012, it spent $2 campaign intervention activities and $46,863,401 (or 65.6%) on soci thus eligible for recognition of tax?exempt status under Code section 9? See Big Mama Rag, 631 F.2d at1038, 1038 n. 15. 99 The Proposed Adverse Letter found that all direct mailings, telephone commun advertisements in calendar year 2010 fell within the pre-election window. GPS Service?s standards incorporate those ?ndings. There was no pre-election wind April 30, 2012, thus all of expenditures during that period would qualify 44 good faith, GPS calculated ties and $47,614,152 (or meous per se rule, GPS has 4,561,307 (or 34.4%) on all welfare activities and is ications, and television ?3 calculations under the ow between January 1, 2011, and as social welfare expenditures. Obtained and Uploaded by the Center for Responsive Politics (OpenSecrets.org) CODE AND TREASURY REGULATIONS In developing and reviewing its communications on legislatii. carefully observed and relied upon the facts and circumstances test, published letter rulings. But published letter rulings are not the equi1 enacted law. Indeed, Judge Holcomb Hall of the United Sta former litigator in the Tax Division of the US. Department of Justice Service stands before a judge, published letter rulings are merely the litigants.100 Nor are letter rulings the equivalent of Treasury Regulat presumption of validity because they are developed pursuant to a pul rulemaking processlm GPS recognizes that the Service is charged with administerin because the Service?s interpretation of Code section 501(c)(4) is not Regulations, that interpretation is entitled to little, if any, deference. litigated, even in a court willing to give the Service some deference, that deference by demonstrating that the facts and circumstances test correctly to GPS (as discussed above) and (2) is unconstitutional (as ?00 See Browne v. Commissioner, 73 TC. 723, 731 (1980) (Hall, J., concurring). 10? See Lunder Whitaker, at pages 3-4. 45 THE FACTS AND CIRCUMSTANCES TEST IS NOT Eli PRESUMPTION OF VALIDITY AND DEFERENCE TITLED TO THE ICORDED TO THE '8 and policy issues, GPS which is the product of two valent of the Code, which is tes Tax Court herself a has noted that when the opinion of one of the ions, which enjoy a >lic notice-and-comment the Code. However, embodied in Treasury If this matter were to be GPS would easily overcome (1) was not applied discussed below). Obtained and Uploaded by the Center for Responsive Politics (OpenSecrets.org) VI. THE SERVICES STANDARDS ARE UNCONSTITUTI A. Although this matter can and should be resolved in favor of constitutional issues, the facts and circumstances test of Rev. Rul. 20 is unconstitutional because it violates the void-for?vagueness doctrin A law, regulation, or administrative pronouncement is uncon. following applies: (1) It is so dif?cult to understand that ?men of common it - - ,1104 guess as to 1ts meanmg. (2) It provides so little objective guidance to officials that and contains ?language calling for the exercise of sub_ - - 10 by objective norms.? 5 The Facts and Circumstances Test Is Void for Vag DNAL ueness without reaching 04-6 and Rev. Rul. 2007-41 102,103 3 stitutional if either of the itelligence must necessarily enforcement is inconsistent ective judgment, unaided While GPS endeavored in good faith to hew carefully to the facts and circumstances test (as GPS could best determine the test?s ?meaning? and ?guidance?), the facts void for vagueness under each factor of the void-for-vagueness doctt 102 Tax laws are subject to the void-for-vagueness doctrine. See, Big Mama Ii long-standing Treasury Regulation void due to vagueness). A large number of knowledgeable observers including many who disagree agree that the facts and circumstances test is unconstitutional. See, e. Laura J. Johnson, Legislative Counsel, ACLU Letter to the IRS Expressing Concerns Regard to Political Speech and the De?nition of What Is or Is Not an ?Exempt political-speech- (last visited Oct. 13, 2013). For the seminal historical overvie doctrine, see Anthony G. Amsterdam, The Void-For- Vagueness Doctrine in the Rev 67 (1960); see also, Keyishian v. Bd. ofRegents, 385 US. 589 (1967) (1964); Joseph Inc. v. Wilson, 343 US. 495 (1952). '04 Hynes v. Mayor of Oradell, 425 US. 610, 620 (1976) (quoting Connally v. Ger (1926)). NAACP v. Button, 371 US. 415, 466 (1963) (Harlan, J., dissenting). '06 Ironically, the Service itself is currently seeking to adopt new regulations that and circumstances test is inc.106 ag, 631 F. 2d at 1040 (declaring a th GPS on most other issues W. Murphy, Director, and Marvin about Revenue Ruling 2004-6 with Function? (Jan. 26, 2004), enue-ruling?2004-6-regard- of the void-for-vagueness Supreme Court, 109 U. Pa. L. Baggett v. Bullitt, 377 US. 360 . Constr. 269 US. 385, 391 eject the facts and circumstances test of Rev. Rul. 2004-6 and Rev. Rul. 2007-41. See Notice of Proposed Rulemaking, at page 856. 46 Obtained and Uploaded by the Center for Responsive Politics (OpenSecrets.org) l. The Facts and Circumstances Test Fails to Pro vide the Clarity and Predictability Required by Applicable Constitutional Standards If the Service determines that GPS failed to properly apply the test, such failure is due to the test itself. Rev. Rul. 2004-6 presents six factors ?tend[ing] to Show? that campaign intervention activity and ?ve factors ?tend[ing] to show? th is not campaign intervention activity. No single factor is determinati? eleven factors are not weighted against each other, and the ruling acki unspeci?ed facts and circumstances may be equally relevant, varying addition, the ruling presents six hypothetical ?situations.? Each situa out an isolated set of facts and states a result in those circumstances; provided for the result beyond a simple restatement of the applicable noted that the guidance provided by these situations is of limited use best, Rev. Rul. 2004-6 indicates what might be considered relevant in leaving a reader to guess at the ruling?s meaning more generally. The provide the real-world, objective guidance needed both by those who welfare organizations and by the Service?s employees who are charge Rev. Rul. 2007-41 similarly lays out seven ?key factors? in and circumstances in determining whether a communication consti activity. The ruling also presents three situations in great detail. Aga most informs readers what considerations might be important given and leaves readers to guess at the ruling?s meaning in anything but th See, Hill Mancino It has also been noted authority for its position? in the ruling. Id. 1i 47 facts and circumstances a given communication is at a given communication Ie or predominates. The nowledges that other on a case-by?case basis. In :ion, however, simply lays there is little reasoning factors. Indeed, many have in the real world.107 At some circumstances, ruling simply fails to form and operate social ?d with enforcing the law. addition to all other facts utes campaign intervention in, however, the ruling at ertain highly-specific facts exact same circumstances. hat ?[t]he Service did not cite any Obtained and Uploaded by the Center for Responsive Politics (OpenSecrets.org) The facts and circumstances test also fails to set forth the exte may engage in campaign intervention activities without jeopardizing Rul. 81-95108 provides that a social welfare organization may engage activities if it remains ?primarily? engaged in the promotion of socia has never clari?ed (1) the amount of campaign intervention activities Service measures the quantity of an organization?s campaign interve In addition, ?[t]he distinction between campaign intervention and the measurement of the organization?s social welfare acti nt to which an organization its tax-exempt status. Rev. in campaign intervention I welfare. Yet the Service allowed or (2) the way the 1tion activities:109 and social welfare activity, vities relative to its total activities, have created considerable confusion for both the ppblic and the IRS in making appropriate section 501(c)(4) determinations.? The Treasury recognize that both the public and the IRS would bene?t fron concepts. 1 10 Rev. Rul. 2004-6 and Rev. Rul. 2007-41 essentially establish reSpect to campaign intervention activity as ?we know it when we se organizations must guess how much of each kind of activity is allow Department and the IRS 1 clearer de?nitions of these the Service?s position with it.? Social welfare ed and whether they should track their activities based on the amount of dollars spent, the amount of time spent, or any of a number of other measures.1 Indeed, even the Service has publicly and circumstances is ambiguous and confusing: acknowledged that the facts It has been a common refrain from Congress and the public that the rules that are applicable for 501(c)(4) eligibility are ambiguous and confus 1981-1 CB. 332. '09 See McPherson, E0 Training Materials Suggest 51 Percent Threshold, at page ?0 Notice of Proposed Rulemaking, at page 858 (quoting Werfel, Charting a Path See Lunder Whitaker, at page 6; Judith E. Kindell John Francis Reilly, Ele Kindell Reilly), 2002 E0 CPE Text, Ch. 1, Sec. C, Question 1, at pages 350- 48 ng, both for the taxpayer 122. Forward, at page 28). ction Year Issues (hereinafter 52. Obtained and Uploaded by the Center for Responsive Politics (OpenSecrets.org) and for the staff within the IRS whose responsibility it is to a regulations. 1 ?2 The Constitution does not allow this degree of vagueness, particular rights are involved. The void-for-vagueness doctrine requires the lat common intelligence? need not ?guess as to its meaning.?H3 The far does not meet that standard. 2. The facts and circumstances test is also unconstitutionally va little objective guidance to government officials that enforcement require the exercise of subjective judgment is inconsistent. For ex: that subjective intent should not be considered but at the same time must be considered.?4 No objective standard can accurately determi employees are therefore forced to exercise their own subjective judg norms. In practice, the Service considers intent in some cases, but n1 When the Voter Alliance to Improve Democracy (?Vote AID exemption under Code section 501(c)(3) a status inconsistent with intervention its application unambiguously stated its intent to elect candidates for public of?ce by registering voters who would vote fo issuing a favorable determination letter to Vote AID, the Service den ?2 Werfel, Charting a Path Forward, at page 28. ?3 Hynes, 425 US. at 620. ?4 Kindell Reilly, at page 350 (determining whether a Code section 501(c)(3) 0 campaign intervention prohibition). ?5 See Vote AID Form 1023 (Application for Recognition of Exemption Under S: Revenue Code) (attached as Exhibit Letter to Lois Lerner, Director, Exemp (noting the favorable determination letter issued to Vote AID on May 31, 2007 (attached as Exhibit 6). 49 The Service Applies the Facts and Circumstan iminister those laws and 1y when First Amendment to be so clear that ?men of :ts and circumstances test ces Test Inconsistenth gue because it provides so vhich will necessarily tmple, the Service has stated hat manifestations of intent ne intent; the Service?s nent, unaided by objective )t in others. applied for recognition of any political campaign liberal or progressive such candidatesns By I ionstrated that even a rganization has violated the :ction 501(c)(3) of the Internal Organizations (Dec. 14, 2007) and requesting further guidance) Obtained and Uploaded by the Center for Responsive Politics (OpenSecrets.org) clearly-stated intent did not matter at least in that case. But someh different. At the Conference, the Service dismissed as irrelevant the ref Service?s decision to recognize Vote AID was not a fluke or an inadi stated activities and the identity of its officers, its directors, and its le the decision to issue the favorable determination letter was made at Service and after careful deliberation. Moreover, after the organizati determination letter, the results were highlighted in a letter to Lois Exempt Organizations.?6 Vote AID is not unique. It is no secret th. many similar organizations with similarly stated intent. Here, however, the Service has inferred and then considered concluded that most of advertising activities were campaign i because of the advertising itself, but rather because of the Service?s 5 regarding underlying intent: We also note that after the [2010] general election, your adve [taxable year ending May 31, 2011] dropped off sharply, whi that most of your advertising activities in [2010] were campa The Service apparently believed that reduced activity after the was an indicator of political intent instead of other potential factors legislative sessions, or natural periods of heightened public interest i ?6 See Exhibit 6. ?7 Proposed Adverse Letter, at page 13. ?8 As explained above, GPS remained actively involved in issue advocacy activiti even if expenditures may have decreased. 50 JW the rules for GPS are erence to Vote AID, but the zertent error. Vote gal counsel all indicate that he highest levels of the on received its favorable erner, then Director of at the Service has approved intent and has ntervention activities not ubjective inferences rtising expenditures in ch supports the conclusion ign relatedm 2010 general election118 . such as cyclical cash flow, issues and then weighted es after the 2010 general election, Obtained and Uploaded by the Center for Responsive Politics (OpenSecrets.org) that intent heavily in order to conclude that GPS was not engaged primarily in social welfare activities. But any test that allows the Service to consider the inferred intent of some applicants GPS) and ignore the explicit intent of other applicants Vote AID) is without question void for vagueness. Similarly, the Service appears to use inconsistent factors to calculate an organization?s campaign intervention activities. The Proposed Adverse Letter states as follows: You did not provide sufficiently detailed information regarding other possible measures, such as the amount of time and effort that was expended for each activity, and, to the limited extent that you did comment on the relative amount of time devoted to your activities, your statements support our conclusion that you are not primarily engaged in promoting social welfare. Accordingly, we have based our conclusion that you are not exempt under 501(c)(4) principally on the ?nancial expenditure information that you provided.?9 The Service thus implies that the provision of additional information might have resulted in a different outcome. Yet it should not be the case that an adverse determination is reached in part because of an absence of information, particularly when the Service never requested that information after reviewing the application for nearly three years. ad hoc approach to evaluating application demonstrates that the facts and circumstances test ?is no standard at all, and makes the tax status of [tax-exempt] organizations and their donors a matter of the whim ofthe ?9 Proposed Adverse Letter, at page 14. United Cancer Council, Inc. v. Comm 'r ofInternal Revenue, 165 F.3d 1173, 1179 (7th Cir. 1999) ?(Posner, C.J.). 51 Obtained and Uploaded by the Center for Responsive Politics (OpenSecrets.org) B. The Facts and Circumstances Test Impermissibly Rev. Rul. 2004-6 and Rev. Rul. 2007-41 were both issued be Supreme Court decided the Wisconsin Right to Life and 1 Burdens Free Speech fore the United States Citizens United122 cases. While those cases involved FEC rules restricting ?electioneering coniimunications,? their holdings are relevant here because: speech as the rules restricting electioneering cc the Service itself well knows. 123'12? 1 . Protected Speech The Bipartisan Campaign Reform Act of 2002 cable, or satellite communication? that ?refers to a clearly identi?ed made within 30 days of a primary or 60 days of a general election In WRTL, the Supreme Court rejected a subje and-tumble of factors? approach instead adopting an objective ?ap FEC v. Wisconsin Right to Life, Inc., 551 US. 449 (2007). ?22 Citizens United v. FEC, 558 US. 310 (2010). '23 See E-mail to Michael Seto, Manager, Exempt Organizations Technical, from 1 Organizations (Feb. 1, 2011), (last visited Feb. 27, 2014): Tea Party Matter [sic] very dangerous. This could be the vehicle to go to Citizen?s United [sic] overturning the ban on corporate spending applies Judy Kindell need to be in on this one . . . Ms. Kindell, who represented the Service at the Conference, is generally regari Rul. 2004-6 and Rev. Rul. 2007-41. 124 See also Josh Hicks, Republicans say IRS e-mails from Lois Lerner show ?abus Federal Blog (Sept. 13, 2013, 6:00 AM), (quoting er '25 2 use. 434(n(3). 52 The Service?s facts and circumstances test imposes th The Service is subject to the same First Amendment (2 The Supreme Court Has Struck Down Multi-l? same burdens on protected immunications; and bligations as the FEC, as actor Tests Restricting Jhibits ?any broadcast, candidate for Federal office? ?electioneering :tive, ?open-ended rough? )eal to vote? test for .ois Lerner, Director, Exempt inoreply@mailhost% court on the issue of whether to tax exempt rules. Counsel and led as the major author of Rev. of power Washington Post nail to Mr. Seto from Ms. Lerner). Obtained and Uploaded by the Center for Responsive Politics (OpenSecrets.org) determining whether a potential electioneering communication was tie functional equivalent of express advocacy.126 In response to WRTL, the FEC created a two-part, eleven?fact or balancing test, which allowed the FEC ?to select what political speech [was] safe for public consumption by applying ambiguous tests.?127 The multi-factor test required government of?cials to ?pore over each word of a text to see if, in their judgment, it accord[ed] with the 11-factor test they [had] promulgated.?128 Because of the test?s complexity and uncertainty, speakers were essentially left with only two options to avoid litigation and penalties: refrain from speaking or request permission to speak.129 The Supreme Court struck down the multi-factor test as an impermissible burden on and an ?unprecedented governmental intervention into? protected speech in violation of the First Amendment. 130 The Supreme Court?s reasoning in Citizens United applies here. Because the Service?s facts and circumstances test is unclear, an organization that wants to maintain tax-exempt status under Code section 501(c)(4) faces even greater restrictions on its speech than one facing the multi-factor test. A Code section 501(c)(4) organization can only guarantee tax-exempt status by engaging in only de minimis campaign intervention activities. Otherwise, the organization will face the multi-factor, incomprehensible, and dangerous facts and circumstances '26 WRTL, 551 US. at 469-70 (internal citations omitted). ?27 Citizens United, 558 U.S. at 336; see 11 CPR. 114.15. ?23 Citi:ens United, 558 US. at 336. ?29 See id. at335. Id. at 336; see also id. at 335: ?[T]he FEC adopted a two-part, ll-factor balancing test to implement ruling . . . . This regulatory scheme may not be a prior restraint on speech in the strict sense of that term, for prospective speakers are not compelled by law to seek an advisory opinion from the FEC before the speech takes place . . . . As a practical matter, however, given the complexity of the regulations . . . a speaker who wants to avoid threats of criminal liability and the heavy costs of defending against FEC enforcement must ask a governmental agency for prior permission to Speak . . . . These onerous restrictions thus function as the equivalent of prior restraint by giving the FEC power analogous to licensing laws implemented in 16th- and 17th-century England, laws and governmental practices of the sort that the First Amendment was drawn to prohibit.? 53 Obtained and Uploaded by the Center for Responsive Politics (OpenSecrets.org) test of Rev. Rul. 2004-6 and Rev. Rul. 2007-41. The test requires the word of an organization?s communications to guess if, in the Service communications accord with the Service?s standards. But the Consti1 Service to create and implement such an in terrorem regime. 2. The Supreme Court has ?long recognized that the distinction advocacy and issue advocacy ?may often dissolve in practical applica also long recognized that distinguishing between discussions of issue candidates cannot be based on an intent-and-effect test without jeopa discourse.132 The First Amendment is meant to protect uninhibited a issues of national importance; a test that focuses on the intent of the 5 re?ect the country?s ?profound national commitment? to that princip An intent-based test is inherently uncertain and unpredictable the door to a trial on every ad . . . on the theory that the speaker actua election, no matter how compelling the indications that the ad concer policy issue.?134 Such tests also ?lead to the bizarre result that identi time could be protected speech for one speaker, while leading to . . . ?31 WRTL, 551 US. at 454 (quoting Buckley v. Valeo, 424 U.S. 1, 42 (1976)). '32 See id. at 467. '33 Id. at 467-68. ?34 1d. at 468. 135 54 The Supreme Court Has Held that Intent Cann Differentiating Issue Advocacy and Campaign . Service to pore over each judgment, those tution does not allow the at be a Factor for Intervention Activities between campaign tion.mm The Court has 8 and discussions of rdizing free political nd robust public debate on peaker does not ?remotely? e. 133 Intent-based tests ?open[] lly intended to affect an ned a pending legislative or :al ads aired at the same Jenalties for another??35 1 Obtained and Uploaded by the Center for Responsive Politics (OpenSecrets.org) Regulations of speech therefore require objective standards that focus communications rather than ?amorphous considerations of intent and 3. The Facts and Circumstances Test?s Reliance Communications Is Questionable The Service?s facts and circumstances test relies heavily upon communications in determining whether those communications are is intervention activities,137 and the Service appears to have reached its Adverse Letter based primarily on the timing of advertising neither than its content. The Supreme Court has held that the timing of a communicat in determining whether that communication is the functional equivalt In WRT L, the organization planned to air its advertisements near elec legislative votes, and it did not run the ads after elections.140 To the the organization?s subjective intent, it was entirely irrelevant because a factor when regulating protected speech.141 The Supreme Court err certainly choose to run an issue ad to coincide with public interest rat Moreover, the Supreme Court has explicitly recognized that election is the time when citizens are most engaged and most aware ?It is well known that the public begins to concentrate on elections 01 ?35 us. at 469. Five of the Service?s factors expressly reference the timing of communications. and SWF Rev. Rul. 2007-41 Factor (3), Factor (6) and Factor (7). ?38 See, e. Proposed Adverse Letter at pages 12-13 (?nding that pre-election tele campaign intervention actiVities and that the single post-election television adv advocacy) and page 13 (?nding that direct mailings and telephone calls constitL activities because they were communications during the period leading up to th ?39 WRTL, 551 us. at 472473. 55 on the substance of effect.?136 in the Timing of the timing of sue advocacy or campaign conclusions in the Proposed 133 on is at best unpersuasive :nt of express advocacy. 139 tions but not near actual :xtent this evidence went to subjective intent cannot be [phasized that ?a group can her than a ?oor vote.?142 he period preceding an if important policy issues: ily in the weeks See Rev. Rul. 2004-6 CIF vision advertisements constituted :rtisement constituted issue ited campaign intervention 3 election). Obtained and Uploaded by the Center for Responsive Politics (OpenSecrets.org) immediately before they are held. There are short timeframes in which speech can have in?uence.?143 It is therefore to be expected that organizations will engage in issue advocacy during electoral campaigns, when citizens are most engaged and most receptive to issue advocacy and when public of?cials are most responsive to their con stituents.I44 In addition, as GPS explained during the Conference, this is the same time period during which Senators and Representatives are often back in their home states and most responsive to their constituents. Therefore, an organization?s choice to engage in issue advocacy during periods close in time to an election or its decision to cease issue advocacy following an ele ction ?does not support the inference that the ads were the ?mctional equivalent of electioneerin g.?145 The Facts and Circumstances Test?s Reliance on Contextual Factors Is Questionable Some of the factors in the Service?s facts and circumstances which communications are made rather than on the content of the co Such contextual factors ?should seldom play a significant role in the advertisement is the ?inctional equivalent of express advocacy. 146 communications for a different purpose than the FEC, both regulator political communications that may be the equivalent of express advc political party or candidate for of?ce. '43 Citizens United, 558 vs. at 334. '44 See, e. Saul Zipkin, The Election Period and Regulation of the Democratic J. 533, 544 (2010) (?The pre-election period is a time of heightened engageme time when both voters and political actors are more attentive to one 2d 176, 793-94 (D.D.C. 2003) (discussing interest groups? belief ?that the peri elections are the most effective times to run issue advertisements discussing pe public?s interest in policy is at its peak?). WRTL, 551 us. at 473. 1d. at 473-74. 56 Obtained and Uploaded by the Center for Responsive Politics (OpenSecrets.org) test focus on the context in mmunications themselves. inquiry? into whether an Vhile the Service reviews 'y agencies review protected cacy for or against a ?rocess, 18 Wm. Mary Bill Rts. it with the democratic process: a McConnell v. FEC, 251 F. Supp. )ds immediately preceding nding legislation because the When an agency reviews a communication, it does not need information that may be necessary to put an ad in context such as legislative issue that is either currently the subject of legislative scru subject of such scrutiny in the near future.??l47 However, the consid information ?should not become an excuse for discovery or a broade [that] raises First Amendment concerns??48 Under that standard, and circumstances test are questionable. First, the facts and circumstances test asks whether the comm ongoing series of similar communications by the organization on the question does not consider the content of the communication itself ?ignore basic background thtl?lCI? an ad ?describes a tiny or likely to be the :ration of basic background inquiry ofthe sort . . . reral elements of the facts unication is part of an same issue. 149 This instead relies upon an organization?s past course of conduct. To the extent the Service exa ines the organization?s subjective intent, this element of the facts and circumstances test is estionable, as discussed above. To the extent the Service examines any other consideration, tihis element of the facts and circumstances test is a questionable consideration of context. For ex an established, single-issue interest group might be classified as issu communication made by a newly-formed or broad?based advocacy classi?ed as campaign intervention activity, simply because the sing track record of communications regarding a specific issue. The ident ample, a communication by advocacy while the same rganization might be 1 e-issue group would have a ity of the speaker and that speaker?s past conduct should have no bearing on a determination uqder the facts and circumstances test. This element of the facts and circumstances test under the First Amendment. WRTL, 551 US. at 474 (quoting WRTL v. FEC, 466 F. Supp. 2d 195,207 (D.D I48 1d. '49 Rev. Rul. 2004?6 CIF Rev. Rul. 2007-41 Factor (6). 57 3 therefore questionable c. 2006)). Obtained and Uploaded by the Center for Responsive Politics (OpenSecrets.org) Second, the facts and circumstances test asks whether a partic organization has been raised as distinguishing candidates in a campat purpose this consideration serves. Indeed, it would seem simply to organizations from discussing national issues under debate. The mos consequential policy and legislative issues generally involve matters and candidates disagree; the fact that they may disagree on an issue communication can have no bearing on whether that communication ular issue identi?not clear what iscourage social welfare important and upon which of?ceholders aised in an advocacy constitutes issue advocacy.?1 The First Amendment embraces all issues; ?[d]iscussiotn of issues cannot be suppressed simply because the issues may also be pertinent in an elec element of the facts and circumstances test is suspect under the First Finally, by its nature, the facts and circumstances test will con circumstances the Service ?nds relevant. This is likely to include a external considerations. The Supreme Court has established that reg must focus on an objective inquiry into the content of the communicz Because the Service?s facts and circumstances test incorporates other it is constitutionally suspect under the First Amendment. '50 Rev. Rul. 2004-6 CIF Rev. Rul. 2007?41 Factor (5). See WRTL, 551 us. at 470. In WRTL, the organization?s issue advocacy adver ?libustering as a political tactic. The FEC argued that, because the organizatio opposed one candidate?s re?election and identified ?libusters as a campaign iss communications were actually electioneering communications. The Supreme and found this overlap in activities to be irrelevant. ?52 Id. at 474. '53 See Citi:ens United, 558 US. at 336. 58 :tion.?152 Therefore this Amendment. sider any facts and ariety of contextual or ulations of political speech itions themselves. 153 contextual considerations, tisements focused on the use of 1 and its associated PAC had re, the issue advocacy Iourt rejected the argument Obtained and Uploaded by the Center for Responsive Politics (OpenSecrets.org) VII. CONCLUSION It has been nearly three and a half years since GPS ?led its Fc 3m 1024. Throughout this period, GPS has made multiple submissions to the Service, droviding responsive and relevant information and arguments in more than 1,000 pages of mat case. The Service could conclude that GPS quali?es as a social welf of three different ways. First, the Service could fairly and objectively apply the facts activities of GPS during its ?rst taxable year ending May 31, 2011. A the facts and circumstances would not apply a per se eleven-week ru factors; make generalizations as to groups of advertisements; or rely taken out of context. In addition, an objective application would ?nc question grant-making activities. When the Service conducte time period, it concluded that 54.1% of activities, measured b; erial. Yet this is not a hard are organization in any one and circumstances test to the An objective application of e; elevate timing over other upon incomplete quotes I no basis whatsoever to 1 its initial review of this 51 dollars, were not social welfare activities. Although the facts and circumstances test does lend itself to ultimate conclusions that are measured in tenths of a percent, GPS respectfull Protest demonstrates (1) that the Service misclassi?ed at least 4.2% therefore (2) at least 50.1% (indeed, signi?cantly more) of ex] welfare activities in its ?rst taxable year. This Revised Protest also signi?cantly more than 50% of overall activities were for a so time and effort is properly considered (in addition to expendit Second, the Service could follow its own guidance and practi information it requested and received from GPS, which covers inception through April 30, 2012. The Service?s unwarranted delay 1 into a de facto audit. GPS is unaware of any precedent allowing the 59 submits that this Revised 3f expenditures and Jenditures were for social emonstrates that cial welfare purpose when ures). cc and analyze all of the 5 activities from its :onverted Form 1024 Service to ignore relevant Obtained and Uploaded by the Center for Responsive Politics (OpenSecrets.org) information, particularly information that it itself requested. Indeed, Service has historically considered all information in its possession. activities from its inception through April 30, 2012, overwhel GPS has always been engaged primarily in social welfare activities. just the opposite is true; the The information regarding lningly demonstrates that Third, the Service could acknowledge that the facts and circuinstances test is unconstitutional.154 The facts and circumstances test is void for vag recent Supreme Court jurisprudence, the facts and circumstances tes speech by allowing government employees to consider intent, timing inappropriate contextual factors. As an institutional matter, the Service would be ill-advised to circumstances test and issue an adverse determination letter to GPS. acknowledged the need for new regulations to replace the facts and true across the political spectrum 55 and even within the Service itse proposed new regulations that are entirely different from the facts an they would replace. The materials in the Service?s possession are extensive and d! social welfare purpose. The Service must issue a favorable ?54 Because the facts and circumstances test is the product of two published letter recognize the inherent problems with this test without a court order or the Adm procedures required to repeal or revise a regulation. '55 See, e. US. Senator Max Baucus Baucus Statement on the IRS Sc Applications (May 21, 2013), Feb. 21, 2014): Once the smoke of the current controversy clears, we need to examine the nation?s vague 501(c)(4) tax laws. Neither the tax code nor the complex provide clear standards for how much political activity a 501(c)(4) group even provide a clear de?nition of what quali?es as political activity. ?56 See Werfel, Charting a Path Forward, at page 28. 60 iieness. Moreover, under 1 impermissibly burdens free and other irrelevant or defend the facts and Everyone has ircumstances test. This is [if 156 - - which has issued circumstances test that :?nitive in their proof of etermination letter to GPS. rulings, the Service could nistrative Procedure Act rutinizing Tax Exemption 212013%203aucus%20 (last visited root of this issue and reform the :gulations that govern nonpro?ts can undertake. The code does not Obtained and Uploaded by the Center for Responsive Politics (OpenSecrets.org) Respectfully submitted this 28th day of February, 2014. 2300 Street, NW Washington, DC 20037 Telephone: 202-663-8441 Facsimile: 202-663-8007 Tom Jose?ak Jason Torchinsky Michael Bayes Holtzman Vo gel Jose?ak PLLC 45 North Hill Drive, Suite 100 Warrenton, VA 20186 Telephone: 540-341?8808 Facsimile: 540-341-8809 Alvin Dunn Stephen S. Asay Pillsbury Shaw Pittm 2300 Street, NW Washington, DC 20037 Telephone: 202-663-8000 Facsimile: 202-663-8007 61 an LLP Obtained and Uploaded by the Center for Responsive Politics (OpenSecrets.org) 100 a .J ?1 viewers to call to contact Conway Bad Sign 08/31/2010 09/06/2010 Kentucky Yes PPACA - Medicare - State lawsuits challenging PPACA - Identi?es Jack Conway; Conway is the incumbent Attorney General of Kentucky - Asserts that ?Obamacare is the wrong way for Kentucky? - Explains the negative effects of PPACA - Urges viewers to ?Tell Jack Conway Fight the insurance mandate? - Call to action refers to Conway?s refusal to join 13 other state attorneys general in a lawsuit challenging PPACA - The lawsuit brought by other state attorneys general was pending at the time this ad was distributed, and Conway could have joined that lawsuit on behalf of Kentucky at any time - Provides phone number for viewers to call to contact Conway See above TV-17 Worried 08/25/2010 09/02/2010 California Yes. Ads in multiple - PPACA - Medicare - Identi?es Barbara Boxer; Boxer is an incumbent member of the US. Senate 990,000.00 TV-07 Obtained and Uploaded by the Center for Responsive Politics (OpenSecrets.org) states urging Congress to protect Medicare from spending cuts. - Discusses Boxer?s vote in favor of PPACA, and provisions contained in that legislation, including a provision that cuts $500 billion from Medicare spending Tells viewers to contact Boxer and tell her to ?stop the Medicare cuts? - Legislative efforts to eliminate provisions of PPACA, including its cuts to Medicare spending, were ongoing at the time the ad was distributed - Provides phone number for viewers to call to contact Boxer 101 The System 03/09/2011 National No - Reform of - Identi?es President Obama 778,803.58 TV-37 03/ 16/201 1 government Informs viewers of the practice by employee which the mandatory dues of unions unionized government employees are spent to support pro-union politicians who, in turn, protect a system in which unionized government employees are paid considerably more than their non- unionized counterparts - Tells viewers to ?Tell President Obama: You?ve had enough? and ?Call on him to support government union reform? Shovel 06/23/2011 National Yes (?No - ARRA - Identi?es President Obama 3,224,331.24 TV-38 Ready 07/08/2011 More Blank Reviews current economic Checks? - second indicators and ?gures series)158 stimulus (unemployment, national debt, package gasoline prices) (American Jobs - Tells the viewer that ?Obama?s Act) $830 billion stimulus failed? and that now ?America [is] drowning in debt? - Tells viewer that ?It?s time to take away Obama?s blank check,? and viewer is urged to ?Tell Congress: No More Blank Checks? Obtained and Uploaded by the Center for Responsive Politics (OpenSecrets.org) ?58 The ?No More Blank Checks? series aired during a period in which Congress and President Obama were considering a second package of economic stimulus legislation. GPS referred to this $450 billion American Jobs Act in various advertisements as President Obama?s ?blank check.? 102 - Provides phone number for viewer to contact Congress - Distributed at time when Congress and the President were considering the AJA Thread 07/27/201 1 08/03/2011 National Yes (?No More Blank Checks? series) - AJA - Identi?es President Obama - Reviews current economic indicators and ?gures (unemployment, national debt, gasoline prices) - Tells viewer that ?It?s time to take away Obama?s blank check? - Urges viewer to visit Crossroads GPS website at NoMoreBlankChecks.com to ?take action? - At this website, viewers can learn about President Obama?s ?scal record - Website provides the viewer with assistance to contact elected of?cials by phone or email - Distributed at time when Congress and the President were considering the AJA 1,993,048.99 TV-3 9 Hard To 07/08/2011 National Yes (?No Identi?es President Obama Combined TV-40 Obtained and Uploaded by the Center for Responsive Politics (OpenSecrets.org) Sleep 07/22/201 1 More Blank Checks? series) - AJA - Reviews current economic indicators and ?gures (unemployment, national debt), and questions President Obama?s proposal to ?spend even more and raise taxes? - Tells viewer: ?We?ve gotta take away Obama?s blank check? - Urges viewer to visit Crossroads GPS Website at costs of TV- 40 TV-42: 72,851.86 TV- 42 were on the same invoices as TV-43 TV- 47 103 NoMoreBlankChecks.com to ?take action? - At this website, viewers can learn about President Obama?s ?scal record Website provides the viewer with assistance to contact elected of?cials by phone or email - Distributed at time when Congress and the President were considering the AJA Combined costs of TV- 40 TV-47: 5,043,220.42 Wake Up 07/08/201 1 07/22/201 1 National Yes (?No - ARRA More Blank Checks? - AJA series) - Identi?es President Obama - Reviews current economic indicators and ?gures (unemployment, national debt), and questions President Obama?s proposal to ?raise taxes and keep spending more? - Asks: ?Doesn?t Washington know we can?t afford more taxes and debt?? - Tells viewer: ?There?s gotta be a way to take away Obama?s blank check? - Urges viewer to visit Crossroads GPS website at See above Obtained and Uploaded by the Center for Responsive Politics (OpenSecrets.org) NoMoreBlankChecks.com to ?take action? - At this website, viewers can learn about President Obama?s ?scal record Website provides the viewer with assistance to contact elected of?cials by phone or email - Distributed at time when Congress and the President were 104 considering the AJA Despertarse 07/19/201 1 07/28/201 1 10/24/201 1 10/25/201 1 National Yes (?No - ARRA More Blank Checks? series) - AJA - Identi?es President Obama - Reviews current economic indicators and ?gures (unemployment, national debt), and questions President Obama?s proposal to ?raise taxes and keep spending more? - Tells viewer: ?There?s gotta be a way to take away Obama?s blank check? - Asks: ?Doesn?t Washington know we can?t afford more taxes and debt?? - Urges viewer to visit Crossroads GPS website at NoMoreBlankChecks.com to ?take action? - At this website, viewers can learn about President Obama?s ?scal record - Website provides the viewer with assistance to contact elected of?cials by phone or email - Distributed at time when Congress and the President were Cost of airing: 207,228.22 Production costs included above. TV-42 Obtained and Uploaded by the Center for Responsive Pblitics (OpenSecrets.org) considering the AJA Watch-FL 07/08/201 1 07/22/201 1 Florida Yes (?No - ARRA More Blank Checks? series) - AJA - PPACA - national debt limit - Identi?es Bill Nelson; Nelson is an incumbent US. Senator - Reviews Nelson?s recent record on ?scal legislation, including votes for ARRA, PPACA, and to raise debt limit Tells viewer to call Bill Nelson and tell him ?no more reckless spending, no new taxes and No Production costs for TV- 43 TV-47: 60,000.00 TV-43 More Blank Checks? - Distributed at time when Congress and the President were considering the AJA Provides phone number for viewers to call to contact Senator Nelson Watch-MO 105 07/08/201 1 07/22/201 1 Missouri Yes (?No More Blank Checks? series) -ARRA - AJA PPACA - national debt limit - Identi?es Claire McCaskill; McCaskill is an incumbent US Senator - Reviews McCaskill?s recent record on ?scal legislation, including votes for ARRA, PPACA, and to raise debt limit - Tells viewer to call Claire McCaskill and tell her ?no more reckless spending, no new taxes and No More Blank Checks? - Distributed at time when Congress and the President were considering the AJA - Provides phone number for viewers to call to contact Senator McCaskill See above TV-44 Watch-MT 07/08/201 1 07/22/201 1 Montana Yes (?No More Blank -ARRA - Identi?es Jon Tester; Tester is an incumbent US. Senator See above TV-45 Obtained and Uploaded by the Center for Responsive Pelitics (OpenSecrets.org) Checks? series) - AJA - PPACA national debt limit - Reviews Tester?s recent record on ?scal legislation, including votes for ARRA, PPACA, and to raise debt limit - Tells viewer to call Bill Jon Tester and tell him ?no more reckless spending, no new taxes and No More Blank Checks? - Distributed at time when Congress and the President were 106 considering the AJA Provides phone number for viewers to call to contact Senator Tester Watch-NE 07/08/201 1 07/22/201 1 Nebraska Yes (?No More Blank Checks? series) -ARRA - AJA - PPACA - national debt limit - Identi?es Ben Nelson; Nelson is an incumbent U.S. Senator - Reviews Nelson?s recent record on ?scal legislation, including votes for ARRA, PPACA, and to raise debt limit - Tells viewer to call Bill Nelson and tell him ?no more reckless spending, no new taxes and No More Blank Checks? - Distributed at time when Congress and the President were considering the AJA Provides phone number for viewers to call to contact Senator Nelson See above TV-46 Watch-OH 07/08/2011 07/22/201 1 Ohio Yes (?No More Blank Checks? series) -ARRA - AJA - PPACA - Identi?es Sherrod Brown; Brown is an incumbent U.S. Senator Reviews Brown?s recent record on ?scal legislation, including votes for ARRA, PPACA, and to raise debt limit See above Obtained and Uploaded by the Center for Responsive Politics (OpenSecrets.org) - national debt limit - Tells viewer to call Sherrod Brown and tell him ?no more reckless spending, no new taxes and No More Blank Checks? - Distributed at time when Congress and the President were considering the AJA - Provides phone number for viewers to call to contact Senator Brown 107 Stop (series) 07/ 1 8/201 1 - 08/02/201 1 Yes (?No - ARRA More Blank Checks? series) - AJA - - national debt limit - Series of 10 advertisements that follow the same template; each ad identi?es an incumbent Member of the US. House of Representatives - Each ad reviews the Member?s recent record on ?scal legislation, including votes for ARRA, PPACA, and to raise debt limit - Each ad tells viewer to call the named Member and tell him or her ?no more reckless spending, no new taxes and no more blank checks? - Distributed at time when Congress and the President were considering the AJA - Provide phone number for viewers to call to contact the identi?ed Member - Each ad was targeted to the identi?ed Member?s constituents 1,344,841.24 TV-57 Change-F 07/26/2011 08/03/2011 Florida Yes (?No - ARRA More Blank Checks? series) - AJA - Identi?es Bill Nelson; Nelson is an incumbent US. Senator - Reviews Nelson?s recent record on ?scal legislation, including votes for ?billions in new taxes? Combined costs for TV- 58 TV-62: 1,292,933.93 TV-S 8 Obtained and Uploaded by the Center for Responsive Politics (OpenSecrets.org) and ?trillions in crushing debt? - Informs viewer that ?Now President Obama wants to continue the reckless spending and raise taxes even higher? 1 - Tells viewer to call Nelson and tell him ?no more blank checks? - Distributed at time when Congress and the President were considering the AJA 108 - Directs viewers to the Crossroads GPS website NoMoreBlankChecks.com - At this website, viewers could learn about President Obama?s ?scal record - Website provided the viewer with assistance to contact elected of?cials by phone or email Change-MO 07/26/201 1 08/03/201 1 Missouri Yes (?No - ARRA More Blank Checks? - AJA series) - Identi?es Claire McCaskill; McCaskill is an incumbent U.S. Senator - Reviews McCaskill?s recent record on ?scal legislation, including votes for ?billions in new taxes? and ?trillions in crushing debt? - Informs viewer that ?Now President Obama wants to continue the reckless spending and raise taxes even higher? - Tells viewer to call McCaskill and tell her ?no more blank checks? - Distributed at time when Congress and the President were considering the AJA See above TV-S 9 Obtained and Uploaded by the Center for Responsive Politics (OpenSecrets.org) - Directs viewers to the Crossroads GPS website NoMoreBlankChecks.com At this website, viewers could learn about President Obama?s ?scal record - Website provided the viewer with assistance to contact elected of?cials by phone or email 109 Change-MT 07/26/2011 08/03/201 1 Montana Yes (?No - ARRA More Blank Checks? series) - AJA - Identi?es Jon Tester; Tester is an incumbent US. Senator - Reviews Tester?s recent record on ?scal legislation, including votes for ?billions in new taxes? and ?trillions in crushing debt? - Informs viewer that ?Now President Obama wants to continue the reckless spending and raise taxes even higher? - Tells viewer to call Tester and tell him ?no more blank checks? - Distributed at time when Congress and the President were considering the AJA - Directs viewers to the Crossroads GPS website NoMoreBlankChecks.com - At this website, viewers could learn about President Obama?s ?scal record - Website provided the viewer with assistance to contact elected of?cials by phone or email See above TV-60 Change-NE 07/26/201 1 08/03/201 1 Nebraska Yes (?No - ARRA More Blank - Identi?es Ben Nelson; Nelson is an incumbent US. Senator See above TV-6 1 Obtained and Uploaded by the Center for Responsive Politics (OpenSecrets.org) Checks? series) - AJA - Reviews Nelson?s recent record on ?scal legislation, including votes for ?billions in new taxes? and ?trillions in crushing debt? - Informs viewer that ?Now President Obama wants to continue the reckless spending and raise taxes even higher? - Tells viewer to call Nelson and tell him ?no more blank checks? 110 - Distributed at time when Congress and the President were considering the AJA - Directs viewers to the Crossroads GPS website NoMoreBlankChecks.com At this website, viewers could learn about President Obama?s ?scal record - Website provided the viewer with assistance to contact elected of?cials by phone or email Change-0H 07/26/2011 08/03/201 1 Ohio Yes (?No More Blank Checks? - AJA series) -ARRA - Identi?es Sherrod Brown; Brown is an incumbent US. Senator - Reviews Brown?s recent record on ?scal legislation, including votes for ?billions in new taxes? and ?trillions in crushing debt? - Informs viewer that ?Now President Obama wants to continue the reckless spending and raise taxes even higher? - Tells viewer to call Brown and tell him ?no more blank checks? - Distributed at time when Congress and the President were See above Obtained and Uploaded by the Center for Responsive Politics (OpenSecrets.org) considering the AJA - Directs viewers to the Crossroads GPS website NoMoreBlankChecks.com - At this website, viewers could learn about President Obama?s ?scal record Website provided the viewer with assistance to contact elected of?cials by phone or email 111 Peas 10/25/2011 11/07/2011 Iowa Yes (?No More Blank Checks? series) -ARRA - AJA - Identi?es Leonard Boswell; Boswell is an incumbent Member of the US. House of Representatives - Reviews Boswell?s vote for President Obama?s stimulus bill, and informs viewers of Boswell?s support for the AJA - Informs the viewer that the AJA contains ?more of the same big spending? and ?tax increases of $450 billion? - Tells viewer to contact Congressman Boswell to tell him that ?Iowa needs jobs, not more Obama taxes and spending? - Provides viewers with phone number to call to contact Boswell - Boswell was in a position to vote on and in?uence the AJA - Distributed at a time when Congress and the President were considering the AJA 160,568.48 2 Presidents 11/09/2011 11/23/2011 National Yes (same subject as ?No More AJA - Identi?es former President Clinton and President Obama, and contrasts their differing views on 2,341,043.23 TV-64 Obtained and Uploaded by the Center for Responsive Politics (OpenSecrets.org) Blank Checks? series) tax increases - Informs viewers about the tax increases contained in the AJA, and characterizes the AJA as ?a political stunt, not a solution? - Viewers are urged to call President Obama to tell him to ?attack problems, not people" in context, the message conveyed is one of opposition to the AJA 112 .- - President Obama was in a position to in?uence the debate on the AJA - Provides a phone number for viewers to call to contact President Obama Distributed at a time when Congress and the President were considering the AJA Typical 12/12/2011? 12/21/2011 National Yes (one of several ads produced regarding the bankruptcy scandal) - bankruptcy scandal - Identi?es President Obama 516,247.36 TV-67 - Discusses the federal government?s $535 million loan to the company?s political ties to the Obama Administration, and the company?s subsequent bankruptcy and FBI investigation - Urges viewers to contact President Obama to tell him: ?we need jobs, not more Washington insider deals? - Provides phone number for viewers to call to contact President Obama - Aired during a period when the scandal was subject of reporting Obtained and Uploaded by the Center for Responsive Politics (OpenSecrets.org) Every Level 02/01/2012 02/07/2012 National Yes (one of several ads produced regarding the bankruptcy scandal) - bankruptcy scandal - Identi?es President Obama 515,125.22 TV-68 - Discusses the federal government?s stimulus spending on ?clean energy companies,? including - Informs viewers that billions of dollars went to the Administration?s political supporters as part of a program that the Washington Post called 113 ?infused with politics at every level? - Urges viewers to contact President Obama to tell him: ?we need jobs, not more Washington insider deals? - Provides phone number for viewers to call to contact President Obama - Aired during a period when the scandal was subject of reporting Step 11/17/2011- 11/23/2011 Missouri Yes (same - ARRA subject as ?No More - AJA Blank Checks? series) - Identi?es Claire McCaskill and Barack Obama; McCaskill is an incumbent US. Senator - Reviews McCaskill?s vote in favor of the ARRA, and her expressed support for the AJA - Tells viewer to call McCaskill and tell her to ?Stop Spending? and ?Step in a new direction? (the ad urges opposition to the AJA, and support for alternative ways to address unemployment concerns) - Distributed at time when Congress and the President were 266,046.00 TV-71 Obtained and Uploaded by the Center for Responsive Politics (OpenSecrets.org) considering the AJA - McCaskill was in a position to vote on and in?uence the pending AJA - Provides phone number for viewers to call to contact McCaskill 14 12/12/2011 12/21/2011 Missouri Yes (same - AJA subject as ?No More Blank - Identi?es Claire McCaskill and Barack Obama; McCaskill is an incumbent US. Senator - Reviews national debt ?gures that 261,570.60 TV-70 114 Checks" series) resulted from the policies and laws supported by Senator McCaskill and President Obama - Tells viewer to call McCaskill and tell her to ?stop the reckless spending? (in context, the ad urges opposition to the AJA) - Distributed at time when Congress and the President were considering the AJA - Provides phone number for viewers to call to contact McCaskill - McCaskill was in a position to vote on and in?uence the pending AJA From There 03/08/2012 - Missouri No - PPACA - Medicare - Extension of Bush-era tax cuts - Identi?es Claire McCaskill; 300,000.00 TV-72 McCaskill is an incumbent US. Senator - Reviews McCaskill?s record on Medicare and opposition to extension of certain tax cuts, and contrasts that record with Senator McCaskill?s claims that she had protected Medicare and cut taxes for the middle class - Tells viewer to call Mcf?askill and Obtained and Uploaded by the Center for Responsive Politics (OpenSecrets.org) tell her: ?on Medicare and taxes, start voting in Washington the way you talk in Missouri? - Distributed at time when was considering numerous proposals related to Medicare and taxes; McCaskill was in a position to vote on and in?uence these debates - Provides phone number for viewers to call to contact McCaskill 115 Bacon 11/17/2011? 11/23/2011 Nebraska Yes (?No More Blank Checks? series) -ARRA - Identi?es Ben Nelson; Nelson was an incumbent US. Senator - Reviews Nelson?s vote in favor of the ARRA and some of the wasteful spending contained in that legislation - Educates the viewer about Nelson?s consistent support for President Obama?s spending proposals - Tells viewer to call Nelson and tell him ?no more blank checks? - Distributed at time when Congress and the President were considering the AJA - Provides phone number for viewers to call to contact Nelson - Nelson was in a position to vote on and in?uence the pending AJA 135,499.70 TV-74 Stakes 12/12/2011? 12/21/2011 Nebraska Yes (ongoing series of PPACA- related ads - PPACA - Identi?es Ben Nelson; Nelson was an incumbent US. Senator - Reviews the special deal that Nelson received in exchange for his vote in favor of PPACA - Tells viewer to call Nelson and tell him that ?it?s time to make it 143,079.63 Obtained and Uploaded by the Center for Responsive Politics (OpenSecrets.org) right? and to ?help repeal Obamacare? - Distributed at time when efforts were being made to repeal PPACA - Nelson was in a position to vote on and influence efforts to repeal PPACA - Provides phone number for viewer to call to contact Nelson 116 Dirt 11/17/2011? 11/23/2011 Montana No EPA regulatory authority - Identi?es Jon Tester; Tester is an 154,784.75 TV-77 incumbent U.S. Senator - Reviews Tester?s recent vote on EPA regulatory authority - Urges opposition to ?big government regulations that could hurt our farmers andjobs? - Tells viewer to call Tester and tell him: ?onjobs, he needs to work for Montana, not Obama? - At time ad was aired, Tester was in a position to in?uence various legislative and policy debates, and to support alternatives to President Obama?s economic and regulatory proposals - Provides viewers with a phone number to call to contact Tester His Own Words 12/12/2011 12/21/2011 Montana Yes (same issues as ?No More Blank Checks? series) -ARRA - PPACA - national debt - Identi?es Jon Tester; Tester is an 147,540.81 incumbent U.S. Senator - Reviews Tester?s recent record on ?scal legislation, including his votes for the ARRA, PPACA, and trillions of dollars of additional national government debt - Tells viewer to call Tester and tell Obtained and Uploaded by the Center for Responsive Politics (OpenSecrets.org) him to ?stop saddling our kids with trillions in debt? and ?stop the Washington spending and debt? - Distributed at time when Congress and the President were considering the AJA - Tester was in a position to vote on and in?uence the AJA - Provides viewers with a phone number to call to contact Tester Balloon 117 03/01/2012 03/07/2012 Iowa Yes (same issues as ?No More Blank Checks? series) - ARRA - PPACA - auto industry bailout Identi?es President Obama and Leonard Boswell; Boswell was an incumbent Member of the US. House of Representatives Reviews Boswell?s support for the ARRA, the auto industry bailout, and the PPACA - Urges viewer to call Boswell to tell him to ?vote for policies that lower our debt, not add to it,? and to ?stop the out of control spending? . - Provides phone number for viewers to call to contact Boswell - Distributed at time when Congress was considering the President?s ?scal year 2013 budget proposal - Boswell was in a position to vote on and in?uence the pending budget debate and vote 88,631.72 TV-84 Deflect 03/21/2012 03/28/2012 National Yes (energy policy series) - oil production in the Gulf of Mexico - oil shale - Identi?es President Barack Obama - Educates viewers about President Obama?s energy policies, and the effect of those policies on gasoline 650,000.00 Obtained and Uploaded by the Center for Responsive Politics (OpenSecrets.org) production - Keystone XL pipeline prices, and asserts that accuses President Obama is ?playing politics? with energy policy - Urges viewers to call President Obama to tell him that ?bad energy policies mean energy prices we can?t afford? - Provides phone number for viewers to call to contact President Obama - President Obama was in a position to change the energy policies referenced in the ad Too Much 04/11/2012 04/20/2012 Colorado, Florida, Iowa, Nevada, Ohio, Virginia 118 Yes (energy policy series) - domestic energy production and gasoline prices Identi?es President Barack Obama - Discusses recent claims made by the President about domestic oil production - Informs viewers that despite the President?s spin, ?gas costs too much? - Urges viewers to call President Obama to tell him to ?work to pass better energy policies? - Provides a phone number for viewers to call to contact the President - President Obama was in a position to adopt energy policies that might reduce gasoline prices 1,700,000.00 TV-78 04/24/2012 05/04/2012 Quote Missouri Leadership One of numerous GPS ads urging ?scal restraint - President Obama?s proposed ?scal year 2013 budget - Identi?es Claire McCaskill and Barack Obama; McCaskill is an incumbent US. Senator - Reviews employment ?gures and foreclosures in Missouri, and reviews federal government 300,593.80 Obtained and Uploaded by the Center for Responsive Politics (OpenSecrets.org) spending supported by Senator McCaskill and President Obama - Tells viewers to call McCaskill to tell her to ?stop supporting Obama?s outrageous spending? and to ?say NO to Obama?s proposed trillion-dollar de?cit; bring a responsible budget to a Senate vote? - Provides phone number for 119 K. viewers to call to contact McCaskill - Distributed at time when Congress was considering the President?s ?scal year 2013 budget proposal McCaskill was in a position to vote on and in?uence the pending budget debate and vote 04/24/2012 05/04/2012 Montana One of numerous GPS ads urging ?scal restraint - President Obama?s proposed ?scal year 2013 budget - Identi?es Jon Tester and Barack Obama; Tester is an incumbent US. Senator - Reviews federal government spending and new taxes supported by Senator Tester and President Obama, and that ?Tester voted with President Obama 97% of the time? - Tells viewers to call Tester to tell him that ?Obama?s way is the wrong way for Montana? and to ?say NO to Obama?s proposed trillion~dollar de?cit; bring a responsible budget to a Senate vote? - Provides phone number for viewers to call to contact Tester Distributed at time when 194,963.69 TV-80 Obtained and Uploaded by the Center for Responsive Politics (OpenSecrets.org) Congress was considering the President?s ?scal year 2013 budget proposal -Tester was in a position to vote on and in?uence the pending budget debate and vote Hole 04/24/2012 05/04/2012 Nevada No - HR. 206 - Identi?es Shelley Berkley; Berkley is an incumbent Member of the US. House of Representatives 305,362.90 TV-8 1 120 if, - Reviews Berkley?s recent voting record on ?scal matters, including votes for tax increases and de?cit spending - Urges viewers to call Berkley to tell her to ?vote against higher taxes that would cost more jobs? and to ?Vote for HR. 206? (HR. 206 was a bill to prevent tax increases) - Provides phone number for viewers to call to contact Berkley - Distributed at time when HR. 206 was pending before the House - Berkley was in a position to vote on and in?uence HR. 206 Obtained and Uploaded by the Center for Responsive Politics (OpenSecrets.org) APPENDIX F: TABLE OF CAMPAIGN INTERVENTION TELEVISION ADVERTISEMENTS Each of the advertisements below was reported to the Federal Election Commission as an independent expenditure. Title Period of Availability Geographic Area of Distribution Part of Ongoing Series Legislation, Policy, or Event Reasons for Classi?cation Total Associated Expenses Exhibit Code What 09/21/2010 10/04/2010 No - Patient Protection and Affordable Care Act - Medicare - Tax increases - Identi?es Rep. Joe Sestak - Criticizes Sestak?s voting record - Does not tell viewer to contact Sestak about a pending legislative or policy issue - Advocates against the election of Sestak can?t afford Joe Sestak?) 506,745.12 TV-OS Review 121 09/28/2010 10/11/2010 Missouri - None - Identi?es Robin Carnahan - Criticizes Carnahan?s ?negative ads? - Tells viewers that Carnahan is ?too dishonest? and ?too liberal? - Tells viewers that Carnahan deserves ?too thumbs down? - Does not tell viewer to contact Carnahan about a pending 7 1 4,223 .70 TV-09 Obtained and Uploaded by the Center for Responsive Politics (OpenSecrets.org) nr nnlir?u IQQlle av l?vu'J - Advocates against the election of Carnahan (Say NO to Robin Carnahan?) Add Up 09/28/2010 10/1 1/2010 - American Recovery and Reinvestment Act of 2009 - PPACA - Identi?es Rep. Joe Sestak - Criticizes Sestak?s voting record - Does not tell viewer to contact Sestak about a pending legislative or policy issue - Advocates against the election of Sestak (?Joe Sestak . . . wrong for 302,450.50 123 informing viewers that Giannoulias has run a ?dishonest campaign? Does not tell viewer to contact Giannoulias about a pending legislative or policy issue ~Advocates against election of Giannoulias (?Illinois can?t afford any more Alexi?) You Guessed It 10/05/2010? 10/11/2010 Kentucky No - None - Identi?es Jack Conway - Criticizes Conway?s record as a state of?cial - Ad accuses Conway of personally pro?ting from utility rate increases that occurred on his watch - Ad informs viewers that ?Conway helps himself? while ?Kentucky families pay? - Does not tell viewer to contact Conway about a pending legislative or policy issue 324,028.50 4 Colors 10/12/2010? 10/18/2010 Florida No -ARRA - Identi?es Charlie Crist - Criticizes Crist?s record as a state of?cial - Criticizes Crist?s support for President Obama?s initiatives - Does not tell viewer to contact 354,016.00 TV-IS Obtained and Uploaded by the Center for Responsive Politics (OpenSecrets.org) Crist about a pending legislative or policy issue - Advocates against Crist?s election (?We don?t need another chameleon in Washington? and ?Vote No Chameleon Charlie Crist?) Shocker 10/12/2010? 10/18/2010 Kentucky No - None - Identi?es Jack Conway - Criticizes Conway?s record as a state of?cial - Accuses Conway of personally 359,806.78 124 pro?ting from utility rate increases that occurred on his watch - Does not tell viewer to contact Conway about a pending legislative or policy issue - Advocates against the election of Conway (?Jack Conway is the Wrong Way for Kentucky?) Story 10/12/2010 Nevada No 10/18/2010 - None 10/19/2010 10/29/2010 - Identi?es Harry Reid - Refers to Reid as a ?champion of liberal special interests inside the beltway? who is ?disconnected from Nevada and its residents" and ?extremely out of touch with Nevada? - Does not tell Viewer to contact Reid about a pending legislative or policy issue - Advocates against the election of Reid (?Nevada just can?t afford more of the same old Harry Reid?) 571,811.95 10/12/2010 Illinois No 10/25/2010 Consistent None - Identi?es Alexi Giannoulias - Criticizes Giannoulias? accounts of his own personal taxes - Criticizes Giannoulias for being inconsistent 2,360,954.70 Obtained and Uploaded by the Center for Responsive Politics (OpenSecrets.org) - Criticizes Giannoulias for wanting to raise taxes - Does not tell viewers to contact Giannoulias about a pending legislative or policy issue ?59 In submission to the Service, ?Story? was improperly listed as two separate advertisements TV-18 and TV-85 leading to confusion regarding the actual campaign intervention costs incurred. GPS spent $571,811.95 for ?Story,? and the advertisement should be treated as a single expenditure for any calculations made by the Service. 125 10/19/2010? 11/02/2010 Known Illinois No - None - Identi?es Alexi Giannoulias - Criticizes ties between the Giannoulias family bank and organized crime - Criticizes Giannoulias? accounts of his own personal taxes Criticizes Giannoulias? record as a state of?cial - Does not tell viewers to contact Giannoulias about a pending legislative or policy issue Advocates against the election of Giannoulias (?Alexi Giannoulias can?t be trusted?) 1,038,067.80 10/19/2010? 11/02/2010 Enough Nevada No - unemployment - PPACA - National debt - Wall Street Bailout - Home foreclosure rate Identi?es Harry Reid - Criticizes Reid?s voting record and its impact Refers to election (?Are you tired of all these negative political ads??) - Does not tell viewer to contact Reid about a pending legislative or policy issue - Advocates against the election of Reid on Harry Reid?) 1,681,445.86 TV-Z Pattv?s 10/26/2010 Washington No - None - Identi?es Pattv Murrav 1.049.573 .67 TV- Obtained and Uploaded by the Center for Responsive Politics (OpenSecrets.org) Promises 1 1/02/2010 - Features four individuals making critical comments of Murray - Does not tell viewer to contact Murray about a pending legislative or policy issue - Advocates against election of 25160 160 extensive submission to the Service, those numbers were inadvertently skipped. There were no television advertisements labelled TV-23 and TV-24. When numbering the television advertisements during the compilation of 126 Murray (?nal speaker states think she?s been there too long?) Problem With Patty 1 1/02/2010 10/26/2010 Washington No - PPACA - bailouts - Identi?es Patty Murray - Features several individuals making comments critical of Murray - One speaker states, ?Patty?s become part of the problem? - Another speaker states, ?She?s been there too long? Does not tell viewer to contact Murray about a pending legislative or policy issue - Advocates against the election of Murray (?We can?t afford six more years of Patty Murray?) 2,039,811.26 Boondoggle (series) 1 1/02/2010 atives 10/27/2010 In and around congressional districts of 8 named Represent? No -ARRA (Eight advertisements following same template) - Each advertisement identi?es an incumbent member of the House of Representatives who is running for reelection - Each ad tells the viewer that the state of the identi?ed Representative ?is reeling? and the Total cost of eight ads: 2,185,124.37 TV-28 through Obtained and Uploaded by the Center for Responsive Politics (OpenSecrets.org) identi?ed Representative ?is making it worse? - Each ad criticizes the identi?ed Representative for supporting ?Nancy Pelosi and her failed agenda,? instead of ?helping us? 16' There was no television advertisement labelled TV-36. A ninth ?Boondoggle? advertisement was originally planned for North Carolina, but it was never created. Other than de minimis time and effort to draft a ninth iteration of the script, GPS incurred no costs related to the proposed advertisement, which would have been designated TV-36. 127 - Each ad then repeats the assertion as ?helping Pelosi, not us? - Ads do not tell viewer to contact the identi?ed Representative about a pending legislative or policy issue - Each ad advocates against the election of the identi?ed Representative by telling the viewer that the individual is ?wrong for? his particular state Charm 10/29/2010 1 1/02/2010 Nevada No None - Identi?es two candidates (Harry Reid, Sharron Angle) - Urges viewers to vote for Sharron Angle for US. Senate 126,013.58 TV-86 Foundation 11/10/2011 11/23/2011 Massachusett No - unemployment - Occupy Wall Street - Identi?es Elizabeth Warren; Warren had served as Chair of the Congressional Oversight Panel created to oversee the Troubled Asset Relief Program and was associated with the Consumer Financial Protection Bureau - At the time the ad aired, Warren was a candidate for of?ce, and not an incumbent Of?ceholder, although she had held government positions 530,339.86 Obtained and Uploaded by the Center for Responsive Politics (OpenSecrets.org) related to ?nancial matters - Informs viewers of Warren?s support for the ?Occupy Wall Street? protests, and of her assertion that she ?created much of the intellectual foundation for what they do? - Does not call on Warren to take any particular legislative action - Targeted to viewers in Massachusetts, where Warren was seeking of?ce Applause 128 11/10/2011 11/23/2011 Virginia No - ARRA - government spending - national debt - Identi?es Tim Kaine; Kaine was formerly the Governor of Virginia and Chairman of the Democratic National Committee - At the time the ad aired, Kaine was a candidate for of?ce, and not an incumbent Of?ceholder - Informs viewers of Kaine?s support for President Obama?s stimulus bill, and his ?scal record as Governor of Virginia - Does not call on viewers to contact Kaine about a legislative issue; ad does not call on Kaine to take any particular legislative action - Targeted to viewers in Virginia, where Kaine was seeking of?ce 564,748.50 Champion 12/12/2011? 12/21/2011 Massachusett No TARP - Identi?es Elizabeth Warren; Warren had served as Chair of the Congressional Oversight Panel created to oversee TARP, and was associated with the Consumer Financial Protection Bureau - At the time the ad aired, Warren 546,256.03 TV-69 Obtained and Uploaded by the Center for Responsive Politics (OpenSecrets.org) was a candidate for of?ce, and not an incumbent Of?ceholder, although she had held government positions related to ?nancial matters - Criticizes Warren?s role in the Troubled Asset Relief Program - Does not call on Warren to take any particular legislative action - Targeted to viewers in Massachusetts, where Warren was 129 seeking of?ce Amazing 04/24/2012 05/04/2012 North Dakota No - Identi?es Heidi Heitkamp; Heitkamp was a former North Dakota state of?cial At the time the ad aired, Heitkamp was a candidate for of?ce, and not an incumbent Of?ceholder - Notes Heitkamp?s praise for President Obama and her support for PPACA - Tells viewers to call Heitkamp to tell her to support the repeal of PPACA - Targeted to viewers in North Dakota, where Heitkamp was seeking of?ce 88,147.44 Similarities 04/24/2012 05/04/2012 Virginia No -ARRA - Identi?es Tim Kaine and Barack Obama; Kaine was formerly the Governor of Virginia and Chairman of the Democratic National Committee - At the time the ad aired, Kaine was a candidate for of?ce, and not an incumbent Of?ceholder - Informs viewers of Kaine?s support for President Obama?s 264,834.17 Obtained and Uploaded by the Center for Responsive Politics (OpenSecrets.org) stimulus bill, and his ?scal record as Governor of Virginia - Does not call on viewers to contact Kaine about a legislative issue; ad does not call on Kaine to take any particular legislative action Targeted to viewers in Virginia, where Kaine was seeking of?ce APPENDIX G: STATEMENT OF STEVEN J. LAW. PRESIDENT OF GPS 130 Obtained and Uploaded by the Center for Responsive Politics (OpenSecrets.org) Statement of Steven J. Law, President of Crossroads GPS Regarding Crossroads Grants An important element of Crossroads social welfare mis other non-pro?t, Section 501(0) organizations whose activities, purpo complement Crossroads mission. sion is providing grants to ses, and capabilities Crossroads GPS is, and was, aware that grant?making is a coniimon practice among non- pro?t organizations. For example, labor unions extensively support i advocacy organizations that have complementary capabilities and goa During the time period addressed in this matter, Crossroads grantee to assess its ability to appropriately spend any funds provided general, Crossroads GPS selected grantees that had been in continuou years, that had diverse funding sources, and that had a broad portfolic that could effectively complement Crossroads issue advocacy organizations with large membership networks, recognized issue exp capabilities, issue-focused litigation expertise, and grassroots-level or All grants were made with the express understanding of both grantee that all funds would be spent on activities that are consistent ssue-oriented non-pro?t [18. PS evaluated each potential by Crossroads GPS. In existence for several of social welfare activities work. This included ertise, extensive lobbying ganizational strength. Crossroads GPS and the with the de?nition and understanding of educational or social welfare activity, and in furtherance of the grantee?s primary, tax-exempt purpose. Prior to the transmission of any grant funds, Crossroads GPS with prospective grantees the conditions on which a grant would be grantee could, ?nancially and organizationally, adhere to those condi understood and agreed that funds provided by Crossroads GPS in the 131 representatives discussed iade and whether the tions. Both parties form of a grant would be Obtained and Uploaded by the Center for Responsive Politics (OpenSecrets.org) spent on activities that areconsistent with the de?nition and understanding of educational or social welfare activity, and not on any non-exempt purpose. In nearly all cases (and eventually in every case, as Crossroad activity grew), this understanding was memorialized in a written lette accompanied each grant. These written letters of transmission genera language indicating the parties? agreement and understanding that the used in furtherance of the grantee?s primary, tax-exempt purpose and activities. Upon review of these letters, it appears that over time min These variations in language, however, were not intended to, and did the agreement and understanding between the parties with respect to grant funds. In instances in which Crossroads GPS made multiple grants t< duplicate letters of transmission were not always mailed in the case 0 grant. The absence of such letter in no way altered the established funds provided were to be used only for activities that are consistent and understanding of educational or social welfare activity, and in fu primary, tax-exempt purpose. 132 grant-making of transmission that Llly include the same funds provided were to be not for non-exempt or variations occurred. not, re?ect any change in the permissible uses of )lthe same grantee, a second, third, or fourth utual understanding that the with the de?nition therance of the grantee?s Obtained and Uploaded by the Center for Responsive Politics (OpenSecrets.org) APPENDIX H: SUPPORTING INFORMATION AND MA GRANT-MAKING ACTIVITIES GPS was aware of the limitations on its grant-making activitie all of its grants to purposes furthering social welfare. (1) 60 Plus Association, Inc. ERIALS FOR and appropriately limited On October 26, 2010, GPS made a grant of $50,000 to 60 Plus Association, Inc., a Code section 501(c)(4) tax-exempt organization. GPS may or may not have sent a transmittal letter with these funds. Regardless, GPS and 60 Plus Association, Inc. had an oral understanding and agreement that the grant funds would only be used for social welfare purposes. Additionally, the amount of the grant was invoiced by 60 Plus Association, Inc. as an grant.? A copy of the invoice is included in this Appendix. American Action Network (2) unrestricted educational On August 26, 2010, GPS made a grant of $500,000 to Ameripan Action Network, a Code section 501(c)(4) tax-exempt organization. GPS may or may not have sent a transmittal letter with these funds. Regardless, GPS and American Action Network had an oral understanding and agreement that the grant funds would only be used purposes. (3) American Justice Partnership for social welfare On September 17, 2010, GPS made a grant of $300,000 to American Justice Partnership, a Code section 501(c)(4) tax-exempt organization. The transmittal le funds would not be used for any political activity or other purpose inc Justice Partnership?s social welfare status. A copy of the transmittal Appendix. 133 tter established that the onsistent with American etter is included in this Obtained and Uploaded by the Center for Responsive Politics (OpenSecrets.org) xx' (4) Americans for Tax Reform GPS made three grants to Americans for Tax Reform, a C0 dc section 501(c)(4) tax- exempt organization: $1,300,000 on September 29, 2010; 00 on October 12, 2010; and on $200,000 on October 21, 2010. GPS may or may not have sent initial grant. Regardless, GPS and Americans for Tax Reform had a transmittal letter for the an oral understanding and agreement that the grant funds would only be used for social welfare purposes. Furthermore, the transmittal letters for the second and third grants memorialize and re?ect the same requirements and restrictions applied to the ?rst grant. Copies of the two available transmittal letters are included in this Appendix. (5) Center for Individual Freedom On October 8, 2010, GPS made a grant of $2,750,000 to the Center for Individual Freedom, a Code section 501(c)(4) tax?exempt organization. The t'ansmittal letter established that the funds would be used in support of the Center for Individual Freedom?s social welfare purposes and would not be used in connection with any non-exempt activity. A copy of the draft transmittal letter is included in this Appendix; GPS has been unabl transmittal letter. (6) Competitive Enterprise Institute On February 23, 2012, GPS made a grant of $25,000 to the to ?nd a signed coPy ofthe Competitive Enterprise Institute, a Code section 501(c)(3) tax-exempt organization. The tr msmittal letter established that the funds would not be used in connection with any political or other non-exempt activity. A COpy of the transmittal letter is included in this Exhibit. 134 Obtained and Uploaded by the Center for Responsive Politics (OpenSecrets.org) I kkakkt I kk& (7) Conscience Cause On March 12, 2012, GPS made a grant of $75,000 to Conscience Cause, a Code section 501(c)(4) tax-exempt organization. The transmittal letter established that the funds would not be used in connection with any political or other non-exempt activity. A copy of the transmittal letter is included in this Exhibit. (8) Ethics Public Policy Center On June 28, 2011, GPS made a grant of $50,000 to the Ethics Public Policy Center, a Code section 501(c)(3) tax-exempt organization. GPS may or may not have sent a transmittal letter with these funds. Regardless, GPS and the Ethics Public Policy Center had an oral understanding and agreement that the grant funds would only be used for social welfare purposes. Additionally, a contribution request from the Ethics Public Policy Center explains that the grant was to be used to further educational and advocacy A copy of the contribution request is included in this Exhibit. (9) Freedom Vote Inc. GPS made two grants to Freedom Vote Inc., a Code section 501(c)(4) tax-exempt organization: $700,000 on September 13, 2010, and $200,000 on October 19, 2010. The transmittal letters established that the sole purpose of the grants was to further Freedom Vote Inc.?s social welfare purpose and that no funds would be used for political or any other non- exempt activity. Copies of the transmittal letters are included in this Appendix. (10) Indiana Right to Life On September 17, 2010, GPS made a grant of $35,000 to Indiana Right to Life, a Code section 5 01(c)(4) tax-exempt organization. The transmittal letter established that the funds 135 Obtained and Uploaded by the Center for Responsive Politics (OpenSecrets.org) would not be used in connection with any political or other nonuex< transmittal letter is included in this Appendix. (11) National Federation of Independent Busin On October 8, 2010, GPS made a grant of $3,700,000 to the Independent Business, a Code section 501(c)(6) tax-exempt organi established that the funds were to be used consistently with were not to be used for any non-exempt activity. A copy of the dra in this Appendix; GPS has been unable to ?nd a signed copy of the (12) National Ri?e Association (Institute for On October 12, 2010, GPS made a grant of $600,000 to the (Institute for Legislative Action), a Code section 501(c)(4) tax-exe transmittal letter established that the funds would be used in suppor purposes of the National Ri?e Association (Institute for Legislative used in connection with any political or other non-exempt activity. letter is included in this Appendix. (13) National Right to Life Committee I I :mpt activity. A copy of the 1885 National Federation of zation. The transmittal letter social welfare purposes and ft transmittal letter is included transmittal letter. egislative Action) National Ri?e Association pt organization. The of the social welfare Action) and would not be A copy of the transmittal GPS made twelve grants to the National Right to Life Committee, a Code section 501(c)(4) tax-exempt organization, between June 10, 2010, and Ap were for $250,000; a twelfth grant was for $25,000. Transmittal le1 would be used in support of the National Right to Life Committee?: would not be used in connection with any political or other non-exe eleven transmittal letters associated with $250,000 grants are incluc 136 til 18, 2012.? Eleven grants ters established that the funds . social welfare purpose and activity. Copies of the led in this Appendix. The Obtained and Uploaded by the Center for Responsive Po litics (OpenSecrets.org) grant for $25,000 may or may not have been accompanied by a tra?lismittal letter but was made with the understanding that it was subject to the same conditions as the other grants. (14) Republican Governors Public Policy Comfmittee On September 17, 2010, GPS made a grant of $750,000 to the Republican Governors Public Policy Committee, a Code section 501(c)(4) tax-exempt organization. The transmittal letter established that the sole purpose of the grant was to further the Republican Governors Public Policy Committee?s social welfare purpose and that the funds would not be used for any political or other purpose. A COpy of the transmittal letter is included in this Appendix. (15) Republican Jewish Coalition GPS made two grants to the Republican Jewish Coalition, a Code section 501(c)(4) tax- exempt organization: $150,000 on October 19, 2010, and $100,000 on October 26, 2010. The transmittal letter established that the sole purpose of the grant was To further the Republican Jewish Coalition?s social welfare purpose and that the funds would not be used for any political or other purpose. A copy of the ?rst transmittal letter is included ir this Appendix. The second grant for $100,000 may or may not have been accompanied by a transmittal letter but was made with the understanding that the second grant was subject to the samie conditions as the first grant. 137 Obtained and Uploaded by the Center for Responsive Politics (OpenSecrets.org) 60 Plus Association, Inc. I I C9 515Kin?g Street Dali I Suite 315 8 ?Wm Alexandria, VA 22314 10/25?2010 93 Bill To Ship To Crossroads GPS PO, Box 34413 PO. Box 34413 Washington, DC 20043 Washington, DC 20043 PO. Number Terms Rep Ship Via F.0.B. Project 10/25/2010 Quantity item Code Description Price Each Amount i Grant Unrestricted Educational Grant 50,000.00 50,000.00 RE IACTED Total $50,000.00 13 8 Obtained and Uploaded by the Center for Responsive Po itics (OpenSecrets.org) Crossroads GPS September 17, 2010 Mr. Dan Perro American Justice Partnership 600 South Walnut Street Lansing, MI 48933 Dear Dan: Crossroads GrassroOts Policies Strategies (GPS), a non?profit 501(c)(4) tax exempt organization, is pleased to make this general support grant in the amount of $300,000 to American Justice Partnership (AJP), also an IRS tax exempt non profit 501 (4) organization. The sole purpose of this grant is to further your organization?s stated mission and purpose as a legally qualified social welfare tax exempt organization. As a result, AIP agrees that funds provided by this grant will not be used any other purpose including any political activity, This grant is being made based upon that assurance. cerely, Steven La President 139 Obtained and Uploaded by the Center for Responsive Politics (OpenSecrets.org) Crossroads GPSJ October 12, 2010 Mr. Grover Norquist President Americans for Tax Reform 722 12th Street, NW - Suite 400 Washington, DC 20005 Dear Grover, Crossroads Grassroots Policy Strategies is pleased to Americans for Tax Reform in support of your organization?s As you know, Crossroads GPS is committed to advanc will strengthen America?s economy and security, and one of with other social welfare organizations to help promote such efforts to educate the public and policymakers on the need to national debt and deficits, and restrain out?of~control govern particular, we applaud and support your efforts over many from public of?cials at every level of government to oppose a through well-known Taxpayer Protection Pledge?. Crossroads GPS is organized as a non-pro?t corporatii of the Internal Revenue Code. In keeping with its own tax ex GPS is donating to your organization with the understanding be used in connection with any non-exempt activity. Please do not hesitate to contact me if you have any qr Sincerely, Steven La President Paid for by Crossroads Grassroots Policy Strategies, an independent, nonprofit taxation under section 501(c)(4) of the Internal Reven 1401 New York Ave, NW Suite 1200 Washington, DC 20005 0 (202) 559-6 141 onate $2,500,000 to tax exempt purposes. ing legislative policies that our strategies is to partner policies. We value your keep taxes low, reduce the ment spending. In ears to secure pledges my and all tax increases an under section 501 empt status, Crossroads that its donation will not Lest-ions. organization exempt from federal ue Code. 428 - Obtained and Uploaded by the Center for Responsive Politics (OpenSecrets.org) October 8, 2010 Center for Individual Freedom Dear Crossroads GPS is pleased to make this grant, in the amount Individual Freedom (CFIF) to support its non?pro?t 501(c miss' of X, to the Center for n, namely to assist CFIF in its continuing efforts to promote and protect the rights granted to in ividuals under the United States Constitution. Crossroads GPS is organized under Section 501(c)(4) of the ntemal Revenue Code for the promotion of social welfare. Speci?cally, Crossroads GPS is a olicy and grassroots advocacy organization that is committed to educating, equipping an mobilizing millions of American citizens to take action on the critical economic and legisl our nation?s future in the years ahead. We share with CFIF an overr levels of debt, expansive government power, a nationali struggling economy and looming tax increases are all on the brink devastating the great country we?ve all known. CFIF has been a leading voice in the ?ghts to reign in unche and keep marginal tax rates low. CFIF has also worked for innovati don?t sacri?ce economic growth, and has been a strong voice in opp mandate and other features of the Patient Protection and Affordable makes this grant to help CFIF continue its efforts in these important own mission, consistent Internal Revenue Service ?exempt fl Thank you again for your past efforts, and please feel free to assistance going forward. Sincerely, Steven J. Law 142 ive issues that will shape iding concern that zed health care system, a freshaping and potentially ked government spending ve energy solutions that osition to the individual Care Act. Crossroads GPS areas and in furtherance of mction? guidelines. contact me if we can be of Obtained and Uploaded by the Center for Responsive Politics (OpenSecrets.org) Crossroads GPS February 23, 2012 Mr. Vincent Vernuccio JD Competitive Enterprise Institute 1899 Street, NW 12th Floor Washington, DC 20036 Dear Mr. Vernuccio, Crossroads Grassroots Policy Strategies is pleased to contribute $25 Competitive Enterprise Institute in support of your organization's ta: Crossroads GPS is organized as a non?pro?t corporation under secti of the Internal Revenue Code. In keeping with its own tax exempt st GPS is donating to your organization with the understanding that its not be used in connection with any political or other non-exempt act Please do not hesitate to contact me if you have any questions. President Paid for by Crossroads GPS, on indepmuient, tax-exempt organization organiz: Internal Revenue Code. Contributions are not deductible as charitable donation 1-101 ew York Ave, NW Suite 1200 \X?ashington. DC 20005 (202) 7063 143 000 to the [payer index initiative. an 50.1 (4) atus, Crossroads contribution will ivity. (1 under section 501 (4) ofthe for federal income tax purposes. '051 Obtained and Uploaded by the Center for Responsive Pc blitiCS (OpenSecrets.org) Crossroads GPS March'12, 2012 Ed Gillespie Conscience Cause PO. Box 34794 Washzi?, DC 20043 13W Crossroads Grassroots Policy Strategies is pleased to contribute $75,0( Conscience Cause to facilitate ?xture endeavors. Crossroads GPS is organized as anorkpro?t corporation under section of the Internal Revenue'Code. In keeping with its own tax exempt stat! GPS is donating to your organization with the understanding that its cc not be "used in connection with any political or, other non-exempt actim Please do not hesitate to contact me if you have any questions. President Paidfo?r by Crossroads GPS, on i?micpwdent, fax-exempt organisation organized internal Rare-um Code. Contributions rm: not deductible as ciin-i-i-tnbla-dmmtions f: 1401 New Yon: Ave, NW Suite 1200 \t'ashingmn, DC 20005 (202) 706-705 144 \fiib Canada/w, CUMQO )0 to the 501 (4) JS, Crossroads mtributio?n will ty. antler Sect-ion 501(c)(4) of the urfen?eml income tax purposes. 1 - Obtained and Uploaded by the Center for Responsive Politics (OpenSecrets.org) THICS PUBLIC POLICY CENTER June 28, 2011 Mr. Steven J. Law President Crossroads Grassroots Policy Strategies 1401 New York Avenue, NW, Suite 1200 Washington, DC 20005 Dear Steven, I am writing to respectfully request your generous support for my work as Senior Fellow at the Ethics and Public Policy Center. I need to raise an additional $50,000 per ear to sustain my work. I am deeply grate?il to you for considering my request for support. This year 1 co-authored and published two books. Wealth and Justice: he Morality of Democratic Capitalism (co-authored with Arthur Brooks, president of the American terprise Institute) and City of Man: Religion and Politics in a New Era (co-authored with Michael Ge'son). Both books?but eSpecially the former?provide a robust moral defense of democratic capitalism. In addition, 1 have devoted much of my writing?in the form of daily blogs at Commentary magazine?s Contentions, and articles in the The Weekly Standard and he Wall Street Journal?to defending the capitalism, the free market, and greater choice and competition, while highlighting the dangers of an all-powerful state, centralization, and unaccountable bureaucracies. In the year ahead I will redouble those efforts, focusing on, the theme of 1%ited government being the sine qua non of self-government. I will continue to highlight why the nati nalization of our health care system will make health care both more costly and less ef?cient, leading to (among other things) rationing. And I will not stop advocating for policies that shrink the size oFour de?cit and debt as we promote a vigorous, pro-growth agenda. In America today the greatest domestic threat to our well-being is a ?at linng economy and the growth in the size, scope, reach and cost of the federal government. In the next twelve months I will focus like a laser beam on these matters and, just as importantly, offer solu :ions to the problems that plague us. Beyond that, I respectfully submit that there is no institution doing more effective and in?uential work than the Ethics and Public Policy Center in defending America?s ideals and the Judeo-Christian moral tradition that underlies those ideals. Across the broad range of critical ?ghts??om the battle to repeal and replace ObamaCare, to the ongoing assault on marriage, to the Brave New World co leagues and at EPPC are having more impact than ever. Whether you read major newspapers and magazines, surf key blogs, or follow the news on television and radio, you increasingly run into the work of EPPC scholars. Beyond the public eye, we have consulted closely with members of Congr and other policymakers.- We have worked intensively with congressional leaders to craft policies an? develop strategy on critical issues like health care, entitlements, and the federal budget. 1730 Street, NW, Suite 910 WaShington, DC 20036 202-682-1200 Fax 202-408-0632 145 Obtained and Uploaded by the Center for Responsive Politics (OpenSecrets.org) Congressman Paul Ryan?the architect of the highly praised ?Roadmap? for entitlement reform and one of the most an important and innovative conservative thinker in Congrelss?says about EPPC: ?The Ethics and Public Policy Center is a wonderful resource for c-eative and savvy policy proposals that are faithful to America's founding, principles. I regularly draw on the broad- ranging expertise of EPPC scholars.? I commit to you that we will continue to do our best to transform ybur contribution into maximum policy impact. We are a remarkably lean operation, with only two administrative staffers supporting our team of scholars, and we keep our overhead expenses as low as poSsib'lc. Charity Navigator, the nation's largest evaluator of nonpro?ts, has recently giVen us its highest rating of ?eitceptional? for sound ?scal management. According to Charity Navigator: ?Only 14% of the charities we rate have received at least 3 consect. tive 4-star evaluations, indicating that the Ethics and Public Policy Center consistently exe cutes'its mission in a ?scally responsible way, and outperforms most other charities in merica. This ?exceptional? designation from Charity Navigator differentiates the Ethics and blic Policy Center from its peers and demonstrates to the public it is worthy of their trust.? I am deeply grateful to you for considering my request for support. Please let me know if you have any questions. Sincerely, U1 1m am My. Peter Wehner Senior Fellow, Ethics and Public Policy Center \s a 146 Obtained and Uploaded by the Center for Responsive Politics (OpenSecrets.org) Crossroads 1401 New York Ave, NW Suite 1200 Washington, DC 20005 September 13, 2010 Freedom Vote Inc. ID Cloud 8: CO LLP Mr. Tom Whatman 1100 Mercan?le Center 120 Fourth St. Cincinnati, OH 45202 Dear Tom: Crossroads Grassroots Policies Strategies (GPS), a non?profit 501(c)(4) tax exempt organization, is pleased to make this general support grant in th 3 amount of $700,000 to Freedom Vote, also an IRS tax exempt non-profit 501(c)(4) organization. The sole purpose of this grant is to further your organization?s stated mission and purpose as a legally qualified social welfare tax exempt organization. As a result, Freedom Vote agrees that funds provided by this grant will not be used for any other purpose including any political activity. This grant is being made based upon that assurance. President 147 Obtained and Uploaded by the Center for Responsive Politics (OpenSecrets.org) Crossroads GPS October 1, 2010 Mr. Grover Norquist President Americans for Tax Reform 72 12th Street, NW Suite 400 Washington, DC 20005 Dear Grover, Crossroads Grassroots Policy Strategies is pleased to donate $1,300,000 to Americans for Tax Reform in support of your organization?s ta As you know, Crossroads GPS is committed to advanciJ will strengthen America?s economy and security, and one of 01 with other social welfare organizations to help promote such efforts to educate the public and policymakers on the need to 1 national debt and de?cits, and restrain out-of?control governm particular, we applaud and support your efforts over many ye from public of?cials at every level of government to oppose an through well-known "Taxpayer Protection Pledge?. Crossroads GPS is organized as a non-profit corporatio: of the Internal Revenue Code. In keeping with its own tax. exe GPS is donating to your organization with the understanding 1 be used in connection with any nonmexempt activity. Please do not hesitate to contact me if you have any quv.E Sincerely, even Law President Paid for by Crossroads Grassroots Policy Strategies, on independent, nonpro?t taxation under section 501(c)(4) of the Internal Revenu exempt purposes. 1g legislative policies that 11? strategies is to partner olicies. We value your :eep taxes low, reduce the ent spending. In are to seCure pledges Ly and all tax increases 1 under section 501 status, Crossroads that its donation will not :stions. rganization exempt from federal 2 Code. 1401 New York Ave, NW Suite 1200 - Washington, DC 20005 0120255964128- 140 Obtained and Uploaded by the Center for Responsive Politics (OpenSecrets.org) Charting the Course for a New Direction for Ar September 17, 2010 Mike Fichter President and CEO Indiana Right to Life 8520 Allison Pointe Blvd. Suite 220 Indianapolis, IN 46250 Dear Mike, Crossroads GPS is pleased to make a contribution of $3 Life to further your organization?s tax exempt activities. We are particularly appreciative of your focus on educ and policymakers on vital nationalissues. Crossroads GPS is organized as a non-profit corporatio of the Internal Revenue Code. In keeping with its own tax ex: GPS is donating to your organization with the understanding not be used in connection with any political or other non~exer Please do not hesitate to contact me if you have any q'u incerel Steven Law President Paid for by Crossroads Grassroots Policy Strategies, on independent, nonprofit taxation under section 501(c)(4) of the internal Revenr 1401 New York Ave, NW Suite 1200 - Washington, DC 20005 - (202) 559-64 149 nerica 5,000 to Indiana Right to ating the American people under section 501(c)(4) erupt status, Crossroads that its contribution Will apt activity. estions. irgonization exempt from federai ie Code. 28 - Obtained and Uploaded by the Center for Responsive Politics (OpenSecrets.org) October 8, 2010 Mr. Dan Danner . President National Federation of Independent Business 53 Century Boulevard Sune250 Nashville, TN 37214 Dear Mr. Danner, Crossroads GPS is pleased to make this grant, in the amount National Federation of Independent Business (NFIB), to assist the to promote and protect free-market-based economic policies. Crossroads GPS is organized under Section 501(c)(4) of the the promotion of social welfare. Speci?cally, Crossroads GPS is a advocacy organization that is committed to educating, equipping and American citizens to take action on the critical ecOnomic and legislai our nation?s future in the years ahead. We share with the NFIB an levels of debt, expansive government power, a nationali: struggling economy and looming tax increases are all on the brink of devastating the great country we?ve all known. NF IB has been a leading voice in the ?ghts to reduce margin expiration of the Bush-era tax cuts, and reign in unchecked governm joined 20 states in a historic lawsuit challenging the constitutionality and Affordable Care Act. Crossroads GPS makes this grant to help 1 these important areas and in furtherance of own mission with] ?exempt function? guidelines. Thank you again for your past efforts, and please feel free to assistance going forward. Sincerely, Steven J. Law 150 of$ 3,700,000, to the FIB in its continuing efforts nternal Revenue Code for olicy and grassroots mobilizing millions of .ive issues that will shape verriding concern that zed health care system, a ~reshaping and potentially 511 tax rates and prevent the ent spending. NFIB also of the Patient Protection continue its efforts in Internal Revenue Service contact me if we can be of Obtained and Uploaded by the Center for Responsive Politics (OpenSecrets.org) Charting the Course for a New Direction for America October 12, 2010 David Lehman Deputy Executive Director and General Counsel NRA-ILA 11250 Waples Mill Road Fairfax, VA 22030 Dear David, Crossroads GPS is pleased-to make a contribution of Ri?e Association to further your organization?s tax exempt ac? 0,000 to the National vities. We are particularly appreciative of your focus on educating the American people and policymakers on the importance of private property as a core economic right under the Constitution. Crossroads GPS is organized as a non-profit corporation under section 501(c)(4) of the Internal Revenue Code. In keepingwith its own tax exei status, Crossroads GPS is donating to your organization with the understanding that its contribution will not be used in connection with any political or other non-exam Please do not hesitate to contact me if you have any que Steven La President Paid for by Crossroads Grasmnots Poiicy Strategies, on independent, nonprofit or taxation under section 501(c)(4) of the In ternai Revenue 1401 New York Ave, NW Suite 1200 - Washington, DC 20005 - (202) 559-642 15 1 pt activity. stions. ionization exempt from federal Code. - Obtained and Uploaded by the Center for Responsive Pclitics (OpenSecrets.org) Mapping a New Direction for America June 10, 2010 Ms. Darla St. Martin Co-Executive Director National Right to Life Committee 512 10th Street, NW Washington, DC 20004 Dear Darla, Crossroads GPS is pleased to make a contribution of $2 Right to Life Committee to further your Organization?s tax e'x-e We are particularly appreciative of your focus on educ and policymakers on the vital national issue of health care ref implementation of, and potential changes to, the health care 1 Congress earlier this year. Crossroads GPS is organized as a non-profit corporatic of the Internal Revenue Code. In keeping with its own tax ex GPS is donating to your organization with the understanding 250,000 to the National ampt activities. ating the American people orm, including anticipated agislation enacted by under section 501(c)(4) empt status, Crossroads that its contribution will not be used in connection with any political or other non-ex ejnpt activity. Please do not hesitate to contact me if you have any estions. merely, Steven Law Chairman Paid for and authorized by Crossroads Global Policy Strategies, 0 501 (c 152 tax-exempt organization. Obtained and Uploaded by the Center for Responsive Politics (OpenSecrets.org) Charting the Course for a New Direction for Ame Iuly 7, 2010 Ms. Darla St. Martin Co?Executive Director National Right to Life Committee 512 10th Street, NW Washington, DC 20004 Dear Darla, Crossroads GPS is pleased to make a contribution of $25 Right to Life Committee to further your organization?s tax exen We are particularly appreciative of your focus on educat and policymakers on the vital national issue of health care ref01 implementation of, and potential changes to, the health care leg Congress earlier this year. Crossroads GPS is organized as a non-profit corporation of the Internal Revenue Code. In keeping Withits- own tax (2er GPS is donating to your organization with the understand that be used in connection with any political or other non?exempt ai Please do not hesitate to contact me if you have any que: Sincerely, one Steven Law Chairman Paid for by Crossroads Grassroots Policy Strategies, on independent, nonpro?t or taxation under section 501(c)(4) of the Internal Revenue 1401 New 'York Ave, NW Suite 1200 Washington, DC 20005 0 (202) 559642 153 {rice 0,000 to the National 1pt activities. ing the American people rm, including anticipated ?gislation enacted by under section 501 status, Crossroads its contribution will not :?tivity. stions. gdnization exempt from federai Code. 8 Obtained and Uploaded by the Center for Responsive Pi )IitiCS (OpenSecrets.org) Cross-roads GPS August 12, 2010 Ms. Darla St. Martin Co?Executive Director National Right to Life Committee 512 103-1 Street, NW Washington, DC 20004 Dear Darla, Crossroads Grassroots Policy Strategies is pleased to ontribute $250,000 to the National Right to Life Committee in support of your organization?s tax exempt social welfare activities. As you know, Crossroads GPS is committed to advanc will strengthen America?s economy and security, and one 0ft with other social welfare organizations to help promote such efforts to educate the public and policymakers on national he 'ing legislative policies that our strategies is to partner policies. We value your alth care policy, including the implementation of, and potential changes to, the health care legislation enacted by Congress earlier this year. Crossroads GPS is organized as a non-profit corporati4 of the Internal Revenue Code. In keeping with its own tax ex GPS is donating to your organization with the understanding not be used in connection with any political or other non-eer Please do not hesitate to contact me if you have any qt 1. Steven La 1. Director Paid for by Crossroads Grassroots Policy Strategies, an independent, nonprofit taxation under section 501(c)(4) of the Internal Reven 1401 New York Ave, NW Suite 1200 Washington, DC 20005 - (202) 559-6 154 an under section 501 empt status, Crossroads that its contribution will activity. testions. organization exempt from federal ue Code. 428 I Obtained and Uploaded by the Center for Responsive Politics (OpenSecrets.org) Charting the Course for a New Direction for A September 1, 2010 Ms. Darla St. Martin Co-Executive Director National Right to Life Committee 512 10th- Street, NW Washington, DC 20004 Dear Darla, Crossroads GPS is pleased to make a further contribut National Right to Life Committee to further your organizatio We are particularly appreciative of your focus on educ and policymakers on the vital national issue of health care rei implementation of, and potential changes to, the health care 1 Congress earlier this year. Crossroads GPS 'is organized as a non-profit corporatit of the Internal Revenue Code. In keeping withits own tax ex GPS is donating to your organization with the understanding merica ion, of $250,000 to the n?s tax exempt activities. ating the American people 'orm, including anticipated egislation enacted by under section 501 (4) empt status, Crossroads that its contribution will not be used in connection with any political or other non-exempt activity. Please do not hesitate to contact me if you have any Steven Law Chairman Paid for by Crossroads Grassroots Policy Strategies, an independent, nonpro?t taxation under section 501(c)(4) of the Internal 1401 New York Ave, NW Suite 1200 0 Washington, DC 20005 0 (202) 559-64 15 5 ?estions. irganization exempt from federal ie Code. 28 - Obtained and Uploaded by the Center for Responsive Politics (OpenSecrets.org) Charting the Course for a New Direction forA September 17, 2010 Ms. Darla St. Martin Co-Executive Director National Right to Life Committee 512 10th Street, NW Washington, DC 20004 Dear Darla, Crossroads GPS is pleased to make a contribution of Right to Life Committee to further your organization?s tax ex We are particularly appreciative of your focus on educ and policymakers on the vital national issue of health care re merica 250,000 to the National empt activities. :ating the American people form, including anticipated implementation of, and potential changes to, the health care legislation enacted by Congress earlier this year. Crossroads GPS is organized as a non-profit corporati: of the Internal Revenue Code. In keeping with its own tax ex GPS is donating to your organization with the understanding not be used in connection with any political or other non-exe Please do not hesitate to contact me if you have any qt President Paid for by Crossroads Grassroots Policy Strategies, an independent, nonpro?t taxation under section 501(c)(4) of the Internal Rever 1401 New York Ave, NW Suite 1200 1- Washington, DC 20005 - (202') 559-6 156 an under section 501(c)(4) empt status, Crossroads that its contribution will activity. ie'stions. organization exempt from federal ue Code. 428 - Obtained and Uploaded by the Center for Responsive Politics (OpenSecrets.org) Charting the Course for a New Direction for Am September 30', 2010 Ms. Darla St. Martin Co-Executive Director National Right to Life Committee 512 10th Street, NW Washington, DC 20004 Dear Darla, Crossroads GPS is pleased to make a further contributic National Right to Life Committee to further your organization erica of $250,000 to the 5 tax exempt activities. We are particularly appreciative of your focus on educating the American people and policymakers on the vital national issue of health care refo implementation of, and potential changes to, the health care 1e Congress earlier this year. Crossroads GPS is organized as a non?profit corporatior of the Internal Revenue Code. In keeping with its own tax exe GPS is donating to your organization with the understanding not be used in connection with any political or other non-exern Please do not hesitate to contact me if you have any que merely, Steven Law Chairman Paid for by Crossroads Grassroots Policy Strategies, on independent, nonpro?t or taxation under section 501(c)(4) of the Internal Revenu: 1401 New York Ave, NW Suite 1200 Washington, DC 20005 0 (202) 559-542 157 rm, including anticipated gislation enacted by 1 under section 501 status, Crossroads hat its contribution will pt activity. stions. ganization exempt from federal Code. 8 0 Obtained and Uploaded by the Center for Responsive Politics (OpenSecrets.org) Charting the Course for a New Direction for Ar October 12, 2010 Ms. Darla St. Martin Co-Executive Director National Right to Life Committee 512 10th Street, NW Washington, DC 20004 Dear Darla, nerico Crossroads GPS is pleased to make a further contribution of $250,000 to the National Right to Life Committee to further your organizatior We are particularly appreciative of your focus on educ and policymakers on the vital national issue of health care ref implementation of, and potential changes to, the health care 14 Congress earlier this year. Crossroads GPS is organized as a non-profit corporatic of the Internal Revenue Code. In keeping with its own tax ex: GPS is donating to your organization with the understanding not be used in connection with any political or other non-exer Please do not hesitate to contact me if you have any qu Steven Law Chairman Paid for by Crossroads Grassroots Pollcy Strategies, on independent, nonprofit: taxation under section 501(c)(4) of the internal Revem 1401 New Vork Ave, NW Suite 1200 washington, 00 20005 - (202) 559?5: 158 1?3 tax exempt activities. a?ng the American people orm, including anticipated agislation enacted by under section 501(c) (4) ampt status, Crossroads that its contribution will activity. estions. irganization exempt from federal re Code. 28 - Obtained and Uploaded by the Center for Responsive Politics (OpenSecrets.org) Charting the Course for a New Direction for Al October 20, 2010 Ms. Darla St. Martin Co?Executive Director National Right to Life Committee 512 10th Street, NW Washington, DC 20004 Dear Darla, Crossroads GPS is pleased to make a further contribut National Right to Life Committee to further your organizatio We are particularly appreciative of your focus on educ and policymakers on the Vital natiOnal of health care rei implementation of, and potential changes to, the health care Congress earlier this year. Crossroads GPS is organized as a non-profit corporatii of the Internal Revenue Code. In keeping with its own tax ex GPS is donating to your organization with the understanding not be used in connection with any political or other non-exa- Please do not hesitate to contact me if you have any qt - Sincerely, Steven Law' President Paid for by Crossroads Grassroots Policy Strategies, on independent, nonprofit taxation under section 501(c)(4) of the internal 1401 New York Ave, NW Suite 1200 - Washington, DC 20005 (202) 5 9 Trance ion of $250,000 to the n?s tax exempt. activities. ating the American people :orrn, including anticipated gislation enacted by an under section 501 empt status, Crossroads that its contribution will activity. testions. organization exempt from federal Code. 428 I Obtained and Uploaded by the Center for Responsive Politics (OpenSecrets.org) February 15, 2012 Ms. Darla St. Martin Co?Executive Director National Right to Life Committee 512 '10'11 Street NW, Washington, DC 2004 Dear Ms. St. Mart-in, Crossroads Grassroots Policy Strategies is pleased to contribute $25? Right to Life Committee in support-of your organiZs?on's tax exem; activities. As you know, Crossroads GPS is committed to advan?in?g legislative. strengthen Arnerica?s economy and security. One of our strategies is non-pro?t sociai welfare organizations, especially those with effectiv grassroots resources, to help promote such policies. we particularly, 1 educate the public and policymakers on national health care policy, i1 implementation of, and efforts to repeal, the President?s health care] Crossroads is organized. as a- nonspro?'t corporation under .sccti Internal Revenue Code. In keeping with its own tax exempt status, donating to your organization with the understanding that its contrih in connection with any political or other non~exempt acrivity. Please do not hesitate to contact me ifyou have any questions. Sincerely, Steven Law President Paid?Jr by Crossroads GPS, on independent, fax?exemptorganization organisz Interim! Revenue Code. Contributions me not deductible as dmritabic donations]?! 1401 New York Ave, NW Suite 1200 Remington, DC 20005 (202) 706?705 160 ?000 to the National bt social welfare policies that will to partner with other legislative and mine your efforts to tcluding the Ongoing on 501(c)(4) of the rossroads. GPS is ution will not be used Hider sectiwt 50 1 of the fod?ml income tax purposes; I Obtained and Uploaded by the Center for Responsive Politics (OpenSecrets.org) Crossroads GPS March 21, 2012 Ms. Darla St. Martin Clo?Executive Director National Right to Life Committee 512 100? Street NW, Washington? DC 2004 Dear Ms- St. Martin, Crossroads Grassroots Policy Strategies is pleased to contribute $25< Right to Life Committee in support of your organization's tax exemt activities. As you know, Crossroads GPS is committed to advancing legislative strengthen America?s economy and security. One of our strategies 1 non-profit social welfare organizations, especially those with effectiv graserOts resources, to help promote such policies. We particularly 1 educate the public and policymakers on national health care policy, ii implementation of, and efforts to repeal, the President?s health care 1 Crossroads GPS is organized as a non?pro?t corporation under secti Internal Revenue Code. In keeping with its own tax eXempt status, donating to your organiz?a?on with the understanding that its contrib in connection with any political or other non-exempt activity. Please do nor hesitate to contact me if you have any questions. - erely, Steven Law President Pnidj'br by Crossroads GPS, rm independent, tnx~exanzptorganization organized Internal Revenue Code. Contriimtimis are not deductible as charitable donations for 1401 New: "York Ave, NW. Suite 1200 DC 20005 (202) 706-7051 161 fag, arr-u 1,000 to the National at social welfare policies that will to partner with other legislative and ralue your efforts to minding the ongoing egislation. on 501(c)(4) of the rossroacls GPS is ution will not he used rider section 501? of the federal income tax purposes. Obtained and Uploaded by the Center for Responsive Po litics (OpenSecrets.org) XE) April 18, 2012 Ms. Darla St. Martin Co-Executive Director National Right to Life Committee 5210* Street NW Washington, DC 20004 Dear Ms. St. Martin, Crossroads Grassroots Policy Strategies is pleased to contribute $25 0,000 to the National Right to Life Committee in support of your organization's tax exern or social welfare - activities. As you know, Crossroads GPS is committed to advancing legislative policies that will strengthen America's economy and security. One of our strategies is to partner with other non?pro?t social welfare organizations, especially those with effective legislative and grassroots resources, to help promote such policies. We particularly value your efforts to- edueate the public and policymakers on national health care policy, including the ongoing implementation of, and efforts to repeal, the President?s health care egislation. Crossroads GPS is organized as a non-pro?t corporation under section 501(c)(4) of the Internal Revenue Code. In keeping with its own tax exempt status, Crossroads GPS is donating to your organization with the understanding that its contribution will not be used in connection with any political or other non-exempt activity. Please do not hesitate to contact me if you have any questions. Steven Law i President Paid for by Crossroads GPS, an independent, tax-exempt organization organized mier section 501(c)(4) of the Internal Revenue Code. Cortiribufiw-Is are not deductible as charitable donations ?n federal income tax purposes. 1401 New York Ave, NW Suite 1200 DC 20005 (202) 706-705 162 Obtained and Uploaded by the Center for Responsive Po itics (OpenSecrets.org) Crossroads September 17, 2010 Mr. Nick Ayers Republican Governors Public Policy Committee 1747 Ave, NW Suite 250 Washington, DC 20006 Dear Nick: Crossroads Grassroots Policies Strategies (GPS), a non-pr organization, is pleased to make this general support grant in the Republican Governors Public Policy Committee also a profit 501(c)(4) organization. 3 The sole purpose of this grant is to further your organiz ofit 501 tax exempt amount of $750,000 to IRS tax exempt non- . a1 ?on?s stated mission and purpose as a legally qualified social Welfare tax exempt org ation. As a result, agrees that funds provided by this grant will not be used including any political activity. This grant is being made based 1. Steven Law President 163 fer any other purpose [pon that assurance. Obtained and Uploaded by the Center for Responsive Po litics (OpenSecrets.org) Crossroads GPS Charting the Course for a New Direction for A1 October '19, 2010 Mr. Matthew Brooks Executive Director Republican Jewish Coalition 50 Street, NW Suite 100 Washington, DC 20001 Dear Matt: Crossroads Grassroots Policies Strategies (GPS), a non-prof] nerica ?t 501(c)(4) tax exempt organization, is pleased to make this general support grant in the amount of $150,000 to Republican Jewish Coalition (RIC), also an IRS tax exempt non-pro The sole purpose of this grant is to further your organiza?o purpose as a legally quali?ed social welfare tax exempt organized that funds provided by this grant will not be used for any other pu activity. This grant is being made based upon that assurance. Steven Law President Paid for by Crossroads Grassroots Policy Strategies, on independent, nonpro?t 4 taxation under section 501(c)(4) of the Internal Reven 1401 New York Airs, NW Suite 1200, - Washington, DC 20005 i- (202) 559-61 164 fit 50]. (4) organization. ?5 stated mission and n. As a result, RIC agrees rpose including any political arganization exempt from federal 18 Code. 128 - Obtained and Uploaded by the Center for Responsive Politics (OpenSecrets.org) APPENDIX I: STATEMENT OF STEVEN DUFFIELD. VICE PRESIDENT FOR POLICY OF GPS 165 Obtained and Uploaded by the Center for Responsive Politics (OpenSecrets.org) Statement of Steven Duf?eld, Policy Director; Vice President for Policy Crossroads Grassroots Policy Strategies The following is a review of the role that I have played as Policy Director and Vice President for Policy for Crossroads Grassroots Policy Strategies with special attention paid to the 2010-2011 time period. This review is designed to demonstrate how GPS focuses its efforts on the policymaking process, in particular on Capitol Hill. General Background of Policy Role I was approached by representatives of GPS to serve as Policy Director in May 2010. When I was contacted and invited to discuss a policy role with GPS, it was made clear to me that my role would be to develop a smart policy agenda for the organizat on, monitor legislation on Capitol Hill, engage productively throughout the national policy community, and look for opportunities for GPS to in?uence legislative activity. This has been my objective throughout my time with GPS. Agenda Development From the beginning, it was important to determine which policy areas GPS should target and how the organization could best in?uence them. To determine that agenda, we examined and identi?ed issue areas where the public might be willing to become engaged and where Congress and the President might pay attention. GPS soon developed a policy agenda that focused on economics, energy policy, health care, national debt, regulatory overreach, and national defense. This agenda dubbed the ?7 in ?11? National Action Plan) was discussed openly in the press and with policymakers, and was the culmination a great deal of work that drew on research within the national policy community on both the quality of the policy being pursued and the feasibility of its enactment. 166 Obtained and Uploaded by the Center for Responsive Politics (OpenSecrets.org) It is important to emphasize this latter point, which is that fea important consideration. It has been the practice at GPS to advocate the realm of the possible and that are close to where elected of?cials GPS tries to in?uence policy debates as they actually occur, which is many organizations that lay out aspirational ideological principles officeholders will respond. GPS focuses on policy as it actually devr where policymakers are already inclined to act, and then advocate fo outcome. Issue Surveys GPS is focused on the art of the possible in terms of policy, part of our work has focused on determining where the public stands knowledge helps us decide how best to persuade the public, and then and pursue policies that GPS supports. To that end, GPS has pursue sibility has always been an for policies that are within are inclined to engage. in marked contrast to some th the hope that :lops, and we identify issues the best possible policy vhich means that an essential on key issues. This policymakers, to support public opinion projects that are focused on policy issues so that our advocacy work can be shaped to persuade. During the relevant time period (2010-2011), we conducted several issue-ba surveys focused on health care policy, tax policy, and the national de GPS develop and shape its policy agendas. surveys are some sometimes shared with policymakers or with other members of the In the latter case, this collaborative process enables our work to be a who share the same policy goals. Interaction with Policymakers Because GPS is primarily focused on in?uencing public polic interact with policymakers, elected and appointed, both directly and 167 sed surveys, including bt. These surveys helped times made public and ational policy community. ?force multiplier? of those part of my role is to through staff. These Obtained and Uploaded by the Center for Responsive POIitics (OpenSecrets.org) interactions are of an educational nature. We share polling results an public may react to different public policy choices. In my role, I hav Capitol Hill staff about policy issues and provide counsel and educat and Members/Senators in their decision-making. Capitol Hill staff a appreciate the policy knowledge and research that we can share and discuss our latest public policy research and analysis. Advocacy within Policy Community Throughout my work with GPS, I have engaged with other Washington DC. regarding how best to advance our policy agenda. meetings and correspondence with policy at entities such as Forum, Americans for Tax Reform, the Heritage Foundation, the An the Cato Institute, the Competitive Enterprise Institute, and other ins which have happened quite literally daily since the inception of the 0 Crossroads GPS on the nature of the policy debate and aid the organ advocacy. Crossroads research and analyses likewise impact how ot view the policy debate and how they might be most effective. ?Issue Directions? Emails One speci?c way that GPS has sought to in?uence policy is the national policy community that is represented by Washington D. pro?t advocacy organizations, trade associations, corporate lobbying journalism and commentary. To that end, during the 2010-2011 time practice of announcing and broadcasting policy positions on some le when those bills or amendments were being considered in the House 168 judgments on how the regular conversations with ional materials to aid staff nd elected of?cials often invite us to visit to olicy organizations in In practice, this has meant the American Action ierican Enterprise Institute, titutions. These interactions, rganization, inform zation in shaping its her non?pro?t organizations iy changing opinions within C.-based think tanks, non- shops, and centers of :frame, GPS began the gislative matters, especially or Senate. These policy Obtained and Uploaded by the Center for Responsive Politics (OpenSecrets.org) positions included speci?c analysis of the issue at hand and an explan opposition to a particular position would better serve the nation?s wel announcements are shared throughout the Washington policy commu system that reaches more than 1,000 essential in?uencers in the corpc ation of why support or l?being. These nity through a distribution rate, non-pro?t, journalism, and government communities, and they were made available on our Website for all. This tactic has been important in ful?lling vision of in?uencing policy by, in part, in?uencing those who in?uence policymakers. Public Events and Public Writings GPS has also shared its agenda through public events where For example, during the relevant time period, Crossroads GPS hosted Washington DC. on the issue of Executive Power, hosting former At former White House Counsel C. Boyden Gray, Senator Orrin Hatch, policy This event, designed in late 2011 and effectuated in and was discussed in the national press. It focused the public?s attent olicy issues are discussed. a special forum in torney General Ed Meese, Rep. Peter Roskam, and early 2012, was televised ion on questions dealing with re ulatory authority, the Affordable Care Act, environmental lic and the im act of Pol administrative actions on small business. In July 2012, Crossroads Health Care policy in which elected of?cials and policy advocates discussed the then-recent Supreme Court decision on the Affordable discussion. Another example of this approach was in January 2011 when behalf of GPS at a Heritage Foundation-hosted event. This event, wl Lamar Alexander, focused on how the Senate should react to efforts 1 through unorthodox means. 169 asted a similar event on the non-pro?t world Care Act in a televised I appeared on on rich also included Sen. 0 change Senate rules Obtained and Uploaded by the Center for Responsive (OpenSecrets.org) In a similar way, GPS has, at times, pursued opinion advocacy under its of?cers? names that seeks to in?uence policymakers. For example, GPS has published opinion advocacy pieces authored by former Board member Heather Wilson, GPS president Steven J. Law, and myself. These efforts, all of which appeared in key publications were policy focused in an effort to in?uence policymakers. 170 Obtained and Uploaded by the Center for Responsive Politics (OpenSecrets.org) EXHIBIT 1: PROPOSED ADVERSE DETERMINATION LETTER (SEP. 6. 2013) 171 Obtained and Uploaded by the Center for Responsive Politics (OpenSecrets.org) DEPARTMENT OF THE TREASURY INTERNAL REVENUE SERVICE WASHINGTON, D.C. 20224 TAX EXEMPT AND GOVERNMENT ENTITIES DIVISION Date: September 6, 2013 Contact Person: Karen Schiller ldentific ation Number: Crossroads Grassroots Policy Strategies 100070858 45 North Hill Drive, Suite 1000 Contact Number: Warrenton, VA 20186 (202) 317-8989 FAX NL mber: (202) 317-8584 Employer Identification Number: 27-27 53378 LEGEND FiscalYear Taxable year ending May 31, 2011 gag June 2, 2010 State Virginia Description1 economy and national security CalendarYear1 2010 three DescriptionZ too much government spending seven two one y; 20,797,851 y; 40,365,792 y_3 42,344,884 CalendarYear2 2011 Descriptions government union reform y4 778,804 y_5_ 786,763 y_6_ 73,985 11 876,514 ya 178,942 y3 1,012,933 15,860,000 35 12 Granteet Republican Jewish Coalition Grantee2 American Action Network Organization American Crossroads y? 45,000,000 Dear Applicant: We have considered your application for recognition of exemption f'om federal income tax under Internal Revenue Code 501(a) ("Application"). Based on the information provided in 172 Obtained and Uploaded by the Center for Responsive Politics (OpenSecrets.org) Crossroads Grassroots Policy Strategies connection with your Application and in your Form 990 for FiscalYear you do not qualify for exemption under 501 The basis for our below. FACTS You incorporated on Qat_e, in gate. Your Articles of Incorporation st: ?established primarily to further the common good and general welfa United States of America by engaging in research, education, and cc regarding policy issues of national importance that will impact Americ ahead." Your Articles also state that you ?shall not carry on any activ carried on by an organization exempt from federal income tax under Internal Revenue Code of 1986 . . . In your Application, you stated that your primary activities consist of i policymaking research and public education "may, in the future, develop and/or distribute independent political co "any such activity will be limited in amount, and will not constitute the 1, we have concluded that conclusion is set forth ate that you were "e of the citizens of the mmunication efforts :a's [Descriptiom] in years 'ity not permitted to be section 501(c)(4) of the nfluencing legislation and ou also stated that you mmunications," and that organization?s primary purpose." In Part of your Application, you indicated that you also linake grants to other en??es. 1. Advocacy Activities: In response to further requests for information, you provided a list of communications," with the dates the communications were distribute communications, and the cost of each one. These communications advertisements, radio advertisements, print media, direct mail, and tr not provide any specific information regarding the amount of time sp Television Communications: Of the total amount you reported spending on communications in the expenditures?more than 90%??were for television advertiseme you refer to these advertisements as ?issue advocacy ads." You sut television advertisements aired in FiscalYear and provided informatii one of these advertisements. - With the exception of one, all of these television advertisem for public office by name and were aired during the period le CalendarYear1 general election (the ?pre-election TV ads"). pre-election TV ads aired during the 11 weeks prior to the election. 173 what you termed "advocacy d, descriptions of the consisted of television alephone contacts. You did ent on any activities. calYear, substantially all of 1ts. In your press releases, imitted transcripts of the an on the costs of all but ts referred to a candidate ding up to the More specifically, all of the ilendarYear1 general Obtained and Uploaded by the Center for Responsive Politics (OpenSecrets.org) Crossroads Grassroots Policy Strategies 0 All of the pre-election TV ads expressed disapproval of an individual candidate named in the advertisement; one advertisement also expressed approval of the opponent to the candidate. - You aired the pre-election TV ads in a number of different states. 0 Approximately three-quarters of the pre-election TV ads aired state?wide in states in which a candidate for US. Senate was named in the advertisement. For each of these advertisements, the individual you named was a candidate for US. Senate in the state where it aired. 0 The remaining pre-election TV ads aired in different U.S. Ho.ise of Representatives congressional districts. For each of these advertisements, the individual you named was a candidate for the US. House of Representatives congress onal district in which the advertisement aired. 0 You identified nearly two-thirds of the pre-election TV ads as independent expenditures reported to the Federal Election Commission These advertisements concluded with statements such as the following: [Candidate] "is wrong for" [State]; [State] "can't afford" [Candidate]; ?Say no" to [Candidate]; [Candidate] ?can?t be trusted"; ?Two thumbs down?; and [Candidate] has ?been there too long." 0 The other approximately one-third of the pre-election TV ads you did not report as independent expenditures to the FEC. Of these, 51 contained text at the very end of the adverti ement asking the viewer to tell the US. Senator in question to vote against a partic Iar bill number. The US. Senate was scheduled to vote on the identified bill short after the advertisements aired. However, none of these advertisements provided any information about the bill other than the number. The advertisements contain no description or discussion of the content of the bill, and the audio of the advertisements did not mention the bill at all. Rather, the advertisements focus on criticizing the US. Senate candidates for having approved Descriptionz in 11-week period before the CalendarYear1 general elect he past. During the same on, you ran advertisements that expressed disapproval of these same US. Senate candidates that you reported as independent expenditures to the FEC. You did not "ovide any information indicating you ran any advertisements during this period urging voters to tell any non- candidate US. Senators to vote against the bill in quest on. 1 An independent expenditure is an expenditure made for a communication ?expressly advocating the election or defeat of a clearly identified candidate that is not made in c00peration. consultation, or concert with, or at the request or suggestion of, a candidate, a candidate's authori or a political party or its agents." 11 C.F.R. 174 zed committee, or their agents, Obtained and Uploaded by the Center for Responsive Politics (OpenSecrets.org) Crossroads Grassroots Policy Strategies An additional of these advertisements criticized the candidate identified in the advertisement for supporting legislation Congress had enacted earlier in CalendarYear1. Another advertisement described the involvement of a was a state official at the time) in what the advertisemen scandal" while also criticizing the candidate's support of 0 You reported spending $311 on the pre-election TV ads, whic of these x_2_ advertisements concluded by telling viewers to tell the member of Congress identified in the advertisement to "stop" a particular element of the legislation. 1% of these advertisements provided no discussiow of why the legislation was undesirable but instead criticized the candidate for working to get the legislation passed rather than improving the state's economy. More than half of these advertisements criticized US. Senate candidates who were state officials (not incumbent Senators) for supporting the legislation earlier in CalendarYear1. The advertisements identifying one of the Senate candidates concluded by noting that another official in the state was suing the federal government to oppose the legislation and asked the viewers to tell the US. Senate candidate, as a state official. to support the challenge of the legislation. Advertisements identifying a Senate candidate in a different state (who was a state official in that state) concluded by asking the viewers to tell the US. Senate candidate to ?fight? and ?stop defending? the legislation (with one of those advertisements noting that the candidate had refused to join other states? officials in opposing the legislation). The timing of these advertisements criticizing candidates for supporting the legislation earlier in CalendarYear1 does not appear electoral event such as a scheduled vote on specific candidates. While there were pending suits against timing of the advertisements mentioning or alluding to be related to any expected action in the suits. to be related to a non- legislation by the the federal government, the 0 such suits does not appear During the same 11-week period before the CalendarYear1 general election in which you were airing these advertisements critic zing the candidates for their past approval of the legislation, you aired advertisements expressing disapproval of all but one of the candidates that you reported as the FEC. ndependent expenditures to You did not provide any information indicating that you aired advertisements prior to, during. or after the 11-week period before the Ca urging viewers to tell us. Senators or state officials oppose or challenge the legislation in question. The legislation in question was raised as an issue di mentioned in the advertisements from their oppone 175 endarYear?l general election who were not candidates to stinguishing the candidates s. .8. Senate candidate (who characterized as a ?tax tax increases. :h was more than half of the Obtained and Uploaded by the Center for Responsive Politics (OpenSecrets.org) Crossroads Grassroots Policy Strategies You stated that you spent for radio communications that aired in $y2 in total FiscalYear expenditures that you accounted for in response to further requests for information.2 However, you aired at least one television advertisement in the period leading up to the CalendarYear1 general election provide information on the associated expenditures. That ad record of a member of Congress, who was also a candidate, for which you did not vertisement criticized the for making the state?s economy worse and concluded by stating that the member was ?wrong for? the state. The one television advertisement you aired in FiscalYear that was not a pre-election TV ad aired nationally in CalendarYearZ. The advertisement urged viewers to call the President and tell him to support Description 3. You reporter spending $313 on this television advertisement, which was less than 2% of your $15: in total FiscalYear expenditures. Radio Communications: than 2% of your $12: in total FiscalYear expenditures: You stated that you spent for newsprint communications in Fisc You aired the advertisements as a series of advertisements You aired the advertisements in different congressional distri You aired the advertisements at the same time Congress de legislation, which was after the CalendarYear1 general electi In the advertisements, you instructed the listener to call their representative to take an action on the legislation. Newsprint: 0.2% of your $yg in total FiscalYear expenditures: 0 You ran one advertisement on two separate days. One day CalendarYear1 general election, and one day was after the election. The advertisements appeared at the same time Co legislation mentioned in the advertisement and urged suppo You ran the other advertisement after the CalendarYear1 ge repealing legislation passed earlier in the year. 2 The in total FiscalYear expenditures that you accounted for in respon information is somewhat less than the $111 in total expenditures you report FiscalYear, with most of the difference presumably being general administ was used because that is the total for which you provided the requisite, spe using $13; as the figure for total FiscalYear expenditures would not affect th 176 FiscalYear, which was less aased on a template. in a number of states. iberated a piece of on. Congressional alYear, which was less than was before the talendarYear1 general ngress deliberated the for the legislation. were! election. lt called for se to further requests for rId on your Form 990 for ative and overhead costs. $12 information. However, outcome of this ruling. Obtained and Uploaded by the Center for Responsive Politics (OpenSecrets.org) Crossroads Grassroots Policy Strategies Direct Mailing: You stated that you spent $y1 for direct mailings in FiscalYear (which was approximately 2% of your $yg in total FiscalYear expenditures) and submitted a list and samples of direct-mail communications mailed in FiscalYear: 0 You mailed all communications in September and October of CalendarYear1, during the period leading up to the CalendarYear1 general election. You did not mail any communications after the CalendarYear1 general election. - You selected a number of states in which to send mailings. all of which were holding an election for US. Senate. a You customized the content of each communication for the specific state of distribution. Each communication identified an individual who was a candidate for US. Senate in the state where you mailed it. Substantially all of the communications expressed disapproval of a specific candidate with statements such as the following: [State] ?can't afford" [Candidate]; [Candidate] "only hurts [the] economy"; [Candidate] ?made the problem worse?; [Candidate] ?ideas don?t solve the problem"; ?That?s the wrong way, [Candidate]"; ?[Candidate?s] policies are driving [State's] economy off cliff." The remaining communications expressed approval of a Specific candidate, with the following statements: I [Candidate] ?gets iti"; I [Candidate?s] voting record is one of . . . "champion." - Most of the communications contained a few sentences ask ng the reader to contact the candidate to support specific legislation. However, the vast majority of the text in the communications was not devoted to discussing the legislation mentioned but to criticizing (or approving) the candidate?s past record. Moreover, nearly half of the candidates mentioned were not incumbents in the US. Senate and hence had no ability to vote on the legislation mentioned. 0 More than half of the candidates you identified in your direct mail communications were also identified in your television advertisements. Telephone Contacts: You stated that you spent for telephone messaging in FiscalYea_r (which was less than 0.5% of your $yg in total FiscalYear expenditures) and submitted a ist of telephone messaging communications placed in FiscalYear: - You initiated all the calls within 30 days prior to the Calenda'Year1 general election. No calls were made after the CalendarYear1 general election. 177 Obtained and Uploaded by the Center for Responsive Politics (OpenSecrets.org) Crossroads Grassroots Policy Strategies identified in each of the calls. One call named a candidate for the US. House of Represent calls named candidates for US. Senate. the state where the call was made. All but one of the candidates you identified in your telephone identified in your television communications, your direct mail 1 All of the calls that named US. Senate candidates expressec individual candidate named in the call. The call that named a You directed the calls to a number of states. A specific candi You customized the script of each telephone message to eac district. Each message identified an individual who was a car date in the state was atives, while the remaining state or congressional ididate for elected office in messages were also :ommunications, or both. disapproval of the US. House of Representatives candidate expressed approval of the individual candidate. Several calls contained statements such as the following: [Candidate] ?is taking us down with the votes [Candidate] [Candidate?s] "votes have made the problem worse"; [Candidate] "has turned [Candidate?s] back on" [State]; [Candidate] ?has failed." 2. Research: According to your Form 990 for FiscalYear, you spent on resear approximately 2.5% of your $12 in total FiscalYear expenditures: - In December of CalendarYear1, you released a poll that mea both parties? messaging on a number of economic issues reg deficit. The timing of the poll coincided with pending legislation. 0 You also filed requests to gain access to information re initiatives. 3. Public Education: [Candidate] "isn't on the same page as the rest of? [State] 5 casting in Washington"; ch activities, which was sured voter responses to arding tax rates and the lated to your policy Your Application states that you engage in public education activities that are distinct from your activities aimed at influencing legislation and policymaking. Howeve submitted does not specify any such public education activities that FiscalYear. 178 r, the information you you conducted in Obtained and Uploaded by the Center for Responsive Politics (OpenSecrets.org) Crossroads Grassroots Policy Strategies 4. Grant Making: According to your Form 990 for iscalYear, you spent $m on grants which was less than 40% of your $12 in total FiscalYear expenditures: not to be used in connection with any political or non-exempt You state that the percentage of your total time devoted to You made grants to organizations exempt under 501 state that the grants were accompanied by a letter of transmit "are to be used only for tax-exempt function purposes of theg to other organizations, 4) and 501(c)(6). You tal stating that the funds rantee organization and activity." king grants is a relatively small percentage because evaluating potential grant recipien is not as time intensive an activity as your other endeavors. One of the largest of the grants was made to a 501(c)(6) or anization. A number of your grantees have reported significant political xpenditures. You did not provide any additional information regarding thes grants. Your Form 990 for iscalYear shows that you made a grant Grantee1 and Grantee1, in turn, made a grant to you during the same year. Moreover Granteel?s Form 990 covering the FiscalYear period shows that Grantee1 receive a grant from Granteez, an organization to whom you made a grant in FiscalYear. Grant e1?s grant to you exceeded the combined amount of your grants to Grantee1 alnd Grantee2. 5. Relationship to Organization: In your Application, in response to whether you were connected, or planned to be connected, in any way with any other organization, you stated We." In response t< provided information about your relationship with Organization. You several employees and consultants with [Organization], an I.R.C. 5 registered with the FEC as a political committee." Among the sharec afurther inquiry, you stated that you ?share[] 27 organization that is employees is your CEO, who is also CEO of Organization. In addition, you and Organization office equipment. You stated that you had x_2_ employees, and you Ii have employment relations with, and receive salaries from, both you Furthermore, you listed additional persons who provided volunteer 5 Organization. These individuals provide consulting and strategic ad fundraising. Although you share office space, equipment, employee volunteers who provide strategic advice, you stated that you and Or "joint" efforts. In CalendarYearZ, you issued a report which stated that your publicl $111 in CalendarYear1 for both you and Organization. You stated ?exploded? in September and October of CalendarYear1, allowing yc your public goal "across the two organizations." In this report, you ir articles about the CalendarYear1 political campaign. You included a you and Organization disclosed in an annual report sent to donors tl 179 share of?ce space and ted employees who and Organization. rvices to you and to ice and assist with consultants, and anization do not engage in stated goal was to raise at your donor support >u to substantially exceed cluded various newspaper in article that stated that let you and Organization Obtained and Uploaded by the Center for Responsive Politics (OpenSecrets.org) Crossroads Grassroots Policy Strategies spent nearly all of the money raised on campaigns. The report also 5 August of CalendarYear1 was to ?energize citizens in key states" and which there would likely be robust debate on national policy were sele persuasion TV (sic), integrated with direct-contact mail and phone ad LAW Section 501(c)(4) provides for the exemption from federal income tax organized for profit but operated exclusively for the promotion of soci Section of the Income Tax Regulations providest operated exclusively for the promotion of social welfare if it is primaril some way the common good and general welfare of the people of th fated that your strategy in that ?states and districts in cted for an issue vocacy? of organizations not I welfare. at an organization is engaged in promoting in community. An organization embraced within this section is one which is operated pr marin for the purpose of bringing about civic betterments and social improvements. ln additio the regulations provide that the promotion of social welfare does not include direct or indirect participation in political campaigns on behalf of or in opposition to any candidate for public 0 ice. Rev. Rul. 68-45, 1968-1 CB. 259, states that ?[a]ll facts and circumst nces are taken into account in determining an organization's primary activity" for purpos an organization primarily engages in activities which promote in som and general welfare of the people of the community. In Rev. Rul. 67?368, 1967-2 CB. 194, the Service held that an organ to promote an enlightened electorate and whose primary activity was public office, was not exempt under 501(c)(4) because it did not pr ruling stated that the comparative rating of candidates, even on a no the participation or intervention on behalf of candidates favorably rat those less favorably rated. In Rev. Rul. 81-95, 1981-1 CB. 332, the Service considered the effe campaign activities on a 501 organization. The ruling refers other examples of what constitutes participation or intervention in po those rulings involves a 501(c)(3) organization. The organization activities designed to promote social welfare. In addition, it conduct participation and intervention in political campaigns on behalf of or in for nomination or election to public office. The ruling concluded that, primary activities promoted social welfare, its lawful participation or i campaigns on behalf of or in opposition to candidates for public office its exempt status under 501(c)(4). Rev. Rul. 2004-6, 2004-1 CB. 328, analyzes six situations to determ organization described in each has expended funds for a 527(e)(2} 180 of determining whether way the common good zation, which was formed rating candidates for mote social welfare. The -partisan basis, constitutes and in opposition to of engaging in political five revenue rulings for Itical campaigns. Each of as primarily engaged in activities involving opposition to candidates because the organization's tervention in political a would not adversely affect ine whether the exempt function as a Obtained and Uploaded by the Center for Responsive Politics (OpenSecrets.org) 10 Crossroads Grassroots Policy Strategies result of an advocacy communication on a public policy issue. A 52 means ?the function of influencing or attempting to influence the sele or appointment of any individual to any Federal, State or local public organization, or the election of Presidential or Vice?Presidential electors, whether or not such individual or electors are selected, nominated, elected, or appointed. circumstances must be considered when making this determination. that an advocacy communication on a public policy issue is for a 5i27(e)(2) exempt function include, but are not limited to, the following: The communication identifies a candidate for public office; exempt function ction, nomination, election, office or office in a political All the facts and Factors that tend to show The timing of the communication coincides with an electoral campaign; The communication targets voters in a particular election; The communication identifies that candidate's position on the the subject of the communication; public policy issue that is The position of the candidate on the public policy issue has been raised as distinguishing the candidate from others in the campaign, either in the communication itself or in other public communications; and The communication is not part of an ongoing series of substantially similar advocacy communications by the organization on the same issue. in facts and circumstances, such as those described in the six situat ons, factors that tend to show that an advocacy communication on a public policy issue is not for a 527(e)(2) exempt function include, but are not limited to, the following: The absence of any one or more of the factors listed above; The communication identifies specific legislation, or a specific event outside the control of the organization, that the organization hopes to influence; The timing of the communication coincides with a specific ev ent outside the control of the organization that the organization hopes to influence, such as a legislative vote or other major legislative action (for example, a hearing before a legislative committee on the issue that is the subject of the communication); The communication identifies the candidate solely as a gove rnment official who is in a position to act on the public policy issue in connection with the specific event (such as a legislator who is eligible to vote on the legislation); and The communication identifies the candidate solely in the list of key or principal sponsors of the legislation that is the subject of the communication. Each of the situations assumes that: All payments for the described activity are from the general rather than from a separate segregated fund under 527(f)(3); 181 reasury of the organization Obtained and Uploaded by the Center for Responsive Pelitics (OpenSecrets.org) 11 Crossroads Grassroots Policy Strategies described in the apprOpriate subparagraph of 501 and 0 organization. Rev. Rul. 2007-41, 2007-1 CB. 1421, analyzes 21 situations to dete 501(c)(3) organization described in each has directly or indirectly campaign on behalf of or in opposition to a candidate for public office circumstances are considered when making this determination. communication results in political campaign intervention, key factors The organization would continue to be exempt under 501 (a activity is not a 501(c) exempt activity. because the organiz All advocacy communications described also include a solicit even if the described ation's primary activities are ation of contributions to the rmine whether the iarticipated in a political a. All facts and en determining whether 3 include: a given public office; one or more candidates? 0 Whether the statement identi?es one or more candidates for 0 Whether the statement expresses approval or disapproval to positions and/or actions; 0 Whether the statement is delivered close in time to the election; - Whether the statement makes reference to voting or an election; 0 distinguishing candidates for a given office; Whether the communication is part of an ongoing series of Whether the issue addressed in the communication has been raised as an iss?ue ommunications by the organization on the same issue that are made independent cf the timing of any election; and Whether the timing of the communication and identification of the candidate are related to a non-electoral event such as a scheduled vote on specific legislation by an Officeholder who also happens to be a candidate for public 0 A communication is particularly at risk of political campaign interven reference to candidates or voting in a specific upcoming election. communication must still be considered in context before arriving at Additionally, the ruling states that 501(c)(3) organizations are pem voter education activities if they are carried out in a non-partisan ma voter education or registration activities conducted in a biased manr one or more candidates is prohibited. Finally, the ruling states that a web site is a form of communication. something on its web site that favors or opposes a candidate for put ffice. Eon when it makes vertheless, the any conclusions. 1itted to conduct certain nner. On the other hand, Ier that favors (or opposes) If an organization posts >lic office, the organization will be treated the same as if it distributed printed material, oral statements, or broadcasts that favored or opposed a candidate. 182 Obtained and Uploaded by the Center for Responsive Pdlitics (OpenSecrets.org) 12 Crossroads Grassroots Policy Strategies ANALYSIS Based on our analysis of the information you submitted in connection with your Application, we have determined that you are not operated exclusively for the promotion of social welfare within the meaning of 501(c)(4) and the regulations thereunder. Therefor exemption from federal income tax as an organization described in Television advertisements accounted for the majority of your Fiscaer one of your FiscalYear television advertisements aired during the 11 CalendarYear1 general election, identified a candidate for public offic or disapproval of that candidate. You aired all of these pre-election 'l where the candidate mentioned in the advertisement was running for You identified nearly two-thirds of your pre~election TV ads as indepe reported to the FEC. Of the remaining one-third of pre-election TV a the end of the advertisement that listed a bill number, and a vote on 1 close to the time the advertisements were aired. However, these adi primarily on criticizing the identified candidate and provided no inforn other than the bill number, which was provided as text (but not audio advertisement. in addition, you did not run any advertisements urgin candidate officials to take action on the legislation. Accordingly, thel indicate that these advertisements were political campaign interventi social welfare. Most of the remaining one?third of pre?election TV ads that you did independent expenditures did not identify specific pending legislatlor candidates for supporting legislation enacted earlier in CalendarYear raised as an issue distinguishing the candidates from their opponent advertisements does not appear to be related to a non-electoral ever on specific legislation by the candidates. While a few of these adver alluded to suits filed with regard to the enacted legislation and asked also current state officials?to support the challenge, the timing of th not appear to have had any obvious connection to the timing of the 5 run any advertisements urging these or other state officials to challer prior to the 11?week period before the CalendarYear1 general electir lawsuits were being prepared and filed) or after the CalendarYear1 never ran any advertisements urging state officials who were not carJ legislation. Balancing these and other facts and circumstances resu a, you do not qualify for 501(c)(4). expenditures. All but weeks before the e, and eXpressed approval ads in targeted areas public office. indent expenditures ds, a few contained text at hat bill was scheduled rertisements focused ration about the legislation at the very end of the viewers to contact non- facts and circumstances an and did not promote ct report to the FEC as but rather criticized the 1?legislation that was s. The timing of these it such as scheduled vote tisements referenced or the candidates?who were sse advertisements does uits. Moreover. you did not ige the legislation either >n (closer to the time the reneral election. You also ididates to challenge the Its in the conclusion that these television advertisements criticizing the candidates for supporting legislation enacted earlier in CalendarYear1 were political campaign activities that did Thus, we conclude that all of your pre-election TV ads, and all but or television advertisements, constituted political campaign interventior welfare. The pre~election TV ads accounted for a majority 183 at promote social welfare. is of your FiscalYear and did not promote social fyour in total Obtained and Uploaded by the Center for Responsive Politics (OpenSecrets.org) 13 Crossroads Grassroots Policy Strategies FiscalYear expenditures. The one television advertisement you aire a pre-election TV ad (which aired nationally in CaiendarYearZ) cons rather than political campaign intervention. However, this one adve than 2% of your $yg in total FiscalYear expenditures. In addition to the television advertisements, both your direct mailing were also communications that targeted voters, during the period le in FiscalYear that was not tituted issue advocacy "tisement accounted for less 5 and your telephone calls ading up to the CalendarYear1 general election, which expressed approval or disap candidates for public office. We conclude that these activities, whic approximately 2.5% of your $yg in total FiscalYear expenditures, alt= campaign intervention and did not promote social welfare. proval of specific, identified 1 accounted for constituted political We also note that after the CalendarYear1 general election, your ad FiscalYear dropped off sharply, which supports the conclusion that activities in CalendarYear1 were campaign related. vertising expenditures in host of your advertising Your radio and newsprint communications, most of which ran after the CalendarYear1 general election and called for action on legislation, constituted attempts to ?nfluence legislation rather than political campaign activity. Your research activities also appe to be related to attempts to influence legislation. However, these activities together accounted or less than 5% of your 53g in total FiscalYear expenditures. During FiscalYear, you also made grants totaling $119 to other 5 and 501(c)(6) organizations. You state that the grants were accompanied by a le er of transmittal stating that the funds ?are to be used only for tax-exempt function purposes oft grantee organization and not to be used in connection with any political or non-exempt activit However, the recipient of one of the largest of these grants is described in 501(c)(6), not Its tax-exempt function is to promote the common business interests of its membe s, not to promote social welfare. You did not provide information regarding the purpose oft other grants to indicate that such grants promoted a social welfare purpose. Hence, we ca not conclude that a substantial portion of your grant activity promotes social welfare for purposes of 501(c)(4). Moreover, a number of your grantees have reported significant poli cal expenditures and you have provided no information establishing that the funds you donat to these grantees were not, in fact, used for political campaign activities or that you retaine the control and discretion (or conducted the monitoring) necessary to ensure that use of the was restricted to activities that promote social welfare. In addition, we note that you made a grant to Granteei in FiscalYe and Grantee?l, in turn, made a grant to you of a larger amount during the same year. Mor over, Grantee2. to whom you made a grant in FiscalYear, made a grant to Granteet duringt same period. Grantee1's grant to you exceeded the combined amount of your grants to Gran ?e_1 and Grantee2. These transactions suggest the possibility of a circular flow of funds rather than grants to actually promote social welfare. 184 Obtained and Uploaded by the Center for Responsive Pdlitics (OpenSecrets.org) 14 Crossroads Grassroots Policy Strategies However, even assuming that all of your grants did, in fact, promote the case that the majority of your FiscalYear expenditures were spe activities. Moreover, you have acknowledged that the percentage 0 making grants is a relatively small percentage because evaluating pc not as time intensive an activity as your other endeavors. While all facts and circumstances are taken into account in determini primary activity for purposes of determining whether an organization activities that promote social welfare, you only submitted a detailed expenditures. You did not provide suf?ciently detailed information re measures, such as the amount of time and effort that was expended social welfare, it remains ton political campaign total time you devote to itential grant recipients is ng an organization?s primarily engages in llocation of your garding other possible for each activity, and, to a the limited extent that you did comment on the relative amount of time devoted to your activities, your statements support our conclusion that you are not primarily eni welfare. Accordingly, we have based our conclusion that you are no principally on the ?nancial expenditure information that you provided CONCLUSION Based on our analysis of the information you provided in connection your Form 990 for FiscalYear, we have determined that you are not promotion of social welfare within the meaning of 501(c)(4). Acco under 501(c)(4). You have the right to file a protest if you believe this determination is must submit a statement of your views and fully explain your reasoni gaged in promoting social exempt under 501(c)(4) with your Application and in aperated exclusively for the dingly, you are not exempt incorrect. To protest, you ng. You must submit the statement, signed by one of your officers, within 30 days from the date of this letter. We will gp_n?i_der your statement and decide if the information affects our de termination. Your protest statement should be accompanied by the following declaration: Under penalties of perjury, I declare that I have examined this accompanying documents, and, to the best of my knowledge at contains all the relevant facts, and such facts are true, correct, You also have a right to request a conference to discuss your protes made when you file your protest statement. An attorney, certified pu individual enrolled to practice before the Internal Revenue Service rr want representation during the conference procedures, you must file Form 2848, Power of Attorney and Declaration of Representative, if so. For more information about representation, see Publication 947 and Power of Attorney. All forms and publications mentioned in this Forms and Publications. 185 irotest statement, including 7d belief, the statement and complete. t. This request should be blic accountant, or an ay represent you. if you a proper power of attorney, you have not already done Practice before the IRS letter can be found at Obtained and Uploaded by the Center for Responsive Politics (OpenSecrets.org) 15 Crossroads Grassroots Policy Strategies if you do not intend to protest this determination, you do not need to. take any further action. If we do not hear from y0u within 30 days, we will issue a final adverse determination letter. That letter will provide information about filing tax returns and other matters. Please send your protest statement, Form 2848, and any supporting documents to this address: internal Revenue Service ATTN: Karen Schiller 1111 Constitution Avenue NW Washington, DC 20224-0002 You may also fax your statement using the fax number shown in the heading of this letter. If you fax your statement, please call the person identified in the heading of this letter to confirm that he or she received your tax. If you have any questions, please contact the person whose name and telephone number are shown in the heading of this letter. Sincerely, aren Schiller Acting Director, E0 Rulings and Agreements 186 Obtained and Uploaded by the Center for Responsive Politics (OpenSecrets.org) EXHIBIT 2: UPDATED PART FINANCIAL DATA 187 Obtained and Uploaded by the Center for Responsive Politics (OpenSecrets.org) Form 1024 (Rev. 9-98) Part Ill. Financial Data (Must be completed by all applicants) Complete the ?nancial statements for the current year and for each of the 3 years immediately before it. i statements for each year in existence. If in existence less than 1 year, also provide proposed budgets See 2010 and 2011 Form 990 ft A. Statement of Revenue and Expenses additional information. Page 5 'in existence less than 4 years, complete the for the 2 years following the current year. Current Tax Year 3 Prior Tax Years or Propo: ed Budget for Next 2 Years 6/1/10 Rem? it,? 5?131111 a a .291 a a, Tom 1 Gross dues and assessments of members . . 0 - 0 0 0 2 Gross contributions, gifts. etc. . 48,404,791 28,402,008 157,285,000 TBD Gross amounts derived from activities related to the organization's exempt purpose (attach schedule) (Include related cost of sales on line 9.) 0 0 0 Gross amounts from unrelated business activities (attach schedule) 0 0 0 0 Gain from sale of assets, excluding inventory items 0 0 (attach scheduleinvestment income (see page 3 of the instructions) 0 0 0 1 Other revenue (attach scheduleTom revenue (add (mes 1 through 7) . 48,404,791 28,402,008 157,285,000 TBD Expenses 9 Expenses attributable to activities related to the WI 126 ?96 000 TBD organization's exempt purposes. . . 10 Expenses attributable to unrelated business activities 0 0 0 0 11 Contributions. ifts. rants, and similar amounts paid (attach scgedultgDisbursements to or lor the bene?t of members (attach schedule) 0 0 0 1 3 Compensation oi oi?cers. directors. and trustees (attach schedule) 326350 3291333 4451000 TBD 14 Other salaries and wages. . . . . 219L420 213.745 532.000 TBD 0 0 0 16 Occupancy . . . . . . . . . . . . 7'77? 10?00 TBD 17 Depreciation and depletion . 724 1:890 2000 TBD 18 Other expenses (attach schedule) . m, 20111001000 TBD 19 Total expenses (add lines 9 through 18) 421344354 22,375,630 155,335,000 TBD 20 Excess of revenue over expenses (line 8 minus line 19) . . . 6,059,907 6,026,378 10,000,000 TBD B. Balance Sheetjat the end of the period shovvn) Current Tax Year Assets as of..5.I.1,.2.9.12. 1 Cash, . . . . 1 48,874,858 2 Acoounts receivable. net . . 2 1.290 3 inventories . . . . . . . . . . . . . 3 0 4 Bonds and notes receivable (attach schedule) 4 0 5 Corporate stocks (attach schedule). . . 5 0 6 Mortgage loans (attach schedule) . 5 0 7 Other investments (attach schedule) . 1 0 Depreciable and depletable assets (attach schedule) 2&61 9 Land . . . . . . 9 0 10 Other assets (attach schedule?) . 10 0 11 Total assets . . . . . . . . 11 48,905,009 Liabilities 12 Accounts payable . . . . . . 12 1071.1 87 13 Contributions. gifts, grants, etc.. payable . 13 0 14 Mortgages and notes payable (attach schedule) . 14 0 15 Other liabilities (attach schedule) 15 0 16 Total liabilities107.187 Fund Balances or Net Assets 17 Total fund balances or net assets . . . . . . . . . . . . . . . 17 45305309 18 Total liabilities and fund balances or net assets (add line 15 and line 17) . 13 49,012,196 If there has been any substantial change in any aspect of the organization's ?nancial activities sin check the box and attach a detailed explanation. 188 :e the end of the period shown above. Obtained and Uploaded by the Center for Responsive Politics (OpenSecrets.org) EXHIBIT 3: LETTER TO HOUSE COMMITTEE ON OVERSIGHT AND GOVERNMENT REFORM (SEP. 17. 2013) 189 Obtained and Uploaded by the Center for Responsive Politics (OpenSecrets.org) amen mm 5.. ?Aswan manna -- . . :21:W-mam?mm I - 39?? . . . . 312mm GOVERNM REFORM M?mpm+ Gm, 2157 . a I LL l5 Dc 2051543143 mm!? 14:14)nt, Momma Wm" mama? -FW Mam . moms OMBSIE. WW famme - MICHELLE meu antsmu. NEW DOUG COLLINS, 020mm WlWimogov RON DISAHTIS. FLORIDA LAWRENGEA ?my . September 17, DIRECTOB T0: Members, Cmnmit-?tae on Oversight and Government-Rama: FROM: Majority (10311111qu on Oversight and Govamment Refmn '1nte?mupdateaon the Committee?s investigatian of - Intam'al Re:va SWice?s ihappropriate-?eatment taxaexem tzapplicants which was requested by Chaim "21113353 . .. . Internal Revenue Smice?s inappropriate mammt 43f certain appli ts for tax~cxempt status. On May 2013-, IRS. Exmpt Organizations Dixectm Lois Lemar a knowledged via a planted question a! a Friday morning name! that the-IRS engag?d in-?i . targeting 0f conservativemriented -tax-.exempt applicants. Lama?s remarks were prompted by an audit that waste be issued ?ue week?by. ?Treasm?y Inspector General for Tax 7 - Jbrdan. Sihc'e con?mmion of the targe?ag, the Committee has? been vigorously investigating pic ntial wrongdoing at the IRS with respect to tam-exempt organizatibns; TIL-11's memorandux? pr vides anrin'terim update on the Committee?s investigation. STATUS OF THE - ATION The ?Commjt'tae has conducted extensive facte?nding in. thisi vestigation via two primary memodsz. review of documents pmduced by federal agcn?ies and tr, gri?bed interviews-with ?xemployees, T0 Comu?ttea recaivad more than 805-000. gas of the IRS, the Treasury-Inspecmr Genaralrfo'r Tax the Federal Election Gama-?ssion (FEE), and the Department: of Treasury. "The - - has also-conducted Uanscribed inmwims twenty?few IRS-?employees. These hue 'ew-s include eight IRS Exempt gmployeesbascd in Cinema Ohio; alaven Organizations emPIOyees based in Washington and ?ve IRS Ch 6f'Coun?sEI?s o??me? attorneys. 'On August 2013?, as a result ofthe obstruction "of the ommittce?s investigation. - including prpduc?on of overly gadactad and selectivelyredacted wants and the uptimgly productions of requested material's Chairman Issa issued 'a subpoen to Treasury Seaman! Lew 190 Obtained and Uploaded" by the Center for Responsive to compel the Admmi-Stratiou?s cooperating with the ifnvesg?gatioa. Since ?the issuance Qf?t'h'e' subpoena,jthe IRS prodizce'd ova 67,000 "pages w? m-e than double the: total amount of documents produced in the two months prece?ing the sub Gena. In August, the Committee?- purs-Ued ?minvestigation by 17ech ting additional custodiaunls.? Speci?callyma?er it wasmpogted Zth'ai F1365: - IRS have inappropriately communicated about mx~eXempt :aq?aplications.a Chair nan Issafsand Chaiman ordan sent alettcr to theFEC onAugujst 20.13, requestingga? doc I guts and communications between the PEG and IRS.2 To date, the has produced about 1? 00 pages of documents, which. the Committee is eta-mental}! ravicwing. On ?ugust 13, 2,011 Chairman Issazand- Shah-man Jordan nested e~mails mlatEd to pf??ial IRS business housed Leis Lei-ma?a unbf?c?i?l?ma? acc'd . jt'tIie C?mm'itte?e the use of an uno?icial vmail account in r?db'cuments pm used by the'IRS.3 The- Committae received 11135:: documents from L?ii?ngr on Septemer 61*, 1'3. Similarly, on August .15, 20"113?, Chaiman' mute misiecretary iof't?h'e Treasury Ja'Ck-L'e' remindng him of'his- I obligation to collect and preserve all employees? ted to o'f?Cial InlsimassQ4 Finally, on August 20,2013", Chairman 15521 and. Chaimmn .JQ dag mote tp Holly, Bag, Dirac:th of Ewing's and IRS Exemptrargani?" to ask that She address, apparent inconsistencies in her testimqny- that?have surfa eds-Aime her transcribed interview with Committee staff on May 21, 2013-.5 the first -te?rv?iew conducted by Committee. Through subsequent interviam and! d?ocumems'?btaina by theCOmmittcc, additional information has come-1:0 lighb?ma?t appears. to eonuadic't h' testimony. The Cbm'mittec recei'xfed Paz?is ?I-ari?ca?bm m: September 2013-;-? INTERIM ENGAGED 0F CONSERVATIVE-ORIENTED TAX-EXEMPT LICATITONS While the C'omr?nitte??s discovery efforts-are ongoing? it 13-31; - Tent ?om material already available ire-the Committee- that?the IRS engaggdin inappmp?ate, di?sparatctwatmcmof conservative-oriented applicants tax-exempt Stams, Tim Internal 1 avenue-Code alloWs. a group magi-526d as tax?exempt under seationv 501(c)(4) to: engageri unlimited. issue advocacy. and some campaign intervention, as. Iongm the-grd?p?s primary-pm .0363 is ?fsbci-ai In See letter tram Darrell 15321, H. Comm-an oms'ight 3: Gov?t 'Riefonn, to Jaw? 143w, 'D?pr?t-bf the 2, 2013' .. Dane" issa Jim Jordan, PL em 'Oversight?e Gav?: Refonn', to Ellen L, Weinmh, Fed, Election?Commfn (Aug, 7, 2013), I . . . 3 Latte: from Jim Jm?an', H. (20mm. on Oval-sight?r. Gov?; Refmm, toLois Lama, .Inttmal Revenue Sum-(Aug. 13, 2.013.). . I 4 Lett?er"fr0m Dam}! 133a, Comm qn Oversight 8; 'Gov'ft Reform, to acob. Lew, Dep?t oft-he Treasury (Aug. 15', 2013). 5.'Lcitcr from Damn Issa Jim J'nrdan, H. Comm. animal-Sight 3: (3012?: 'Refbrm, t9 Ho?y 9212, Internal Revenue Sew. (Aug, 20, 2013.). 6 Letter from Roe] Campos, [make Lord, LLP, 10 Darrell?lsga Jim Jar-dam H, gn~0yersight Gov?t Referm LSsm- 3,2013); See me; 501(c)(4). 191 O?iained arid Cente'r'Tof'R??sbdh'sive' Politics (OpenSecrets.org) 2010, as the Obama Amnh?s'tra?en' bemea?ed the ?sliedomW'jn?uer interest? groups, the was not unaffected by?thi-S' political flie?tb?i?ie Committee shows that the acutely aware ef?thislpublie .rheto Parry applicatiOn?s and elevated due to this media suggeSts?that once the cases were identi?ed, the; lRS'handledjand pm applications in- a manner distinct and mliqlue from applicatiens of gm activities; The palitical i-c?mdte in 2010 oppbe?tf fanfu'exempt' involve}:th in pa conservative-eorienzed tax~exempt groups In 2010, ?le Chan-Ia Administration audits allai-esropehestxale callapa?ig'h seeldng m. dele?gitimi'ze the political activity-ween organizations and these groups? right to. assemble and sp supreme Ceurt epinien, Citizens Veiled? Fatwa! January 2.1, 2010.:8 Inthe wake ofthe Court?s decision, senior the influenCe of seecalled the political precess. allies in Congt'ess- repeatedly ?dieuled the 'I?wful?eli-tical .aetivigr. of calling out: some. eonsemativedeaning groups. by name. On the same d?aynf the suprme Connie-Citizens Melted Secretary. Robert Gibbs Wamed that fever-Wed)? :shpuld be Wenied? that have? alreadyzelouded the going to activeway-in'deing the same. "in elee?ng men and wemee mac tee bf smealled ?special EVi?den'ce? available to the rie and that the initial Tea~ alt??tib?. Evidence further eessed' {he'Tea ups engaged i11'"'similar lilies and the emergence of warm tax~eXempit The impetus was a wiamhand?ed down on listta?tion of?cials criticized The Administratim and its tax~e3empt~enri?es, even cage-sustained public xelations g, White House Press .. special hiterest gmups .havolvcd?inanevenmere TWO days later, on 23-, 20-10,- Pr?eident. (mama used: his?weeldy lament United States Supreme Char-t hand?ede huge vietely-to the special in and a power?ll, 1310th our efme 'torei?g'n?in empafrate in?uence, 6131?s and their lobbyists - - ruling strikes at Our demecracy itself. . -. . This ruling; Opens the ?oodgates fin-aim ?u?limit mount of Speeial interes'tmeney pm- On January ?27, 12010:, President Obama: slmd'hefere the-resets: bled 'Cengrem and -;openly- chastisedthe Septeme mert the-Union address.- With, all due to separatien of 'pQWers, lest wee}; the reVer'sec'l aeentmy of law that I believe?will opens?thef?eodga interests including foreign-corporations? Ste. spew Witho?ft elections. I don?t Melitta}: electiens- eho'uld ?berhankro most powerful interests, or worse, by foreign enti??es? They the peeple. And I?d 'uzg'eDemocrat's'and Republic .1 helps to correct some of these problems. Citizens United 4v. Fell. Election 11.5; 310. The White. House, Brie?ng by Mite-Housefress? $eereta1'y Ruben Gibbs and Pi Gooisbee (1311.21, 2010). ?9 The White House, Weekly Address: PraSidentQhama Centinue Slan?" Behalf efthe American Peeple (Jan. 23, 2910). The White House, Remarks by the President in?ict Stateof the Uni-cm AddlzeSSI 3 192 Obtain?ed'a'nd U'Blb?'d'edmliy the R??ponsive Supreme Com-ff 5: for: special in 1.0m led by America?s ould he'decilded by 's to pass-a bill "that fC?b'ief Economist Austen Up to the Special Intern-(St. on an. 27, 2.0 10). litics (OpenSecrets.org) l\ The President?s congressional allies quickly fallow suit. On February 3., 2010?, Nana): PeIos'i, thong-Speaker ofthe House, created a task fbrce ofprominemeem-oc Consid?r Options o'ventu?rni?g the Supreme "Court?s decision.? ratio 10' In wake of Citizens United, conservativalemng Party. inside and outsids of governmam. Tim same mam}: Speaker Par pvemnn Citizens. United, she referrged 'to the Tea mov?ment as as she had before, that it was afakc grassroots mavement- ?that is weaxt11iestp?op-Ie in Washingmn Past coitumnists- acm- ?smoldbr?ngj with anger??75 iandpracticing a brand. of patrim?am. re- Klan.16 Pas? columnist-opined in late March 2-010 that Tea not to i11me humo- incite?? In April 2010-, Reuters tie-d fha-?T?a scason of rage and fear?? continued throughout the-spring and summer: dups began'ta face .s?drn created a force to? ?Astroturf?? suggesting, kroncd bysomc ofthc ed Tea Party groupsof 'ihiscent of'thc Ku Klux arty rhetoric ?is calibrated ?America?s if 2:610 :35 President Obama continued to use his weekly address to-cri?cize ?dl?i?cal groups. In-one su?h address, the President said: W'e?veall seen groups?Mth benignsseemmgnames spanzsoririg television commercials that and assmtions dgsignadw in?uence the public debate and sway vbters.? Now, of (30111356 --*every orga?izvatinn has every right inthi's. make theirvoices heard. But people also have the right to know? when some gmuPIika 701' a" Betta: Fixture? is actually ?m-d?ed entirely by ?(summations-for Weaker Dvers'i In. 1111372010, the President" spike from. White" House Ruse Gard: 11-1150 bastion Americans that ?shadow groups [ware] already "farming and bl?idiug war chests oi-?f tens of miklionsoi? dollars to- in?uence the BUIIQJIE up his :rhetpric and called out a well?knom conservative nonpm?t group? manna for p0 The Frasidmt stated: Right now all around ?iismuntm there are groups with ham ?lcss-munding names like Ameri fer- Prosp?gi?ty,whbfarerum?ng minions 6f :31 5112113 "(if ads against Demecratic candidates all across the country; they don?t have to say who '2 See Ryan Grim, Peiosl Taps TaskFa?ee Cazmter Supreme (Sour: '3 Citizens waited Rating, 'Hui??ngtou Post, 12435,. 201.92 I ?3 Pelasj-Claims Tea Party Hgfaqked by (301?, Fox-News, Feb? 28, 201-0, America, Think Progress, Apr. 15', 2009'. Ryan Pow?rs. 331,931? Tea Purges l-qnepgrt of}: "?aming-7" campaign by "somiof'the w-epithies; people in 1" Colbert Fach We ?ve Seer: Sabre; thg? Deeper Roots affect, Party Rage-, 3 ash, Post; Mar. 27, 201-0. '5 Comland Wll?y, Tanaedo Remark a; Parbr? Event Have??mrriliar Ring, Wash. 175mg. Feb. 17, 20101. ?7 Eugghe Robinson; W?ere the Malaria: quageCan-Lmd, Wash. PQSL Mar. 303, 2610; "j Bemd Amerqu ?s Semen df?age and Fennketlm. Apr. 1, 201-10. ?9 The Witt: House: Weekly Address; Erasi-deLnt-Dbama Cans- on to to Stop- a-?Corparate Takeover of Our. Elections? (May 1, 2010),. 2? The "White House, Remarks- by the-President on thin DISCLOSE ACT (July 2.6, 2:010). 193 Obta'i?n?ed and Upl?oad?d by fdr'RespOn?siV??Pdlitics (OpenSecrets.org) exactly ?xe'Amwcans for PrOSpferity are. You dc'm?t know if" controlled. Coor'ation. You. do??t know ?Ef?i?t?s a" big] oil comp You don?t know if it?s-a insurance [sic] campamy that? wants 1: provisions in health reform repealed b'acau?se it"s g?b?d?d for the if?it"s not good for the America: Izzeprap?lize.21 The. following month, the President doubled On his Stan it?s a fareign- any, or a Big bank. 0 see some of the it bottom line, even sments cr'itijcai of Citizen-s United and of consm'vative nonpro?ts engaged in. political activity. the President-proclaimed, ?it?s nutjust'la' theory; We 6 destructive to our dpmocracy?li-s can become. We: see itin the "?op sponsored by special interests 119ng from groups with misleading. 11' President admittcdithat l?sconwm was-spwi?p 10- eci-al [interests ., doll?ar?s?f attack aids-against fc'a'ndi-datesi? 3' [mnphasis 'ad I In Q?tob?r 2010,0111? weeks befdrei'the 2010 tied his vitrio} toward Citizens Unwed-with the rise-=01? Tea Party gro? town hall: I dothi-nk that What has llappcneCi-is? layered on top -.ofsome _o ?n?strationthat has expressed though the. Tea Party, the muncy' that?speuxing into these electicns right-now tens of millions of dollaifsain what are abalkd?thirdaparty expat being spent basicaliy on negative "ad's. . .. . But if'y?n?refin at right now, you am being: :bnmbarded with negative a?ds every ncb?od?y knows Who, is? payingf?r these Th?ey?ve- ?got ?ies; 1&5 an ?l?ctiqn .see for o?urseWcs? how of deceptive attack ads as?? Days- lat-er! the . . running millions of ed] ectibn, President Obama He stated 'at?ayouth if? that general re is an aw?zl lot of . I maan, you?ve got Lditums that are rattleground state single-day and a like ?Americans f??r Prospedty?? or ?MGms-?fm Motherhood? or '1 I made But you have thsse innocuous?squndm'g?ames, a. where m-is?money is coming from. .I think that is .a problem f: And it?s a. direct resultoif a Sugreme Court (16015in that disclose who ?meir donors-are; actually that last one rid we don?t know at our democracy. they didn?t havgito Meanwhile; the President?s allies in rC?ng-ress? continuedm urge action to stOp politica! activity by conservative entities! Senamr-;Max Baucus mate to? the IRS.- Comri?ssion?r that; [he] and 13333] ag?fic'y suWey magi-or 501(c)(4), and-(m6) orgat?zati?dns involved in poli?cal campaign activity to examine whether -they' arevoperaied for the organizati?n?s intentied exempt prSe and to ensure that politihal' campaign activity is- not the organiza??n?s primm?y. Senator Dick Barbi-n f611c.Wt??i suit and asked the to ?ql?ckly cxan?nc thetaxstatus of GPS and other (OX4) organizations thaf arc- di'recti?ng millions of dollars ?lterpoli?cai advert-5mg . . 3?2? 2" The White House, Remarkay the President?at 3 DNC Finance limit. in Austin, Texas (A1139. 2,910). ?Th: White House, Weekly Address: President Chaim. Casii?gat?esGOP far Blocking Fixes m- the Citizens "united Decision (Sept. 18,2013); 23' The Whitc House, Rgmarks by the-President at Finance Recgptiun' fm' Gangressn 3? The White Ham Remarks by the: a- :Yqutb- 'IT-awn Hall (act. 14, 20 25'Lemur'?'jonrt Max Bananas. Cpmm..on Financq, it) Dpuglas-.1H. Shul?man, Imam 25 Press Release, Durbin Urges IRS to Investigate Spending by Crossroads GPS (0 12m 26', 2010). Raran Sew. (Sept. 2-8; 2010). cg 12, 2010). 5: 19 Ob'f?inedma'rid' ?UpIoa'd?ed Po'l?itics (OpenS?cfetsorg) This 'pressurr: was not warmed to the: 2010 election. cycle. In- con grassional'Democrats continued to press for close scrutiny political activity. InJFEl'Jrua'ry 20-12, seyen Democratid Senators wr?o? urging?the IRS to investigate whe?ler 501(cgg4)? groups are engaged. predominant amme of. canpaign ac'? vity.? Later, in July 2012, the IRS Cormnissioner,imp10ring theawa to ?immediately revie entities engaging in; running partisan political ads . . .r 3?28 Armand Committee RankingzMemb'er Elijah Cummings was group True the: Vow,"9 his sta??qontacwd the request infom- 3m1uary 2013, ?mDamocrat?i-c Member?s Mote-to Pmsident Gbama corrosive in?uence of money in tour democratic pro-6853361 These 0. deaf cars at The IRS Was cognizant Qf?te political ralimate surmunding tax-ex: media attention given tar-exempt gmup?s From materials aVailable?r to the Committee, it" ?EST-evident- were higl?y attentive; to the, pal-itical elimate surrounding tax~exemp1 I allowing years, (93(4) groups engaged in e? tQ' the IRS Commissioner 11 substantial Graven. naturCarl Levin wrote to . the activities of 501(c)(4) . - same time that Oversight "g the Tea Party-af?liated 'on about diagram).3o In asking him to highlight ?the ills to arms "did not fall on amp? organizations and the all levels? within the IRS applications. in the wake of Cirizans United. The IRS maintained an that irucen?Vi-z?ed employees to alert their - any application with the potential for media "a program manager 291? the Cinci?na? af?rm; terri?ed abom?risia explaining that We hafd] from Washingt?n? the potential for IBntion. Cindy Thomas, the -. diaacanscience-culture, te-eievate any issuer-with The pdlitic-al rhetoric criticizingg?the Citizens United-015mm crack down on political activity far-tax-cxem?t entities Was" ttm?lgst. the IRS. on October 19, 2010,, Exempt Organizations Director Lois sponsored by Duke thool-?f Public. Pam-W. the political pressure on the IRS the problem? .actirrtity.33 Echoing President Obama?s publicsstatements, she: said; What happened last year-Was ?ue-Supreme Cburt "away, chipped away in the federal, ?leg?otmrena. The'Suprec huge blow, overttmiing a '100~year old pretzedemat'hat said bar couldn't give directly to, political empai?gns. And werymwi they don?t like it. The Federal Election CommisSion can?t-do 27 Letter from Michael Bennetemlavs. Senate, taming-185 Shaman, Internal 2? Lctter from Carl Lev?irr S. Comm. on Homeland Sec. G'ov?t Affairs. ta Dougl Serv. am (July 2-7., 2012).; see also Lettnr firm;le Latin, .8. Comm. on Hom?l?n muggier Shuhnan,_ Internal Rcvenue'serv. A 293% Letter from Elijah Cummings; FL Comm. 911 Reform, to (Oct. 4, 20.12). I 3? E?mail form Catherine'Barrc, Internal Reven'uc?swz? lo'Lciis Lerner at 211,, Intern 3? Letter from James McGovern 31.. .S. Hausa of?epresemajtiws?o Presidan?t ?2 Transcribtad of Lucinda Thomas, Internal Kettering Sm? in' Wash? 1). I theIRS?t'o "n the senipr l?eade?hip of Lemar spoke at an?sven?t the: ementa Lemar discussed. aups engaged in pdlit'iCaI pt getting chipped 11c Cor-1'11: d?alta si?cally'corporati?ons 5' eupinr amns because- ?about it. Revenue Sew. (Feb. 16,, 2012). Revenue :1 Sec. 8: G?ov?t Affairs, to Catherine Engelhreoht, True the- m1 'Rmnue (Jan. .25, 20:3). Baraek 0.13am (Ian. '29. 20 l3). at 34 (June: 23., 201-3). 3? Idhn' Sexton, Lois Lerner Dis-cars? Political Pressure an #:2113325" Aug? 25013. 195 O'b?t?irted'and Uploaded by them-demerits}. Pc litics (OpenSecrets.org) They Want the IRS ma?x the prebIem. The IRS laws are net problem: can :19 straight political net-Mim? Theyrcan' ad that Says, ?Vow for Joe Blew?? That?s; S'bme?iing they '0 primary activity is their {(3)040 activity, which ?i?ssocial Welf . So everybody is screaming at us. right now: ?Fix. it now befe' you see how much these'peoplegere spending?? I'wor? 9-903 next year whe?mer they havedbne mere thanme prim pelitical or not. Sol. can?t-dolany-thinglfight new.34 set up ?5 ?x the out and?pa?y' for an 160' as-leh'g as their 12. .e ltberelectiion. Canl?t 'txntil I look at. their activity as Lerner 101d TIGTA substantially the game. story, according to dqeumcms-preduced to the Committee by Lerner teld TIC-3717A instes?tig'aters: ?The CitizensrUn?ed dedisidn allOWS corporations to Spend freely on elections. Last year, there was a lot of press on being used to ?mnel money on elee?ens andthe IRS- wz?ie urged to do something about it? The awareness of this. rhetoric t?ae abstract,- The. day after at Duke University, isenier'IRS Of?cial Joseph Ufban eir'e'nlat'ed a press release from. Senator Hick Durbm, to. investigate, spending?by CrosSroads,? 36 press release called, upon the IRS- to. ?quickly investigate-the stems of Crossroads and other organizations that are direcg'ing millie?ns fdollars. into political adVertiSing without disclosing their warms?? Crosemads applicant for t-amexempt- status, wasthe only ?entity men?o?eci by Urban._ As the political rhetoric critical of eqnservat?W?lean-ing tax IRS employees remained'f'infOrmed'of't?e unigbibg public discourse mail publication about issues relating- to tax~exempt hm;38 For ins. 395,, ,a-Gbn?etva?veeoriented - in ?ue-email sent "by . groups continued, .13 the E0 Jew'n?al, an "be, in October 201 l, the E0 7ch Journ'ql. reported .103; a?iletter, sent. by Demeeraey "21 to iCnmmiss-ipne: Shaman and LoisJLemer calling on'the IRS to investigate certain. cmewatiyedee ningj tax?emmpt entities 9-9 IRS Deputy Di-vi-sien Counsel Janine Cook; sent. the repaxt and libel-.61 Victoria Judson, calling the. matter a ?Wery hot button. issue ?eeting. 090k ?fonvarded te-IL-ois Lerner an .130 Tax Jawnat?antidle about con the applicant's.? Lemetreplied in-p" 16:: i0 Divisien Counsel mew"? Later,ln.2012, {6533011211 investi'gatiens into - 1: ?We?r?-gei?g ?to! get 3" See ?Lois Lerner Discusses. Political Pressure bin IRS. in (last-visited Aug. 30,, 2013) (transcription anthers). I I 3? Treasury Inspector General for Tax Admin, Memo of contact-(Apn- 5, 20:12} Banal! from Joseph Urban, Internal Revenue Sena, tbiiosepb Urban, Internal Rwenue?Serv. (Oct. 20, 201-0). [11131310] 37 ?See. 'eggte-mail ?om Mbniee Roseribaum, Internal Revenue Sem, to?Kennem Grimm, Internal Revenue Sew. [I'Rs'lz1'543m 9 E-mail from Paul (Oct. 3, 2011) (BO Tax Journal .2bll 14.63). I ?ll-mail letemel Victoria Judscm, Internalkevenue-I'Sery. (Oct. 10, 201i). E-mai'i from-Janine Cook, Internal Revenue 19 Lois Lemar, Internal Revenue (Mar. 2., 2012), 56965] 7. 19 Obtained arid Pclitics (OpenSecrets.org) crawled?? Similarly, ?than an IRS-mpl'oyee e?Ih?ilgd Lerner an a: mlmown obnServative..donors were influencing Senatorial rates, Le"? FEC will save the day?? Other IRS'employe-ezs also monitored news about cmnservativ: fur tax exemption. In March 201.2,; aline? attorney in the $80111ch New York Times editorial entitled ?The IRS. Does-its Job? to three sentence pfthe editorial read; ?Taxpaygrs should beenpouraged by 0 chapters applying for nuupxo??t tax status at being ask-ed. by the latch prove they are ?sooial welfare? organizatigns and ml the. pulitical act are?? The same day, metal? the recipients-Emmett} the email to Wilkins and. Deputy ChiefComs'el Erik Com-i115 rafarencing-?m ?Hi. bf c4 ?ppli?a?ons cf advocacygorgani?w?'onsf?? Like political actor, theaIRS Of'and'ia? ?cle about allegatiuns that met rapliec'l: ?Perhaps the groups applying ounsd?s Of?ce cipculated a Volleagues.? The first umplaints? from_Tea.~ Paxty Lal Reyenuc-Service I Lviitiies they so obviously Ihief'Couns'el William Ll- mterest "in pretzessing? mom-Ive. to the prevailing. rhetoric surrounding the-1am and regulations it'contro-ls. As-the p?r?m became a sustained assault on the: Supreme Gem?s Citizens ?United I of tax-exempt swam. for certain. groups5 the IRS pou?cal-?sentimem. Material available, to; the Committee that? 09 of public 03113 for the IRS mac}: down onsecret meney in eon?ervative?oriented groups opposed by: certain segments-ref the Ad] The idei?zti?ed'zmd elevated the. T?a Para: appli?atimzs due gurmuudiizg the Tea Party Salient political discourse injon land the . .ot Obli'ViO?us {O?thi's IRS actively politics and the ?se off ministration ta media attention At the same time 1118' IRS was beinglobbi?ed vary-publicly to crack down ontax~?xerr1pt entities engaged in political actiV-ities, IRS lidleliti??d and xlajlqvated ra'l'l?ea, application due to public attention the Tea Party. Later, applications were discovered, the easgs were classi?ed as ?sensi??vc? two more were transferred. to Washinglon tuba pra'ces's'ed. In Februmy 20.10, a lmc'screener in the IRS of?ce: Cincinn when ether Tea Party due to. alti, Obie; became aware- of a- ?taxecxemp?t ayplica?on from a grnup; me-scrasmr valertetd his superiors, who in turn Washingmn'IRS af?cialsf? In? e'l?vatingihe applicafidn t6 his sup?rior, tle Screamer attention to ?lls-type? zo?f?orgahiza?'on indicates 10 me that?thi's is a ?hi-gh- ?ZR-mail ?rm-n Lois Sena, Janine Back; Internal"Rever?neJServ. (Mar. 2.z 2012). 5.69.6.5] ?3 E-mail from Lois Lemar, Internal 'Rcve'nuc Sew, toShamn Light, Internal Revenue Serv. (July 10, 2010) 17909.3] ?IE-mail from ngid MarShal'l. Intgrual Revenue to Don ?Spellmann at gt, "mama! Revenue Sew. (Mar. .87, 20:12), {mm-#601} 4 ?5 me ms. Doe:- its Job, Times, Mar. 7. 2012-. I ?Email from Janine C9019, Internal Revenue Sex-m, Efik Con?n-EL William (Mangg, 144.77] I ?7 [See Edna-i1 I'?'om Cindy [ntemal "Rm/cane :Sgrv.,,t9 Holly Paz, lutema;l._ [Mathm 2*3] I3- 197 kins, Internal Revenue, S'crv. venue Slew.? (Feb. 25,2010.) Obtained and Upload?dwby?th'e C?'ht'?'r'f?lr Pdlitics (OpenSecrets.org) I LAKKL profilc? case?? As-Ihc application con?nwd to be elevated, anatha application a ?potentially pbli?cally base? and also: p0 IRS mployee called the {med out the ?[rjecent'media attention 10- ?ii-5 Organization-M9 Oil-?this basis ?thc potentihi for media attention? the Washington of?ce accepted the case's? WMML. 2010 5:19 PM 1* mm gmm?imo 1 Cindy: Please let ?Wasbin'gton? hum about this pot amassing case 2: ?Tea. Baxty' Omani.th ta this tx-ypa- cf origanization indicates to ?nally politicai;y Racers-t. media that this 11!: a "high profile" Gain. In awiti-qn to 561m} (A) t: antivitiea, ,t'ho applicant, in ans-we: to Part: til}. 1' 1G24?app&iuat?on indicates paasiblu in?ux-m .mlium au?ppar-t. shown helm: ?20m the app? lagislativa and. posaible fut-urn political autiviti ma case is adamantly being held 23.13 the Samar-1mg response from new. 'iaal l'egisalatiw: 15 at the-of candida-ta on de??crlhing its cup, pending a The potential forzmedia attention mntinucd to be a concern Washington received additienal sample cases lat; March 2010? Washington, an IRS employee mviewing. therapplica?ons reiterated patcntinl for media Ammd tbs; same timqthat the Was columns critical ofthc Tea party, she-added that ?itJhc Tea Party :13 Past almost I expect to more She also groups? perceived political wmmn?ng that the. group?s educational but with a republican slant obvimml?y.??53 Aware that addi?tianalzcases remained Manager of EO Technical in 13.0., asked for infanna'tic Party applications He asked, in particular; for any i IRS o?icial?s ?ones: on receiving the cases ?(13136 canoem is ington Post was running vem'e?nt is coveted in the of the "tivity ?locks: more Fmdnitzkm'the?c?ng 1-1 on the remaining Tea af?rmation that makes the Email from John 1.1mm, Imam], "Ra.an Sam. t0 10hr! Shafer, Interim} Revenun SEW, (Feb. 25. 2010). when 4-5] Email from Shawn Camarillo. Internal Revmue Sent? to Cindy ?mamas. Injal Revmne 8m. (Fab. 25. 201-0). 3] Email ?tom tinny Paz, Internal Revenue Sm_,10 Cindy Thomas, lntemal .utimt Evmait from Donna Elliot-Moore, Intemal Revenue Sam, to Steven Grodn?itzky 20.10), [Madam ms} ?2 E-ma? ?rm Emma ElliouMuew, lama! Remch Sam 11; Steven Grads:in Ram/cum Sm. (Apr. 2019). Madmen ?3 E-mail from Donna Eiliot-Mamc, ?lqtemal Rwanda Sam, to Steven Grodnitzky Revenue Sam. (Apr. I, .2010). [Muthm we Sm. (Feb. 26, 201.0). Internal Sew. (Mar. 3'1, 43': Ronald Shamakcr,? imam! Ronald Shaemnker, luxemal E-mail {mm Steven Grodnitzky, Intamalkevenne Sam. to Cindy "mamas, animal Revenue Sew. {Apt 5, 2010). (Mather: 6?8] 9 198 Obtained and Uploadede {H'emCe'n't'e'r'fbr R??bbn?'ive Politics (OpenSecrets.org) cases ?Stand out? such as. ?a high profile; Board member, etc. 'n-g about possible media attention (2333385 wri??: lg that he was ?[?eally mm: mom Steven Sent: Monday, April 65;.2616 12:14 1?03: Thomas CW Cc: shoemm Room 1; Shaw John- Subject: RE: two cases OWL Mtomxanon womd be the numbar chases and. the code sawons in they make: om ammonium tho-other, mate a high :Bbar'd moor. m, M'i?atv about- possible media motion on a- par?oufar case. Just smite make azure-mat hols other cases odt?wem, on car. that - be new Roally aiming nd Rob are mm M??um are Grodnitzky directed the. Washington of?ce to begin dra?ing a whiCh is a mou?aly repon created fer the purpose of hifonning Senior pamcular Issue or.-app11catxon. He. dnrocted a sass report t1 Party :appiica?Ons givon-tho potential for The so Eventually creamed fer the Tea-Pan}? applioa?Ons emphasized the nice 033632 . ?sensitive case report,? IRS lead?rs?l?p about a a be prepared for the Tea risiti-ve oasoropon Liaatten?tiion surrounding the; The various-?teaparty? organizations-taro separatelyorgar?zcai, but appear to. be :a part of-a national pokixical' movement that may be- involved in poli?oal activities; The-?tea party? orgamza? {ions are being follomd newspapers (such as The; Washington Post) abnost' 011a mgular basis?s' Grodnitzky also testi?ed to the Comminee that the only ?sensi?ve ease? criterion selected, for the Tea Part9,r applications, was ?[ijik'ely to amigo: modia so: Cong'ossiona Media attestation mused the (neat conservativgeoriemed tax-?e. di?ewntb? Doo?mom?sivln? other evi?enc?o- obtaine? by. the .Conm?'tte'e rhetoric criticizing conservative tax-exempt organizations affected. ho transcribed interviews with Committees staff?, documentary and test-i1 - attention?? tempt-'tmpiicativm gge'st thaytho public ?ue IRS ?iden??cdland nia'l evi dance indicates evaluated Tea?P?atty applicatime Al?iongh msvempioyees have doied'any Wort bias in this media attention caused the: Screemgroiips and evaluat. manner distinct from other applications for o'xzox-nmionw 55 ?See Transcri'be? into-view (31101, Internal Revenue in wow, interviow o?fMiohaol Soto, hasm??wonue Serve, in at 3 In! T63 Patty applications in a at (July 11, 20-13). I a 57 E-mail from Stoven Grodnilzky, Internal Rewnuc- Sm., to Cindy. Thomas, lotomal Revenue-Sew. (Apr. 2010). gMuthert 6-8} 1ntoma! Revamp Sena, Sensitive Case Repoanay 20.11), 332-1334} ?9 Transmibed interview of StovenGTodnitzky; Internal Rovextue "Sm, in Wash, no, are; (July 16. 2913 1. 1:0 199 Obt?i?h??ol? ar330plo??d??d'Wih?' ii?msoohs'ive Politics (OpenSecrets.org) During- his transcribed intmie?w with Committee?sza?; Gradnitzky explained that the media attention smounding the Tea Party applica?ions distinguished me'Cascs ??om other cases. Grodnitzky'tcstified: A 0 Party groups, that is groupsaf?liated with the. Tea movement? And did you und?rstand these [sample] app?ca?onsgc ?led by Tea That was. my understanding. And were?th?se applications for or (0X4) or some other subsection of 501?? My recollection is war it was not for. another subsm? believe, MG) and +921 and that it was for, I And just to be clear, you have seen applications befme- from 501(c)(3) organizmions applying for exempt stams? I have. And you?ve seen appiica?ons applying for Comm, Those are bath something the IRS-secs regularly? Correct.- Was there any?li'n'g different about these In what respect? In. any gums? Well, I it was my they ware ?idanti?ed is: because were likely to attiact media .attentiOn. That?s what made them distinct, the likelihood ofmcfia attantion? Yas, in my mind, was.m Another supcrvisory IRS employee in thingt?on, Ronald Shoemaker, similarly explained that 111ch attentien ms the reason the Tea Party applications were unique in his mind. Shoemaker testi?ed: Transmihed mmvicw of Steven Grodnitz?ky, Intamal Remus. Sam. 'in. Wash. 1 1 200 an, at 2343 (July 16. 2013). Obta'i'?'ed ?and Uploaded by Politics (OpenSecrets.?org) Other than Mr. Grodnitzky desiignatmg the cases ?sensitive- cascs, Was .therc anything else different abbur ?ie- Tea Party application's 1-2195 compared to. your experience with other with political. activity? A No, Other than were was certain media mention .i?mf. held with those-cases, which. was the basis for the signi?cant cage repon. And "ware you aware of'the media. attention at that time? A I was. aware of media attention, yes-.6" A??er the ?rst applica?titms wereri'denti?ed and elevated due media attitntibn, the criteria used by IRS employees- to screen-faradditional Tea Paity? as were a distinct re?ecti on of the publit: perceptiori of the activities of those groups. A b?e?n paper prepared for Lqis Lerner in?July' 2011 described?the'groupsas ?organizations [tha?far advo'ca?ngonissum related. to government Spending, taxes The same b? ?ng pape?chtoh "to list the criteria- used to identify Tea Party case's, including the phrases ea Party? ""Patribts,? or ?9/12 Project? or in the case ?le [that] criticizehow 6 country is'being run?3?63 3 Increase in (anal/(mm Advocacy Org. ,liaa?ons Background: . E00 Screening has ldunti??d an increase in the mumbaraf (cm and (excel) applies-man's -Waorga?iz?tlon?s Misp?m?r?tg. taxes and m? i'larmatm are I . 50:) Emma identi?ed this type-arm? ah. em?rgmg: issue. began sending cases to a We; gimp ifth mat my bf ?lial-following Wrist: 9 "Tea Pam? ?PamoWor ?911-2- Prqad? is Mariam in case ?le 0 Issues include govemment spendan gwgm-mem debt or taxes .4 1500 of the?publia. by advocacy!?an to "make; .e?ga a better place to live" 0 3mm in the case, ?le criticize tow-?ne country is 9 mm Tht?se criteria-captured predbmi?ately cansemave-mingirgmm?ms. An independent analysis conducted by USA Today found that beginning in February 2010,the:1RS approved nib sapplicafio'ns Tea. Party groups for 27- montlis, wlii} ?the IRS approved perhaps dozens of applications from similar liberal and 'progreSS-i've In addition, the sample cases transferred from Cincinnati and wofkad by Veterzm IRS official Cagter Hull 11212010 were-"applicatinns ?led, by groups af?liated with the: Tea Party mWemeuL The briefing paper prepared for Lerner in July 2011 summarized these. 6? Transcribed interview ofRonald Shoemaker, internal Migraine-Sam, in Wash, (June .21, 2013). 23111131118] Revenue Sam. Increase- in Advocacy Org. Applications. 2735] Id 6? Gregory Kane; 1123 ApprovedLibqiraI Grazng white Tea Party in Lfmbes'z, 2.011434. 12 ?201 I Obtained and Responsive Politics (OpenSecrets.org) sample cases.? The paper. natal that the applicant for 501(c)(4) sta 8 ?stated it will conduct advocacy and political campaigh intervention, but political mama: 'inmwenffon-wifl be 20% or less of activities. A preposedfavomble letter has been-sem?to unsel?r review?? [emphasis added] Despite the fact that the applicant mpresgnted it would engage in only a limited amount of campaign intervention and that a proposed fave 1c letter had'been sent to the IRS Chief Counsel?s of?cc, Hull told tbs: Comn?ttee'?mt the 50 Etc) 4) appIiCation was still open? as oqune 2013.m 1113 (GX4) u-wm We: MW and gamma! bazm?ormofaww?m Apmpasadf to for I a 1m (0X3) stated conduct ?insubs?mm? po??cal In politically ?War-?ch and 5219. A pmosw 6mm is I incorporate ma om?g- bathe mos! recent dew Two em cases ware 11mm in EDT, a {(236) and than approving the: case as recommended by Hull in 61 1 evidence: that the IRS subjected the case :to additional delaysby requesting al' infannation about the. group?s activities during the 2010 election cycle for all the sample a Cases; The decision to develop the 2010 election cycle infomtion appears to have be' made prwipitately. According to tes?mmy, the (incision was made by a senior attorney in the IRS Chief-Cbunsel?s of?ce, before the Jim: attorney even had an opponunity?m indepcnc}: n?y evaluate-the case assigned to her. The line testi?ed: And whose decision was it to lopmcm? [Senior attorney in Chief?Counsel"s of?ce}. Did you concur It made Sense to me! Did you have maxhalief before you-met with [the senior attorney]? opinion. was made Imam; to me bet-bra I looked tinfough the case ?le. How was it made ?own to you before you looked at the case ?le? He told me. What did he say to yam? Rcmue Sm, Increase in (cxmexau Advocacy Org. Applicatia?ns. Luisa 2:135 [d . ?7 Transcribed immiew of Cartgr Hull, lmal Revenue ?ew. in Wash, 13.0., at 5301131: 14, 2013),. 13 202 Obtained and Responsive Politics (OpenSecrets.org) A He Said", am thinkingwc mm to See the 23010 sie'c?ti "this group does.? When did he tel-l you this"? Probably - he told. me this oraliy, I think, in early July At that point whenhc had this discusSion- with you. in sesame case ?le? A. Yes. He roadihc case file before I did. was So he reviewed the ease ?le and then disous?ed with: the case before you had a: chance to? look .at- it ind'cpcn A Wis.?3 According to recent reports, the IRS is now seeking infotmationaboi election cycle .?om some of the same groups whose applications hay Additional evidence suggests that the-H15 v-icwcd- Tea different from other applications for exemption. One Cincinnati the activities of?th'e' Too-Party applicants ?iffer?cd those ?ofoth'e'r stated: ion year to soc-What oariy July, had he (on his beliefs about dent-1y? 1t acthitieg- during the 20:12 cheer). delayed.? tascs as i?mdamemally IRS employee that 501(c)(4) applications. He Normal (63(4) cases. we must develop the concept of'social community newspapers, or the poor; These [Tea mostly concentrate on the lii?r?-tmg gavcm' government role?. or reducing. or poying "different from thoothor sociai Welfare-organizations Which. to The employee, cxpl'ai??d' that the p'oiiti?cal' idoo-IOeg' of the Tea applications different; and that the Tea Party applications were not tr other applications with indications of political activity that? he had Wc olfar'c, such as the . arty] organizations out, . I mops made their mod-in samc manner as irked'in the past.? Other documents appear to show disdain among employ similar conservative-oriented applibati?ons. In one July?ZO 11 email, attorney in. the IRS Ch-iefiCouu?sel?s. of?ce with apparcnt re?nance-t applications. She wrote: ?Lois would like to discuss Our, planned ap' ?8 Transcribed. mterw'riew of Amy Franklin ?Giul?iano, Internal Revenue in See Ben Wolfgang-,185 Continues go. Hound-Tea .Pag'tyj?arriom, Demands Ma - Wash. Times, Aug. 29., 2,013., 7" Transcribed interview of Stephan Seek, Intemai .Revgnuc Sam, in Wash, DC. 7? Id. ages-s9. 14 203 :3 toward thei'Foa and oily Paz mete to. an approve: the .T-?ca Party ro'aCh. for deaiing With these [11.0, zit-.3445 {Aug-9, 20:13). Domfar .Taxu'exempt Status, 19., 201.3). Obtained for Rosp'onsive Politics (OpenSecrets.org) cases. We 3:13th we will have to appmve the majority ef 11m 04 ap January 2012, a branch manager in the IRS Chief Counsel?s e?ice e- Talking Pbinls Memo article about the .dieelesure ofthe? leian Crossroads Thc'employee derisively'eharaeterized the group One IRS document in particular vividly illustrates the agency conservative ideologies. The docmnent, entitled Case Studies hypothetical scenario involving potential political canipaign- inteer Iications.?72 Similarly, in mailed his supervisor a empt application ?led by as ?Rove?s Crossroads?? apparent View toward 'olitlcs,? describese lion.? The language used in the scenario pmides a dispr characte?zation of the candidate, ?President Billy Bob,? and a flattering charaetmimtion of the Democratic cand? hypothetical also presents an allusion to President Qbame?s ?change campaign rhetoric during the 2008 presidential electien?r6 6, ?Nancy Nice.? The we can believe in? Scenario One Vgte {er a gm- is aging Wit: challenger Nancy Nice?. An During a Michelin! electiml meim, the Republican. mumblme President Billy Bob, imam oriented cha?iy named with a liberal reputation recently sponsor that appeared in a major television market that serves swam] hi . The advertisement featured a slum, a wemm, a mesmetim looking upset under a nanny sky. An unseen made ?This time it?s. really imp orient. Unmpleymem is up. edueati equality is static, and the war goes on.? The sky than begins ?a intense, ?Vet-e fer a ?mange to impmvelw The adv sponsored by Nancy Nice has oeeaslmully improve our nation? as a campaign slogan, a. TV advertisement? 3.: contesch states. other, mid . ?soldier 0 following state:an is down. gender leer as an-wmouncer The slanted language used by the IRS in this hypothetical scenario a more neutral version on which the slanted version appears to be in the party af?liations- and names ofthe candidates are removed and 9 advertisement is decidedly more neutral.? more in context of .. In the neutral version, eon-tent of the Email from Holly Fez. Intema'l Revenue Sam, to JanineCook, lacuna-1 Revenue 19, 7? Bm?lfmm? Kemm Grif?n. Internal Revenue Sm, to 3m (30019, Wm: a pm: 15354} id :2 minimal Revenue Sam 130 Case Studies Politics. [men 937e901 Id. 7? internal Revenue Sm., E0 Case Studies Politics. 15 204 avenue Sew. (Dec. 17. 2012). Ob?t'a?ined' and Upl?daded R??p?bh?s?iV? "Politics (OpenSec'rets.org) WOWCAL WMPLES Scenario One far - aw nod against dwa?anger'candidate B. Charityc ism islsuewrie that is fraquently with Candidaha? B?s palm party. several highly contested states. The adve?isemm featured- a college. health care 003115 and ?116 space pl . Sky than begins mildew as an allth intones. "Vote has agahsl Want an 33509331: ?new blood 10 improve "nation" as a slogan. During a Presidential elm campaign, me. incumbmt. charity sgonsored a TV advertisement that appeared Ema major belev5~ astmnaut lmidng upset under a. unseen arm-a cm the following man ?This time it?s really tn?rportam. Parems can?t-afford to send their mum-2n to . new blood to improve nur nation!? 111a advertisement states mat it is 'sponwmd by 9: my: iscampalgning a vi?wpaint Charity 0 recently -'markat lhal selves tude?nl, a- nurse. and an is Willem ?g away." 13! C. Candidate 8 malty used the phrase Material available to the Gmmittce shows that while the 1111811on baa fair and neutral steward of our natiOn?s tax laws; the agency is in fact affected by pq prominent politicians publicly urged the take Mamba-rave): lag-a] campaign intervention activities, neared Tea Party'appl Applications ?lm} by Tea Party grbups were identi??d and (grouped: surrounding the existence of the Tea'P-arfy in general, One such "appl multi?y'ear' delay, [even lifter 'it 11:36 been recommnded fer "appmval, :f?r the applications filed by groups af?liated Willi the. Tea Par-ty- mov? The IRS treated causewative~oriented amlimtims differe?ntb) from Finally, it is. evident .?that the IRS evaluated" cor exempt applicants differently-than other applicant-s, including liberal applicant's. From 20.04.10 2008, them-S of'thc training program for Democratic Women?? Awarding. to one ?ve applications were? apprme'd by Cincinnati e?mploj?ree? in a??1al:te Later, in 2010, the IRS Chief Counsel?s of?ce evaluated ano? described by. the IRS, employee as ?a (?xll) that was going to be tr g? candidat?s? :fbr th'e'Democrazt'ic. Emily; The swe-emplo?ec lgsti?ad had ?two or. three- other applications? from af?liated groups.? Howe ?See .E-mail Eon; Donna Abner, Internal Revenue Sena, to CindyWesco?, Sham Intcmal Revenue Sew? (Shpt. 36, 2008?). ?9 Emerge America, visited Aug. 20. 2013).. ?Transcribed interview oTAmy Franklin Giuliauo, I 3). 1d; a; '61, '82 Id 1'6 205 1118: political rhetoric? As. angaged in. ications. differently. Ede-to media attentith ication was subjected-to :a This tr??atn?i?ent was diStinct emtn?t. pas: liberal nppIications lsenrative~.orientcd tax- or pragressi-veaorimwd applications-horn af?liates- is itsn?lf-a?s ?the premiet Employee, ._$omc of these r" of 3r progressiw applicatiOm ng women to become that at the mm, the JRS ver, there are several 3 Camaxillo, Brenda Melahn, Internal Ravanue 5mm, in 9, Obt??'ihe?d a'h'd bym?th?? Pd Ii?tiCs (OpenSecrets.org) distinctiOns bmaon the man?eain Whioh the IRS Evaluated Emerge the manner in which the IRS evaluated conservativemrionted applio: According to testimony fro-m an IRS attomey?i?'the Chief Cc Am'ori-Ca' applications and ltiClnS. luns'ol?s tax law specialists inEO Teolmical had recommendagl donying {rho Emerge-- was sent to the IRS Chief 201 0.83 The Chief Co recommended denial, and the application was-subsequently doniedli three tax law speoialiSts who mama oonsorvativo (91(4) applicati recommended approving the group for exempt slams? Despite the three-different IRS employees, the oasawas to the which asked the tax law specialists to gather additional infm?ma?on: during the. 2010 election oyolo.86 To the best. of thoCommittoo?s inf Still pending; Unlike the conservative applications pending at the IRS- - W11 unaffiliated organizations espousing similar ideologies and goals.?- worked by the 2010 wore all af?liated onti?os. According to were CSSontially the same organization. Im?e'an, way the applicat ideo?'cal facts and basically identical activitios??s? .Aao?ler'mS em; relationship betWeen the progressive applications as follows;- ?(Two in the sense that they were ~l1ow can I say this? v? sor?t of like an ?ppaication before the case owl?s-of?ce: agreed with the early 2-01 13? Conversely,- 1.1111201 1 all separaiely ropos?ed approval from S- Chiof Counsel of?ce, about-the group?s activities annatfion, this application is ioh were ?led by 16 Emerge application?s one IRS attorney, ?they o'ns all presented ?baSiically loyoe described the organizations Wore related Es a b317th term, like: Whoa 3501.1. haw/o inlavo?oransamg or; mim?dn 3; one: in each state. And-that is sort of what nit-was like?i?"- Mosr impoaan-tlys the ?successfully evaluated and made Emerge applications it considered, whereas it consorvaiti languish without a resolutioIL Furthermoro, the central issue luv-"the the organizations-conveyed an mappropriiato private bene?t to the I) the organization Was engaged. in learnpa'i-gn information activities? Counsel?s of?oe spent seven months evaluating the legal issue of pri centax't for tholilm?go case, it. perfonned only a pea?motory new-dew 2-01 1 and passad- it along for dwelopmoni. where thalapplio?a languished. Tellingly, almough Lois Lemar publicly alogiized for of conscwaii?vo-oriontod applications, she nearer offomd-l a similar op: going; to cal-1, for lack of have is 'determis'la'lion on the .e-orionted applications to" merge casts was whem?er mocratio Party, not whether ?areas the IRS Chief are bene?t in the 501(c)(4) the-conservative case in . "on has sincerapparently the i?mpropor' handling logy for Emerge-Maria applications. When asked daringa media conference call about of non-conservativo organizations, Lerner .dOa?t have-any 'infonna?on on tho 83' Id The of?ce: rovieW?S. Essa matter. of .ooursa, prepared and decided to issue a ?nal adverse latter. . . . So thatls the only?class, 5Q whore the applications are 5pm to counsel for review.? Transcribed interview of Son, in ?321511,, 1320? at 3'1 (July 12,2013), ?4 interview of'Amy Franklin Gi-uliano, Internal Revenue in? Wa [d atzsm. 3" 1d. at 29. ?In: ats87. 3? Transcribed l-intowicw of Steven Internal .Rovonuo?om, in Wash.,l *9 Transcribed; interview of Amy Franklin Giulianoi Internal Romano Sam, in Wa leases where the is ?nal adverse. on Spellman?, Internal .Reve'n'uo La, DC, at 66-68 (Aug. 2013.). lacs, at 57 {July 16, 2013:). 511., at 8.8 (Aug. 9., 2013). 9? AgnonB-lake, "I?m Not Good atMm?h The 2133?s Public Relations Disaster, Wash. l?osl, May 2013. I7 206 Obtained? and Uploaded Politics (OpenSecrets.org) There are? also difference-abetWeen the and. successors? groups and Party" groups on the ?Be. on the lists-and IRS. training documents ?iat have been produced by the IRS, ACQRN- Batty" appears primarily on the Watch List tab of the BOLD ?spreadsheet. Whereas ?le-Tea Party entry appears on the Emerging Issues tab of the Spreadsheet. "Dooments produced by the illustrate the di?egence between issues on the Watch List, which include potential applications that the IRS- has not yet received? and issues labeled as an waging issue, which includes issues, arisiIE-Sfrom ?sigm?cant,cument evejnt?sfgl MOIBO ver, notes. from the July 201-0 screening group wot hope state that while progressive-applications? should be Tea Party applic ts were to be. sent to a special- The notes speci?cally remincl the IRS smeeners that ?Progressive? applicatj onsare not considered ?Tea Parties.??93 Cindy Thomas informed the Committee that, unlike the systematic scrutiny given ?to the conservative-oriented applications asset resultvof progress-lye cases were never automatically eleVated to the Wasl?n'gton of?ce-as a whole. Shet'e?sti?ed: Okay. were [the progressive} oases sent to Washington? I?m. net I don"t?know. Not that you are aware? I?m not aware ofthat. 0>o> As the head of the Cincinnati officeyon were never aware that these cases were sent to WashingtOn? .A There "could. be cases thatyare tiansfferred to the Washington of?ce. according to, like, our [Internal Revenue Manual] sepiiOn? I'mean, mere's a lotofzcase-s thataare? proceesed, and I. den? 1' MOW What happens toevery one of them; Sore". Burmese eases identi?ed ans-progressive as a wllole were never sent to Wasl?ngton?? A Not as a whole?" As this evidenCe demonstrates, there are S?eVeral key distinctions between how the IRS treated progressive-oriented Emerge cases and how the IRS evaluated and failed to resolve the applications. Despite repeated attempts to con?'ate the issues and downplay the treatment of oonsemativeoriented applications, the facts are clear that the 9' Internal Revenue Servi,? Heightened Awareness Issues. 665542] :Inteme?d Revenue Sam, Screening Workshop, Notes 20136.). {[113 6703-04] . 9? Transcribed interview of Lucinda Thomas, Internal Revenue "Sew, in Wash, 13.3., M5566 (June 28, 2.0131 13 207 Obtained and"?Uploaded by? th?'C'en'ter?for'Responsive Pc litics (OpenSecrets.org) systematiCally processed conservative-oriented Applicatian in a wholly disparate and masque: manner. twammnt'rec?ived by Ted unprece dented for {ax-exempt applicants engaged in political activity; THE NEXT STEPS In the-coming weeks, the Committee will continue to vigorously investigate the Internal Revenue Sendcc?s inappropriate treatxnent of certain apylicams for ~exempt Status. To date, the has..prdduced to the Committee only abdut 10 pea-ream of'ali espousive material that it has identi?edgs ?Tthommittee wilJ continuemmview docmnenis 3. they arepmduced by the IRS and other custodians, The Committee will continue t0 conduct anscribed intermich with seniordevel of?cials at the IRS and, if ndcessary, o'thar federal. agar: ?es. At each stagero?f this proccss, the Committee will prodded with. every rchurCc' at its dis?o jal to thoroughly uncover the Despite the Obama Administration?s obstruction and ob? cation d?f?the facts, the Commitmg is committedth continuing with this important investiigajmon to hold wrongdoers accduntabl'e and bring reform to the gQVernment bur?amracy. 9? In his letter of August 2, 2013;, Acting Comm-i?ibncr to the the IRS has idgmti?cd 660,000 responsive documgnm Letter ?am Daniel Warm], Imam; Re mm Sam, to Dar;de 15321.32; 31m Jordan, H. Comm. on Qversight Gov?t Reform. (Aug.- The Committee has rcceivcd: only 63,0001 pages. 19 208 Obtained and Uploaded by the" Center for Responsive Pdl-itics (OpenSecrets.org) EXHIBIT 4: LETTER TO JOHN KOSKINEN (FEB. 4. 2014) 209 Obtained and Uploaded by the Center for Responsive Politics (OpenSecrets.org) DARRELL 5- CALIFOHNM ONE HUNDRED THIRTEENTH CONGRESS ELIJAH E. MARYLAND CHAIRMAN RANKING MINORITY MEMBER JOHN L. MICA. memos. - CAROLYN a. MALONEY. NEW YORK mantanmo ungre a 2 Mom. JOHN J. DUNCAN. JIL. TENNESSEE DISTRICT OF COLUMBIA PATRICK T. MOHENRY. NOFITH CAROLINA JOHN F, TIERNEVI MASSACHUSETTS JIM JORDAN. OHIO WM. ch CLAY, MISSOURI JASON Chart-5T2. UTAH 3901153 0f ??pf??mta?h BE STEPHEN s. MASSACHUSETTS ma WALBERG, MICHIGAN COOPER. TENNESSEE JAMES LANKFORD. OKLAHOMA GERALD E. CONNOLLT. VIRGINIA JUSTIN .AMASH, MICHIGAN COMMITTEE ON OVERSIGHT AND GOVERNMENT REFORM JACKIE SPEIER, CALIFORNIA PAUL DI. GOSAR. ARIZONA MATTHEW A. CABTWHIGHT, PATRICK MEEHAN, MARK FOCAN. wrscousm SCOTT TENNESSEE 2157 RAYBUHN HOUSE L. TAMMY oucmoaru. ILLINOIS THEY GOWDY. SOUTH CAROLINA ROBIN L. KELLY, BLAKE TEXAS 5.6 DANNY K. DAWS. ILLINOIS one HASTINGS. WASHINGTON WASHINGTON DC 2051 143 PETER WELCH. VERMONT M. LUMMIS. WYOMING TONY CARDENAS. CALIFORNIA ?gigg?g? STEVEN A. Hoasrono, NEVADA A A . . MICHELLE LUJAN GHISHAM. new MEXICO oouc COLLINS, GEORGIA Wm"? mama? MARK MEADOWS, NORTH CAROLINA KERRY L. BENTIVOLIO. MICHIGAN RON LAWRENCE J, BRADY surr- nuascron February 4, 2014 The Honorable John Koskinen Commissioner Internal Revenue Service 1 11 Constitution Avenue, NW Washington, DC 20224 Dear Mr. Koskinen: The Committee on Oversight and Government Reform is conducting oversight of the Internal Revenue Service?s inappropriate treatment of tax-exempt applicants. The Obama Administration recently issued a proposed regulation limiting political speech by certain nonpro?t organizations. The Committee?s ongoing investigation has identi?ed several procedural and substantive concems with the Administration?s prope sed regulation. We write to request that the IRS withdraw the rule from consideration and that you provide the Committee with information about the process by which this rule was crafted. On November 29, 2013, the IRS issued a pmposed regulation related to political Speech by organizations exempt from tax under Internal Revenue Code The proposed regulation is intended to clarify the tax-exemption determinations process and resolve problems identi?ed in a Treasury Inspector General for Tax Administration (TIGTA) audit. report.l It does not. As written, the Administration?s proposed rule Will sti?e the speech of social welfare organizations and will codify and systematize targeting of organizations whose views are at odds with those of the Administration. In addition to these substantive concerns, we also have serious concerns about the process by which the Administration promulgated this rule. Our concerns are discussed in this letter. I. The proposed rule codi?es the Obama Administration?s earlier attempts to sti?e political speech The Administration?s preposal to restrict political speech by 5 501(c)(4) nonpro?ts must be understood in context. As the Committee?s investigation has shown, beginning in 2010, the Guidance for Tax-Exempt Social Welfare Organizations on Candidate-Related Political Activities, 78 Fed. Reg. 7l535 (proposed Nov. 29, 2013) (to be codi?ed at 26 C.F.R. pt. 1) (quoting the ?Charting a Path For-ward at the initial Assessment and Plan of Action? report) [hereinafter ?Proposed Regulation?]. 210 Obtained and Uploaded by the Center for Responsive Politics (OpenSecrets.org) The Honorable John Koskinen February 4, 2014 Page 2 Administration ?orchestrated a sustained public relations campaign seeking to delegitimize the lawful political activity of conservative tax?exempt organizations and to suppress these groups? right to assemble and speak.?2 In the wake of the Supreme Court?s Citizens United opinion, the President and Democratic allies in Congress loudly bemoaned the lawful political During his 2010 State of the Union address, the President declared: speech of nonpro?t groups. With all due deference to separation of powers, last week the Supreme Court reversed a century of law that I believe will open the ?oodgates for special interests including foreign corporations to spend without limit in our elections. I don?t think American elections should be bankrolled by America?s most powerful interests, or worse, by foreign entities.3 As the 2010 midterm election neared, the President?s rhetoric: ampli?ed. an election approaches,? the President proclaimed in September 2010, ?it?s not just a theory. We can see for ourselves how destructive to our democracy this can become. We see it in the flood of deceptive attack ads sponsored by special interests using front Ups with misleading names.?4 Singling out the conservative group Americans for PrOSperity by name, the President expounded in October 2010: ?[Y]ou have these innocuous?sounding names, and we don?t know where this money is coming from. I think that is a problem for our democracy. And it?s a direct result of a Supreme Court decision that said they didn?t have to disclose who their donors are. 1:5 For months, the Administration denounced the rights of these groups to engage in anonymous political Speech and baselessly suggested that they were funded by malevolent special interest and foreign entities. This public targeting was intended to shame these groups into disclosing their funding sources and scare potential donors from making otherwise lawful contributions. The preposed regulation represents the culmination the. President?s rhetorical campaign to delegitimize social welfare organiZations engaged in political speech. The proposal effectively codi?es the Administration?s earlier attempts to suppress political speech by nonpro?t organizations. The Committee?s investigation into the targeting of co aservative tax-exempt applicants demonstrates that the proposed rule is simply the ?nal act of the Administration?s history of attempts to sti?e political speech by conservative 501(c)(4) organizations. a. The pmposed rule is a continuation of Lois Lerner ?s efforts to curb conservative political speech 2 Memorandum from Majority Staff, H. Comm. 0n Oversight Gov?t Reform, to Members, H. Comm. on Oversight Gov?t Reform, ?Interim update on the Committee?s investigation of the Intema'l Revenue Service?s inappropriate treatment of certain tax-exempt applicants? (Sept. 17, 2013). 3 The White House, Remarks by the President in the State of the Union Address (Jan. 27, 2010). The White Heuse, Weekly Address: President Obama Castigates GOP Leadership for Blocking Fixes for the Citizens United Decision (Sept. 18, 20l0). 5 The White Heuse, Remarks by the President in a Youth Town Hall (Oct. 14, 2010). Obtained and Uploaded by the Center for Responsive Politics (OpenSecrets.org) The Honorable John Koskinen February 4, 2014 Page 3 The Committee?s investigation uncovered evidence that Lois] Director of Exempt Organizations, sought to crack down on political . groups. Lerner, who previously served as the head of enforcement at Commission, demonstrated a keen interest in curbing nonprofit politic information suggest that under her leadership, the Exempt Organizatir curbing political Speech as early as 2010. In Fall 2010, as the President and Democrats in Congress pub the legitimacy of conservative-oriented nonpro?ts engaged in politica semer, the former IRS speech by certain nonpro?t the Federal Election :al speech. Documents and ms Division considered icly sought to undermine 1 speech, Lerner told an audience about the immense political pressure on the IRS to the problem? of nonpro?t political speech. She stated: What happened last year was the Supreme Court the law ke; away, chipped away in the federal election arena. The Supren huge blow, overturning a lOO-year old precedent that basicall} couldn?t give directly to political campaigns. And everyone is they don?t like it. The Federal Election Commission can?t do They want the IRS to ?x the problem. The IRS laws are not 8 problem: can do straight political activity. They can ad that says, ?Vote for Joe Blow.? That?s something they can primary activity is their (0X4) activity, which is social welfare. So everybody is screaming at us right now: ?Fix it now befor you see how much these people are spending?? I won?t know 9905 next year whether they have done more than their primai political or not. So I can?t do anything right now.6 Within the IRS, Lerner proposed a ?c4 project? to examine more clos engaged in political speech? Lerner noted ?there is a perception out groups are established only to engage in political activity.8 Under he Organizations Division launched a concerted effort to measure and as activity by nonpro?ts. By April 2013, the Exempt Organizations Division had ?nish in 501(c)(4) groups with indications of political activity? This docur in Citizens United, stating: ?Since Citizens United (2010) removed th 5 See ?Lois Lerner Discusses Political Pressure on IRS in 2010,? (transcription by Committee). 7 See E-mail from Lois Lerner, lntemal Revenue Serv., to Cheryl Chasin, Laurice Internal Revenue Serv. (Sept. 15,2010). 191031-32] E-mail from Lois Lerner, internal Revenue Serv., t0 Cheryl Chasin, Laurice Ghor Internal Revenue Serv. (Sept. 15, 2010). 191031] See lntemal Revenue Serv., Baseline Analysis of 501(c)(4) Form 990 Filers with and Lobbying Activities (Apr. 15, 2013). 195642-65] 212 it getting chipped 1e Court dealt a I corporations up in arms because anything about itlong as their 3 the election. Can?t until I look at their ?y activity as ely self?declared nonprofits there? that some 501(c)(4) leadership, the Exempt sess the degree of political ed an analysis of the trends nent grounded the concern limits on political (last visited Dec. 10, 2013) ihougasian, Judith Kindell, igasian, Judith Kindell, Schedule Political Campaign Obtained and Uploaded by the Center for Responsive Politics (OpenSecrets.org) The Honorable John Koskinen Febmary 4, 2014 Page 4 Spending by corporations and unions, concern has arisen in the public s-phere and on Capitol Hill about the potential misuse of 501(c)(4)s fer political campaign activ ty due to their tax exempt status and the anonymity they can provide to donors??0 It is unclear how Lerner intended to utiliZe this information, but other e?mails suggest she hoped to publi size the efforts to reign in nonpro?t political speech. Accordingzto one IRS employee, ?The mere fact that we are doing. anything at all in this area will be huge.? The AdminiStration?s rule can only be properly understood in this context. As such, the proposal is merely an of multi-year effort to the prob lem? of nonpro?t political speech. By April 2013 a month before TIGTA released its audit report Lois Lerner?s Exempt Organizations Division already developed an analysis of political sp organizations. The rule is merely the result of ?everybody? led by sech by tax-exempt the President of the United States ?screaming? at the IRS. to ?x the perceived problem of non]: ro?t political speech. Accordingly, the Administration?s proposed rule should be properly of Lois Lerner?s tenure at the IRS. b. The proposed rule improperly applies Federal Election Con exempt organizations According to the notice of pr0posed rulemaking (NPRM), related political activity for purposes of section 501(c)(4), these pro; understood as the ?nal act emission standards to tax- ]n de?ning candidate- osed regulations draw key time frames for electioneering communication, a specific of communication within concepts from federal election campaign Without explaEtion, the IRS co-Opts the federal election'law, to apply to any cernmunication referring to a relies more heavily on federal election law than tax statute or IRS pr material, without explanation.? Rather than focus on whether politic welfare," as required by the governing statute, the IRS is using FEC expand restrictions on political speech fOr nonpro?t groups. Thus, it advancing the proposed rule, is simply attempting to make up for the authority due to the Supreme Court?s Citizens United decision. c. Lois Lerner ?5 background at the Federal Election Commiss communications with FE employees provide further conte Prior to her role as the Director of the IRS Exempt Organizat an Associate General Counsel and Head of the Enforcement Office a Id. at 3. See E-mail from Lois Lerner, Internal Revenue Serv., to Nancy Marks et al., 1nt4 2013). 188429] '2 E?mail from David Fish, Internal Revenue Serv., to Nancy Marks et al., Internal (emphasis added). 188427] '3 Pmposed Regulation, supra note 1. '4 Proposed Regulation, supra note 1. '5 See Proposed Regulation, supra note 1. 213 didate.?4 The proposal :cedential regulatory a1 Speech advances ?social standards to improperly appears that the IRS, in loss of regulatory ion and her questionable xt for the proposed rule ions of?ce, Ms. Lerner was the Federal Election smal Revenue Serv. (Apr. l, Revenue Serv. (Apr. 1, 2013) Obtained and Uploaded by the Center for Responsive Politics (OpenSecrets.org) The Honorable John Koskinen February 4, 2014 Page 5 Commission.'6 During her tenure at the FEC, she engaged in questio conservative groups, often subjecting those who wanted to expand th heightened scrutiny.l7 Not only was her political ideology evident to brazenly subjected conservative groups to meticulous investigations. not receive the same scrutiny.l8 Documents produced to the Committee demonstrate coordina EC. Employees from the FEC conununicated with Lerner about tar political Speech. For instance, William Powers, an FEC of?cial in th Counsel, e?mailed Lerner, on February 3, 2009, seeking information nonpro?t groups American Issues Project and the American Future the status of these groups? applications for tax-exempt status and the the course of the e-mail, Powers referenced prior cenversations with concerning the American Future Fund.2l The propriety of this relationship raises serious concerns. In Powers, it appears that Ms. Lerner disclosed information protected b] revealing con?dential information about specific taxpayers.22 Furthe former FEC vice chairman, characterized any FEC ?dealing? with Lc of the ordinary?? McGahn went on to say: ?The FEC has not had a calling balls and strikes. They?ve been criticized for not playing fair the FEC, combined with her recent communications with current context for the effort that culminated in the promulgation of th at. The IRS ?s effo?s to develop new restrictions on political Sp? led by Lois Lerner and the IRS ch ief caunsel ?s o??ice, began audit was released The Administration put forth the rule under the guise that it is recommendations concerning the evaluatioa of applications for tax e: '6 Eliana Johnson, Lois Lerner at the FEC, REVIEW (May 23, 2013), (last [hereinafter Lois Lerner at the I la?. '8 Id?, Rebekah Metzler, Lois Lerner: Career Gav ?1 Employee Under Fire, U.S. NE 2013), available a! under-?re (last accessed Jan. 14, 2014). ?9 E-mail from Mr. William Powers, Of?ce of the General Counsel, Federal Electic Lerner. Director of Exempt Organizations, Internal Revenue Service, February See eg. Eliana Johnson, ?E-mails Suggest Collusion Between FEC, IRS to Targ National Review(.1uly 31, 2013) available at 23 Dana Bash and Alan Silverleib, ?Republican says e-mails could mean available at 24 Id. 214 nable tactics to target eir in?uence in politics to her FEC colleagues, she Similar liberal grOUps did tion between Lerner and the :-exempt groups engaged in Of?ce of the General about the conservative und.l9 Powers asked about IRS review process.20 In Lerner from July of 2008 her discussions with Mr. (26 US. Code 6103 by rmore, Donald MoGahn, is Lerner as ?probably out good track record with "24 Lerner?s background at 3 of?cials, provide further 18 proposed rule. eel: for non-pro?t groups, long before the I TA responsive to (empt status. The ale at accessed Jan. 14, 2014) ws Womn REP. (May 30, ireer-government-employee- Commission, to Ms. Lois 009. ct Conservative Groups,? er/35430 /e-mails-suggest- :ollusion." CNN (Aug. 6, 2013) Obtained and Uploaded by the Center for Responsive Politics (OpenSecrets.org) The Honorable John Koski?nen February 4, 2014 Page 6 Committee?s investigation has uncovered evidence that the Administ 501(c)(4) organizations well before the publication of the TIGTA. audit. Indeed, according to IRS attorney Don Spellman, the Administration had quietly considered guidance on 501(c)(4) organizations for several years. He testi?ed: A to . ration considered regulating [C]ertainly guidance under 501(c)(4) has been under discussion for a great deal of time, including this period. When you say a great deal of time, . . . how much time are you talking about? Well, as I said there was a guidance project back in 1969 about whether to address exclusively under 501(c)(4), and it?s been on mid off since then. But that was a formal guidance project that was open and closed. And then just since I have been there, you know, the topic will just come up periodically. But it?s been a very active topic for the last certainly 5 years. And you also said that the primarily standard has been an active tOpiC on and off in the IRS but especially in the last 5 Yes. What has occurred in the last 5 years to make it an act timeframe? Litigation. And who has been actively talking about it within the We_ certainly actively discussed it within Counsel. And would those discussions be driven by the IRS Ch Yes. years. ve topic during that ief Counsel? And were there discussions about issuing a new General Counsel memorandum in regard to the primarily standard in the meeting that you had [with Lemer?s direct reports in the Exempt Organizations Division] in April, May 2011? 215 Obtained and Uploaded by the Center for Responsive Politics (OpenSecrets.org) The Honorable John Koskinen February 4, 2014 Page 7 A There was a discussion and there was even a draft pre pared of a legal memo from Counsel to Exempt Organizations on the exemption standard under 501(c)(4), and those discussions started somewhere in 2009, 2010. I dOn?t remember the exact date.25 Mr. Spellman also explained that a legal memo on the exemption standard under 501(c)(4) was approved by the IRS chief counsel?s of?ce sometime before 2012, but was not made public.26 Similarly, former IRS Acting Commissioner Steve Miller testi?ed that the IRS and the Treasury Department had considered regulations on 501(c)(4) organizations well before May 2013. He testi?ed: Why did you want to discuss this article [entitled ?The ?Feeble? Grip on Big Political Cash?] with Ms. [Nikole] Flax and Ms. [Catherine] Barre? So, I was interested in thinking about what we might future in the area. What do you mean by ?the area?? be able to do into the The area of what constitutes political activity for a 501(c)(4) organization. That?s my recollection, anyway. And what kind of ideas did you have in mind? So, there were issues around the regulation and the de?nition of ?exclusively? as ?primarily? in the regulation. And there were other things gOne on. I don?t even know what else. It actually was a brainstorming session, is my suspicion. Okay. But re?ning the regulation was one idea that you were brainstorming? That had been on - that had been thought about. But brainstorming specifically on that. not sure we were What were the other ideas that you brainstormed, to your recollection? 25 Transcribed interview of Don Spellmann, Internal Revenue Serv., in Wash, DC. (July 12, 20! 3). 2? Id. 216 Obtained and Uploaded by the Center for Responsive Politics (OpenSecrets.org) The Honorable John Koskinen February 4, 2014 Page 8 A I think what could be done in terms of, ifany'thing, in terms ofa legislative disclosure rule. That?s a recollection. I may be wrong on that, but that?s the only other one that I can remember righp now. And, sir, what do you mean by ?legislative disclosure rule?? A So, under the rules and, you know, this is a leng piece. But under the rules, 501(c)(4) donors are not disclosed to the public. And there is an argument made here and elsewhere that that?s a reasoin why money is ?owing into those organizations for political purposes for purposes of spending on politics. I?m sorry. I?ll be more precise. And so you wanted to implement a disclosure rule that would take away that advantage for A Did I want to do that? No. But in terms of brainstorming things that would level the playing ?eld between 527 organizatid ns and 501(c)(4) organizations, that was one thing that was talked aboTt. Did you have discussions with anyone at Treasury ab out these ideas? A Probably would have had them with Mark Mazur, the tax policy person. And I think I did have a discussion with him on the concept of, "is there a thought about changing the disclosure rules? And we did talk about ?eXclusively?/?primari1y? and whether it made sense to do that or not. And that discussion was in this October 2012 timeframe?? I don?t know. It would have been it would have been probably a little later than that. It probably would have been, you know, when I was acting [cormnissioner]. But I?m not again, that would have been the timeframe.? Documents obtained by the Committee confirm that the Treasury Department has 501(c)(4) regulations ?on [its] radar? well before the release of the TIGTA report.28 One e-mail from 2010 clearly articulated the Department?s concern as being roo ?ed in the regulatory failure: Before Citizens United, corporations (including 043) were lli?rited by the FEC rules re: campaign spending and disclosure and subject to i 'nediate FEC enforcement action. Fear of EC enforcement in real time may have served to limit the political activities of aggressive c4s more than fear of IRS TEGE 27 Transcribed interview of Steven Miller1 in Wash, DC. (Nov. 13,, 2013). 23 E-mai'l from Ruth Madrigal, Dep?t of the Treasury, to Victoria Judson, Internal Revenue Serv. (June 14, 2012). 305906] 217 Obtained and Uploaded by the Center for Responsive Politics (OpenSecrets.org) The Honorable John Koskinen February 4, 2014 Page 9 enforcement action . . . . Now that the FEC cannot prohibit corporations (including c4s) from making such expenditures . . . there is some concern that aggressive c4s will be bolder and multiply, intervening in campaigns with relative impunity.29 Moreover, former Acting Commissioner Miller attributed the discussions about further regulating 501(c)(4) organizations to pressure placed on the IRS b: He testi?ed: And, sir, what did you see as the problem that needed through either a regulatory change or a legislative cha A 80 'I?m not sure there was a problem, right? I mean, I had, you know, Mr. Levin complaining bitterly to us Levin complaining bitterly about our regulation that where we had read ?exclusively? to mean ?primarily? context. And, you know, we were being asked to take so we were thinking about what things could be done 3 e. to TI TA ?3 audit recommendations The rule is purported to be a direct response to audi conservative tax?exempt applicants,31 but the reality is that the Adm' controversy Surrounding the IRS targeting as pretext to wrongly just regulation. The notice of proposed rulemaking (NPRM) asserts that would bene?t from clearer definitions? and cites the 30-day pr to the TIGTA audit.32 The Treasury Assistant Secretary for Tax Pol that the rule was intended to be responsive to a recommendation in tl Contrary to the Administration?s assertion, TIGTA did not re regulations narrowing the type of permissible political speech by 5 report offered nine recommendations, but not one recommended a cl campaign intervention. 34 On December 13, 2013, Russell George, tl General for Tax Administration, told the Committee that the propose any recommendation of his of?ce?s audit.? 29 E-mail ?o'm Ruth Madrigal, Dep?t of the Treasury, to Jeffrey Van Hove, Dep?t l- l-7-l3 2260] 3? Id. 3 Proposed Regulation, supra note i. 32 Proposed Regulation, supra note I. 33 Transcribed interview of Mark J. Mazur, Internal Revenue Serv., in Wash, DC 3? See Treasury Inspector Gen. for Tax Admin, Criteria Were Used Applications for Review (May 14, 2013). 35 Meeting with J. Russell George, TIGTA, and House Committee on Oversight ar 13,2013. 218 The proposed rule is a continuation of the IRS ?s maifeasan congressional Democrats. to be addressed nge? think we were we about Senator vas older than me, in the 501(c)(4) :31 look at that. And cc, and not a true response of the targeting of nistration has used the fy the need for this ?both the public and the IRS ogress report that reSponds cy, Mark Mazur con?rmed 1e TIGTA report.33 commend that the IRS issue 01(c)(4) organizations. The range in the term political 1e Treasury Inspector rule was not reSponsive to ifthe Treasury (Aug. 23, 2010). (January l0, 2014). to identify Tax-Exempt Government Reform, December Obtained and Uploaded by the Center for Responsive Politics (OpenSecrets.org) The Honorable John Koskinen February 4, 2014 Page 10 Given these circumstances, we are concerned about the statec for the Administration?s proposed regulation. Especially in light oft coordination with the IRS concerning ObamaCare, including the poti taxpayer information,36 we have serious reservations about the integi rulemaking process. The rule appears to be a continuation of a troub IRS, rather than enforcing laws, carries water for the Administration The rule was developed by those complicit in the targeting ol conceived with the intention of sti?ing political Speech under false reliance and deference to FEC de?nitions of political activity made 2 organizations further calls into question the underlying motivations facts revealed through the course of the Committee?s investigatiOn, a purpOSes and justification he close White House :ntial sharing of confidential ity and tranSparency of the ling pattern, wherein the 3 political agenda. 'the President?s enemies and retenses. The unexplainable Lpplicable to social welfare >f the proposal. Given the [lowing the rule to go forward can only be properly explained as the codi?cation of the Adi'ninistration?s desire to sti?e the activities of non-profits with which it disagrees. II. promulgation of. the proposed rule The Committee?s investigation uncovered evidence indicatin efforts to curb political speech by nonpro?ts. Repeatedly, the Admit The Administration purposefully concealed its efforts that culminated in the the Administration hid its iistration has failed to live up to President Obama?s promise that his would be ?the most transparent administration in history?? The pr0posed rule is yet another example of deliberate re subterfuge, designed to conceal unpopular and unconstitutional publ before the conclusion of several investigations into the multi-year po conservative leaning social Welfare nonpro?t organizations, the prop to alter a 50-year-old regulation in a manner that lacks transparency. In June 2012, Ruth Madrigal of the Treasury Department?s gulatory and legal lC policy actions. Released litical targeting campaign of osed regulation is designed f?ce of Tax Policy wrote to several IRS leaders about potential 501(c)(4) regulations. She Wrote: ?Don?t know who in your organization is keeping tabs on c4s, but since we mentioned them (off?plan) in 2013, I?ve got my radar up and this seemed in added] Madrigal forwarded a short article about a court decision witl rami?cations for politically active section 501(c)(4) organizations.?3 interview with Committee staff, IRS attorney Janine Cook explained works a regulation ?off-plan.? She testi?ed: 3" See Letter from Darrell lssa Jim Jordan, H. Comm. on Oversight Gov?t Rel Treasury InspectOr Gen. for Tax Admin. (Oct. 21, 2013). 37 Jonathan Easley, ?Obama says his is ?most transParent administration? ever," Ti history. 33 E-mail from Ruth Madrigal, Dep?t of the Treasury, to Victoria Judson, lntemal 305906] 39 219 potentially addressing . a . terestmg. [emphasrs .1 ?potentially major 9 In her transcribed how the Administration rorm, to J. Russell GeOrge, 6 Hill (Feb. 14, 20l3) available at transparent-administration-in- levenue Scrv. (June 14, 2012). Obtained and Uploaded by the Center for Responsive Politics (OpenSecrets.org) The Honorable. John Koskinen February 4, 2014 Page ll [T]o understand the term, when it says off plan, it means wor it, but not listing it on the plan. . . . The term I mean it?s a I obviously, it?s a coined term, the term means the idea of Spe on working it, getting legal issues together, things like that, the published plan as an item we are working. That?s what tl means.? Not only did the IRS and Treasury develop the rule ?off-plan include their work on the proposed rule on the Administration?s Unit 2013, concurrently with the release of the preposed regulation.? Th federal govemment-wide report on current and future regulatory acti agencies.42 In summary, it is clear that the IRS and Treasury went to public from learning about their ongoing work that culminated in the completely lacks statutory authority Nonprofit organizations ?Operated exclusively for the promoi promulgated in 1959 interpreted the statutory language to de?ne ?the The regulations state: 1) ?An organization is ope for which ?no part of the net earnings. .. inures to the bene?t of an individual? are entitled to tax exemption under I.R.C. welfare activity.?44 promotion of social welfare if it is primarily engaged in promoting i The proposed rule is a radical deviation from any precedi king 'it. Working on ose term, ding some rescurces ut not listing it on le term off plan but they also did not ied Agenda until the fall of a Uni?ed Agenda is the on under consideration by great to prevent the proposed rule. antial guidance and ion of social welfare? and Drivate shareholder or TreaSury regulations promotion of social rated exclusively for the some way the common good and general welfane??5 and 2) ?The promotion of social welfar does not include direct or indirect participation or intervention in political campaigns on behal of or in opposition to any . 4 candidate.? 6 The Administration?s current proposal signi?cantly broaden the exclusion of political activity well beyond any reasonable interpretation of st tutory text. The proposed de?nition replaces the phrase ?participation or intervention in politi office? with the much broader phrase ?candidate related political act eight point test.?17 As the NPRM states, the proposed regulation ?is i organizations and the IRS more readily identify activities that . . . do welfare.?48 Paradoxically, the preposed regulation shifts the burden 4? Transcribed interview of Janine Cook, lntemal Revenue Serv., in Wash, DC (i 4' Leland E. Beck, Fall 2013 Unified Agenda Published: Something New, Somethil Advisor (Nov. 27, 2013) available at: 3/1 1/27; ?2 How to Read the Uni?ed Agenda, Center for Effective Government (last visited ?3 2: Treas. Reg. (as amended in 1990). a ?7 Proposed Regulation, supra note 1. "a Proposed Regulation, supra note l. 220 a1 campaigns . . . for public ivity? and a far-reaching ntended to help not promote social of proof from the presence 6tug. 23, 20l3). 1g Oid, Federal Regulations fall-2013-uni?ed-agenda- Jan. 13,2013) available at: Obtained and Uploaded by the Center for Responsive Politics (OpenSecrets.org) The Honorable John Koskinen February 4, 2014 Page 12 of social welfare activities to the absence of political activities. Whereas, by its plain language, the statute recognizes exemption for an organization that promotes tl social welfare, the proposed regulation precludes recognition for an organization engaged in activities arbitrarily deemed to be political. The ?candidate related political activity? def nition focuses on types of activities that may be political, rather than types of activities that pro mote social welfare. As discussed above, the Committee?s investigation uncovered a hidden agenda within the IRS conceived ?off-plan? and before the issuance of the TIGTA re non-pro?ts to participate in the political process and thereby engage sort to neuter the ability of in activities that promote their reSpective views of social welfare. The rule?s departure from the statutory text is the work of an overzealous and unchecked agency and must not go forward. IV. The Proposed Rule suffers from de?cient regulatory review and analysis The proposed regulation did not undergo the standard regulatory analysis that most agency rulemakings require. Generally for signi?cant regulatory act ion, like this pr0posed regulation, agencies must include a comprehensive cost?bene?t analysis and the Of?ce of Information and Regulatory Affairs (OIRA) engages in a thorough reiview of the proposed regulation before it is offered to the public for comment.?39 any cost-bene?t analysis and the preposed regulation was never sent gap in the regulatory process allows faulty rules like this one adequate analysis. However, the IRS did not provide to OIRA for review.50 This a reach the public without V. The Proposed Regulation will needlessly harm social. welfare organizations The result of this inadequate regulatory review is a proposed regulation that will exclude nonpro?t organizations from a tax exempt status based on arbitrary and statutorily unfounded restrictions on political speech. The new de?nitions of ?political act create an unnecessarily harsh standard for ?501(c)(4) organizations, activities that I.R.C. ?501(c) was designed to cover. Even the left?1e ?broad array of groups committed to progressive values,?5 believes rule will chill political speech by nonpro?ts. It stated: ivity? are overly broad, and stifle socially bene?cial aning Alliance of Justice, 3 that the Administration?s If implemented, there would be no such thing as a nonpartisan election activity conducted by a 501(c)(4); it would all be considered ?political.? By expanding the de?nition of what activities are political, the rules would ability of to engage in nonpartisan get-out-the?vote dr drastically reduce the ives, candidate questionnaires, and voter registration drives. These activities have been critical to ?9 Exec. Order No. 12866 (1993). 5? See Proposed Regulation, Supra note i. 5' Alliance fer Justice, About AFJ, (last visited Jan. 3 221 0,2014). Obtained and Uploaded by the Center for Responsive Politics (OpenSecrets.org) The Honorable John Koskinen February 4, 2014 Page 13 the ability of nonpro?ts to in?uence the public policy debate - 52 issues. on a wealth of a. The new de?nition of political activity will sti?e constitutiqnally protected political speech ?Speech is an essential mechanism of democracy,?53 but the prOposed regulation rede?nes social welfare to exclude constitutionally protected political speech. In recognition of the ?fundamental importance of the free ?ow of ideas and opinions and concern,? the First Amendment protects the freedom of speech association.54 in .particular, political speech is ?central to the mean Amendment? and ?must prevail against laws that would suppress it on matters of public interest and freedom of ng and purpose of the First whether by design or inadvertence.?55 Through the proposed rule, the IRS is rejecting America?s ?profound national commitment to the principle that debate on public issues should be uninhibited, robust, and wide-Open? 5 analysis.?57 Traditionally, social welfare organizations were permitted to 6 in favor of ?more de?nitive rules? to ?reduce the need for detailed factual engage in unlimited issue based advocacy and comment on the selection of executive branch of?cials and judicial nominees, as part of the promotion of the common good and general welfare. As examples, environmental advocacy groups have been able to comment and advocate for the removal of a conservative EPA Administrators8 and gun rights advocacy groups it against the nomination of anti-Second Amendment judicial appointe ave been able to speak as.59 In a radical deviation from the ?historical application? of express advocacy, the proposed lule chills speech by restricting advocacy for appointed administrators that will hold incre and public policy issues that are fundamental to the missions of social welfare organizations. The preposed rule creates a profound disincentive to engage protected political speech because the mere mention of a candidate social welfare group. Under the rule, ?[a]ny public communication. primary election or 60 days of a general election that refers to one or candidates in that election? is political activity?? Organizations mi. 52 Press Release, Alliance for Justice, AFJ Treasury, pr0posal endangers citiz (Nov. 27, 20 3) available at 5? Citizens United v. Fed. Election Comm?n, 553 vs. 310 (2010). 5? Hustler Magazine v. Falwell. 435 us. 46 (1938). 5? Citizens United v. Fed. Election Comm'n, 558 us. 310 (2010). 56 New York Times Co. v. Sullivan, 376 US. 254 (1964). 57 Proposed Regulation, supra note 1. 5? See ?Environmentalists Protest Selection of Utah Gov. Michael Leavitt at EPA 2003) available at 2/environmentalists_pr 59 See Declan McCullagh, ?Gun Rights Groups are Wary of Sotomoayor," CBS Ne 6? Preposed Regulation, supra note 1. 6' Proposed Regulation, supra note 1. 222 dible power over the socioal it any constitutionally lay affect the tax status of a - within 30 days of a more clearly identified reference the election in to participation in democracy ury-irs-proposal-endangers? lead,? Democracy Now (Aug. 12, Dtest_selection_of_utah_gov. ws (May 27, 2009) available at Obtained and Uploaded by the Center for Responsive Politics (OpenSecrets.org) The Honorable John Koskinen February 4, 2014 Page 14 a newsletter, write a blog post about the election linking to the candic mention the activities of the incumbent elected of?cial in a non?elect but the new rule will ?atly declare that these activities do not promot jeopardizing the tax status of the group engaged in political speech. b. The proposed de?nition will limit the public ?5 ability to petit and learn about public policy Under the _pr0posed rule, invitation-s to incumbent elected off otherwise nonpartisan event into political activity for up to 90 days 0 Members of Congress are regularly invited to speak at policy forums many other occasions, even while serving as candidates. For exampl host Tax Day events every year on April 15 and often invite Member matters of tax and ?scal policy. This rule. will chill these expressive of which is to educate the public on the nation?s ?scal, state. c. Ensuring that eligible citizens are legally able to vote on Elec democracy. Voter registration and get?out-the-vote drives promote encouraging citizens to participate in electing their representatives. 5 materials have expressly permitted voter registration drives, recogniz welfare,62 but the prOposed. rule classi?es voter registration drives or political activity. The rule would thus discourage this type of behavi effect on democracy. In addition, voter education activities are essential to the pron Many organizations that engage in voter education activity distribute candidates in the form of voter guides. According to Revenue Ruling organizations may permissibly distribute voter guidesf?3 but this new reparation or distribution of a voter guide that refers to one or mo candidates? is political activity.?54 Moreover, under the rule, ?[h]osting .or conducting an event Vi election or 60 days of a general election at which one or more candid as part of the program? does not promote social welfare.65 The rule forums, .all debates, and all opportunities to hear from candidates pro exempt organization are political activity. It discourages nonpro?t sc to host important voter education events, which will be deleterious to ?1 See Elizabeth Kingsley John Pomeranz, A Crash at the Crossroads.- Tax and in Regulation of Political Activities of Tax-Exempt Organization, 3] Wm. Mitchell Rul. 2007-41 (Jun.l8, 2007). ?3 Rev. Rul. 73-243, [978-] cs. :54. 6" Proposed Regulation, supra note 1. 65 Proposed Regulation, supra note I. 223 The proposed de?nition will curb important voter education lates? web pages, or simply on related communication, 3 social welfare, thus ion government of?cials ials might turn an Lit of any election year. 00mmunity events, and 3, many nonprofit groups 5 of Congress to speak on demonstrations, the purpose activities tion Day is important to our Jcial welfare by everal IRS guidance ing the value to secial ?get?out?the-vote? drives as 3r and have a negative 1 lotion of social welfare. information about the 78-248, exempt rule declares that the re clearly identi?ed rithin 30 days of a primary ates in such election appear eclares that all candidate rided by any nonprofit tax cial welfare organizations democracy. 1 'ampaign Finance Law: Collide L. Rev. 55 (2004) and see Rev. Obtained and Uploaded by the Center for Responsive Politics (OpenSecrets.org) The Honorable John Koskinen February 4, 2014 Page 15 Confusingly, the new de?nitions run counter to IRS precede nee and guidance. Standards for what constitutes a permissibly apolitical voter guide have been in place for decades and are well Candidate forums have long been permissible an host events with candidates and elected of?cials to educate voters deviations from long standing understandings of permissible and in illogical and without explanation. VI. Conclusion many nonpro?t tax-exempt rior to an election.67 The permissible activities are The Committee is conducting a comprehensive investigation into the targeting of conservative tax-exempt applicants. Over the course of the last ninl reviewed over 400,000 pages of documents and conducted dozens Administration employees. Infermation received in the course of ti1 the proposed regulation is little more than a veiled attempt to stifle 1 constitutionally protected speech afforded to non?pro?t organizatior request that you rescind the Administration?s misguided regulation. 1 Because of the serious concerns outlined above, the Commi process by which the Administration developed the proposed regula Committee?s oversight obligations, we request the IRS produce the a months, the Committee transcribed interviews with is investigation shows that he exercise of '15 by law. Accordingly, we ?tee has questions about the ltion. To assist the following information, in electronic format, for the time period January 1, 2012, to the presenrt: 1. All communications between the current or former IRS limited to Lois Lerner, and the Executive Of?ce of the employees, including but not resident including but not limited to the White House Of?ce and the Of?ce of Mar referring or relating to the deveIOpment of the prOposed amendment to Treas. Reg. All communications between the IRS and the Departmel relating to the development of the proposed regulation al to Treas. Reg. All communications between the IRS and the FEC referl development of the proposed regulation and any suggest All documents and communications referring or relating the proposed regulation to OIRA for review. 6? See eg. Rev. Rul. 78?248, 1978-1 0.3. and see Elizabeth Kingsley John Crossroads: Tax and Campaign Finance Laws Collide in Regulation of Political Organization, 31 Wm. Mitchell L. Rev. 55 (2004). 67 See Rev. Rul. 2007-41, 2007-25. me. and Rev. Rul. 86-95, 1986-2 ca. 73. 224 .agement and Budget, regulation and any suggested it of Treasury referring or ad any suggested amendment ing or relating to the ed amendment to Treas. Reg. to the decision not to send Pomeranz, A Crash at the Activities of Tax-Exempt Obtained and Uploaded by the Center for Responsive Politics (OpenSecrets.org) The Honorable John Koskinen February 4, 2014 Page 16 5. All documents and communications referring or relating to the decision to exclude this regulation from the Spring 2013 Uni?ed Agenda and the Fall 2012 Uni?ed Agenda. The Committee on Oversight and GOVernment Reform is the principal oversight committee of the House of Representatives and may at ?any time? investigate ?any matter? as set forth in House Rule X. An attachment to this letter provides add tional information about reSponding to the Committee?s request. We request that you provide the requested documents and information as soon as possible, but no later than 5:00 pm. on February 18, 2014. When producing documents to the Committee, please deliver production sets to the Majority Staff in Room 2157 of the Rayburn House Office Building and the Minority Staff in Room 2471 of the Rayburn House Of?ce Building. The Committee prefers, if possible, to receive all documents in electronic format. If you have any questions about this request, please contact Katy Rother or Tyler Grimm of the Committee Staff at 202-225-5074. Thank you for your attention to this matter. Sincerely, .1. Darrell Issa . Chairman 1r ubco nittee on Economic Growth, Job Creation and Regulatory Affairs Enclosure cc: The Honorable Elijah E. Cummings, Ranking Mindrity Member The Honorable Matthew A. Cartwright, Ranking Minority Member Subcommittee on Economic Growth, Job Creation and Regulatory Affairs 225 Obtained and Uploaded by the Center for Responsive Politics (OpenSecrets.org) DARRELL E. CHAIRMAN ONE HUNDRED THIRTEENTH CONGRESS (tongues of the '(liniteh gut ?30115: at Bepre?entaiihts COMMHTEE ON OVERSIGHT AND GOVERNMEF 2157 RAYBURN House Omce WASHINGTON, DC 20515?6143 Maturity (202) 22543074 Minority (202) 225-53051 ELIJAH E. CUMMINGS. MARYLAND RANKING MEMBER ates dT REFORM Responding to Committee Document Requests . In complying with this request, you are required to produce all re in your possession, custody, or control, whether held by you or employees, and representatives acting on your behalf. You shoul that you have a legal right to obtain, that you have a right to copy access, as well as documents that you have placed in the tempera control of any third party. Requested records, documents, data 0 destroyed, modi?ed, removed, transferred or otherwise made ina . In the event that any entity, organization or individual denoted in also known by any other name than that herein denoted, the requ include that alternative identi?cation. . The Committee?s preference is to receive documents in electroni stick, or thumb drive) in lieu of paper productions. . Documents produced in electronic format should also be organiz electronically. . Electronic document productions should be prepared according The production should consist of single page Tagged Image 1 accompanied by a Concordance?format load ?le, an Opticon de?ning the ?elds and character of the load ?le. Document numbers in the load ?le should match document names. . If the production is completed through a series of multiple pa names and ?le order in all load ?les should match. All electronic documents produced to the Committee should of metadata speci?c to each document; BEGDOC, ENDDOC, TEXT, BEGATTACH, ENDATTAC DATE, SENTTIME, BEGINDATE, ENDDATE, EN 1 226 sponsive documents that are our pastor present agents, also produce documents or to which you have ry possession, custody, or information should not be ccessible to the Committee. this request has been, or is est shall be read also to form CD, memory ed, identi?ed, and indexed the following standards: iile ?les reference file, and a ?le Lates numbers and TIF ?le irtial productions, ?eld include the following ?elds H, 1E, SENTDATE, DTIME, AUTHOR, FROM, Obtained and Uploaded by the Center for Responsive POIitics (OpenSecrets.org) 10. ll. 12. l3. 14. 15. 16. CC, TO, BCC, SUBJECT, TITLE, FILENAME, I DATECREATED, TIMECREATED, DATELASTMOD, Tll? NATIVELINK, INT I LPA BEGATTACH. Documents produced to the Committee should include an index the production. To the extent more than one CD, hard drive, mer or folder is produced, each CD, hard drive, memory stick, thumb contain an index describing its contents. . Documents produced in response to this request shall be produced together with copies of ?le ciated when the request was labels, dividers or identifying markers with which they were asso served. When you produce documents, you should identify the paragraph in the Committee?s schedule to which the documents reSpond. It shall not be a basis for refusal to produce documents that any 0 possesses non-identical or identical copies of the same documents. If any of the requested information is only reasonably available in machine-readable form (such as on a computer server, hard drive, or computer backup tape), you should consult with the Committee staff to determine the fermat in which to produce the information. If compliance with the request cannot be made in full by the spec compliance shall be made to the extent possible by that date. An In the event that a document is withheld on the basis of privilege, provide a privilege log containing the following information concerning any such document: the privilege the date, author and each other. asserted; the type of document; the general subject matter addressee; and the relationship of the author and addressee to If any document responsive to this request was, but no longer is, or control, identify the document (stating its date, author, subject control. If a date or other descriptive detail set forth in this request referrimg to a document is inaccurate, but the actual date or other descriptive detail is known to you or is otherwise apparent from the context of the request, you are required to produce all documents which would be reSponsive as if the date or other descriptive detail were correct. Unless otherwise speci?ed, the time period covered by this request is from January 1, 2009 to the present. This request is continuing in nature and applies to any newly-discovered information. Any record, document, compilation of data or information, not produced because it has not been 2 227 Obtained and Uploaded by the Center for Responsive Politics (OpenSecrets.org) VIELASTMOD, tTl-I, EXCEPTION, lescn'bing the contents of nory stick, thumb drive, box drive, box or folder should ther person or entity also ified return date, explanation of why full compliance is not possible shall be provided along with any partial production. in your possession, custody, and recipients) and explain the circumstances under which the document ceased to be in your possession, custody, or 17. 18. 19. located or discovered by the return date, shall be produced imme location or discovery. diately upon subsequent All documents shall be Bates-stamped sequentially and produced sequentially. Two sets of documents shall be delivered, one set to the Majorit Minority Staff, When documents are produced to the Committee delivered to the Majority Staff in Room 2157 of the Rayburn Ho Staff and one set to the production sets shall be use Office Building and the Minority Staff in Room 2471 of the Rayburn House Of?ce Building. Upon completion of the document production, you should subm signed by you or your counsel, stating that: a diligent search a written certification, has been completed of all documents in your possession, custody, or control which reasonably could contain responsive documents; and (2) all documents located during the search that produced to the Committee. Schedule De?nitions The term ?document? means any written, recorded, or graphic whatsoever, regardless of how recorded, and whether original or are responsive have been atter of any nature copy, including, but not limited to, the following: memoranda, reports, expense reports, books, manuals, instructions, ?nancial reports, working papers, records, notes, letters, notices, con?rmations, telegrams, receipts, appraisals, pamphlets, magazines, newspapers, prospectuses, inter?of?ce and intra- of?ce communications, electronic mail (e-mail), contracts, cables, notations of any type of conversation, telephone call, meeting or other communication, computer printouts, teletypes, invoices, transcripts, diaries, anal ulletins, printed matter, ses, returns, summaries, minutes, bills, accounts, estimates, projections, comparisons, messages, correspondence, press releases, circulars, ?nancial statements, reviews, opinions, investigations, questionnaires and surveys, and work sheets (and offers, studies and all drafts, preliminary versions, alterations, modi?cations, revisions, changes, and amendments of any of the foregoing, as well as any attacl'unents or appendices thereto), and graphic or cral records or representatiOns of any kind (including without limitation, photographs, charts, graphs, micro?che, micro?lm, videotape, recordings and motion picture mechanical, and electric records or representations of any kind tapes, cassettes, disks, and recordings) and other written, printed recorded matter of any kind or nature, however produced or repr preserved in writing, ?lm, tape, disk, videotape or otherwise. A and electronic, including, without limitation, typed, Or other graphic or oduced, and whether document bearing any no-tatiOn not a part of the original text is to be considered a separate document. A draft or non-identical cepy is a separate document within the meaning of The term ?communication? means each manner or means of disc information, regardless of means utilized, whether oral, electron otherwise, and whether in a meeting, by telephone, facsimile, em device), text message, instant message, MMS or SMS message, releases, or otherwise. 228 this term. losure or exchange of ic, by document or ail (desktOp or mobile regular mail, telexes, Obtained and Uploaded by the Center for Responsive Politics (OpenSecrets.org) The terms ?and? and ?or? shall be construed broadly and either cc to bring within the scope of this request any information which to be outside its scope. The singular includes plural number, and includes the feminine and neuter genders. The terms ?person? or ?persons? mean natural persons, ?rms, par corporations, subsidiaries, divisions, departments, joint ventures, or other legal, business or government entities, and all subsidiarie departments, branches, or other units thereof. The term ?identify,? when used in a question about individuals, rr following information: the individual's complete name and titl business address and phone number. The term ?referring or relating,? with reSpect to any given subject constitutes, contains, embodies, re?ects, identifies, states, refers to that subject in any manner whatsoever. The term ?employee? means agent, borrowed employee, casual e1 contractor, de facto employee, independent contractor, joint advei part-time employee, permanent employee, provisional employee, type of service provider. 4 229 mjunctively or disjunctiver i otherwise be construed vioe'versa. The masculine tnerships, associations, proprietorships, syndicates, s, af?liates, divisions, teams to provide the e; and the individual's means anything that 0, deals with or is pertinent nployee, consultant, 1turer, loaned employee, subcontractor, or any other Obtained and Uploaded by the Center for Responsive Politics (OpenSecrets.org) EXHIBIT 5: VOTE AID FORM 102; 230 Obtained and Uploaded by the Center for Responsive Politics (OpenSecrets.org) Focus on the 1 023 (Rev. June 2006) Department of the Treasury intemai Revenue Service Application for Recognition of Exempti Under Section 501(c)(3) of the Internal Revenue ode OMB No. 1545-0056 Note: if exempt status is approved, this application will be open for public inspection. Use the instructions to complete this application and for a de?nition of all bold items. For dditionai help. call IRS Exempt Organizations Customer Account Services toll-free at 1-877-829-5500. Visit our website at publications. if the required information and documents are not submitted with payment of application may be returned to you. Attach additional sheets to this application if you need more space to answer fully. Put identify each answer by Part and line number. Complete Parts i - Xi of Form 1023 and sub H) that apply to you. w.irs.gov for forms and appropriate user fee, the name and EIN on each sheet and it only those Schedules (A through Identification of Applicant 1 Full name of organization (exactly as it appears in your organizing document) 2 0/0 Name (if applicable) Voter Alliance to Improve Democracy Liz Towne 3 Mailing address (Number and street) (see instructions) Room/Suite 4 Empioi er identi?cation Number (EIN) 11 Dupont Circle, NW 2nd Floor 20?5853546 City or town, state or country, and ZIP 4 5 Month the annual accounting period ends (01 - 12) Washington. DC 20036-1206 Decen. her 6 Primary contact (of?cer, director, trustee, or authorized representative) a Name: B. Holly Schadier Phone: 202-328-1656 Fax: optional) 202-328-9162 7 Are you represented by an authorized representative, such as an attorney or accounta "it? If "Yes," Yes No provide the authorized representative's name, and the name and address of the authorized representative?s firm. include a completed Form 2848, Power of Attorney and Declarat on of Representative, with your application if you would like us to communicate with your representative. 8 Was a person who is ?not one of your officers, directors. trustees, employees, or an authorized Ci Yes No representative listed in line 7, paid, or promised payment, to help plan, manage, or advise you about the structure or activities of your organization, or about your ?nancial or tax matters? if "Yes," provide the person's name, the name and address of the person?s ?rm, the amounts paid or promised to be paid, and describe that person?s role. 9a Organization's website: None Organization?s email: (optional) 10 Certain organizations are not required to ?le an lnfonnation return (Form 990 or Form 990-EZ). If you Yes No are granted tax-exemption, are you claiming to be excused from filing Form 990 or Fc rm if ?Yes,? explain. See the instructions for a description of organizations not required to file Form 990 or Form 990-3. 11 Date incorporated if a corporation, or formed, if other than a corporation. 11/ 17 2606 12 Were you formed under the laws of a foreign country? Ci Yes No if "Yes," state the country. For Paperwork Reduction Act Notice, see page 24 of the instruotions. Cat. No. 17133K Form 1023 (Rev. 6-2006) The Exempt Organization Tax Review Fei 231 bruary 2008 - Vol. 59, No. 2 171 Obtained and Uploaded by the Center for Responsive Politics (OpenSecrets.org) Focus on the For", 1023 (new 5.2005) Name; Voter Alliance to Improve Democracy EN: 20 5853546 Page 2 Or anizationai Structure You must be a corporation (Including a limited liability company), an unincorporated association, or a trust to be tax exempt. (Sed instructions.) DO NOT file this form unless you can check ?Yes? on lines corporation? If "Yes," attach a copy of your articles of incorporatim showing certi?cation Yes El No of ?ling with the appropriate state agency. include copies of any amendmen to your articles and be sure they also show state ?ling certi?cation. 2 Are you a limited liability company if "Yes," attach a copy of your articles organization showing Ci Yes No - certi?cation of ?ling with the appropriate state agency. Also, if you adopted an ope ating agreement, attach a copy. include copies of any amendments to your articles and be sure they show tate ?ling certification. All Refer to the instructions for circumstances when an LLC should not ?le its own ex mption application. .T. 3 Are you an unincorporated association? if ?Yes,? attach a copy Of Your artic 5 01? Yes NO constitution, or other similar organizing dooument that is dated and includes least signatures. Include signed and dated copies of any amendments. 4a Are you atrust? if "Yes," attach a signed and dated copy of your trust agreement. include signed Yes No and dated copies of any amendments. Have you been funded? it explain how you are formed without anything of value placed in trust. Yes No 5 Have you adopted bylaws? If "Yes," attach a current copy showing date of acoption. if explain Yes No how your of?cers, directors, or trustees are selected. Required Provisions in Your Organizi_ng Document The following questions are designed to ensure that when you ?le this application, your org lzing document contains the required provisions to meet the organizational test under section 501(c)(3). Unless you can check the boxes in th lines 1 and 2, your organizing document does not meet the organizational test. DO NOT file this application until you have amen ed your organizing document. Submit your original and amended organizing documents (showing state ?ling certi?cation if you are a GI rporation or an LLC) with your application. p?f .t?pvu- u. .- -ub?v- u. - -1 -. ,szzr r' - .thr-A, 2mg 1 Section 501(c)(3) requires that your organizing document state your exempt p1rpose(s), such as charitable, religious. educational, and/or scientific purposes. Check the box to confirm your organizing document meets this requirement. Describe speci?cally where your organizing documen meets this requirement, such as a reference to a particular article or section in your organizing document. Ref to the instructions for exempt purpose language. Location of Purpose Clause (Page, Article, and Paragraph) En 1-2 3 para 1 a 3 2a Section 501(c)(3) requires that upon dissolution of your organization. your remaini assets must be used exclusively (Z for exempt purposes, such as charitable, religious, educational, and/or scienti?c rposes. Check the box on line 2a to confirm that your organizing document meets this requirement by express provisi for the distribution of assets upon dissolution. if you rely on state law for your dissolution provision. do not check th box on line 2a and go to line 2c. 2b if you checked the box on line 2a, specify the location of your dissolution cla so (Page, Article, and Paragraph). Do not complete line 2c if you checked box 2a. . See the instructions for information about the operation of state law in your erticular state. Check this box if you rely on operation of state law for your dissolution provision and indicate the state: Narrative Description'of Your Activities Using an attachment, describe your past, present, and planned activities in a narrative. if you believe that you have already provided some of this information in response to other parts of this application, you may summarize that information here and refer to the speci?c parts of the application for supporting details. You may also attach representative copies of newsletters, brochures, or similar documents for supporting details to this narrative. Remember that if this application is approved, It will be open for inspection. Therefore, your narrative description of activities should be thorough and accurate. Refer to the instructions for information that must be included in your description. Compensation and Other Financial Arrangements With Yo Of?cers, Directors, Trustees, . Employees, and Independent Contractors IT 1a List the names, titles, and mailing addresses of all of your of?cers, directors, For each person listed, state their 1' total annual compensation, or proposed compensation, for all services to the anization, whether as an officer, employee, or other position. Use actual ?gures, if available. Enter "none" if no compensation is or will be paid. if additional space is needed, attach a separate sheet. Refer to the instructions for on what to incluie as compensation. 7-. Compensation amount Name Title Mailing address (annual actual or estimated) Nan Aron President. Director $0 washingt DC 70036 Jeff Malachowsky Treasurer. Director .mLNoU-Jeastmamedalerrac? $0 - Portland 97212 - hannon Garrett Secretary, Director -1230. 13th .SIEQEINW, #608 - - $0 DC 90005 I. .. - Form 1023 (Flame-2006) 172 February 2003 .. 59, No, 2 The Exempt Organization Tax Review 232 Obtained and Uploaded by the Center for Responsive Politics (OpenSecrets.org) Focus on the Fon?n1023 (Rev. 6-2006) I Name: VoterAillance to improve Democracy em; 20 5853546 Page 3 Compensation and Other Financial Arrangements With Your Icers, Directors, Trustees, Employees, and independent Contractors (Continued) List the names, titles, and mailing addresses of each of your ?ve highest compe sated employees who receive or will receive compensation of more than $50,000 per year. Use the actual figure, if av liable. Refer to the instructions for information on what to include as compensation. Do not include officers, directo s, or trustees listed in line 1a. Compensation amount Name Title Mailing address (annual actual or estimated) None. -- List the names, names of businesses, and mailing addresses of your ?ve highest compensated independent contractors that receive or will receive compensation of more than $50,000 per year. Use the actual figure, if available. Refer to the instructions for information on what to include as compensation. a Compensation amount Name Title Mailing address (annual actual or estimated) g] NoneThe following 'Yes" or ?No? questions relate to past, present, or planned relationships, transa ions, or agreements with your officers. directors, trustees, highest compensated employees, and highest compensated independent 0 ntractors listed in lines 1ayour officers, directors, or trustees related to each other through fami or business Yes El No relationships? If "Yes." identify the individuals and explain the relationship. 4 Do you have a business relationship with any of your of?cers, directors, or trust 5 other than Yes No through their position as an officer. director, or trustee? lf "Yes." identify the indi duals and describe the business relationship with each of your officers, directors, or trustees. i. 0 highest compensated independent contractors listed on lines 1b or to through or business Are any of your of?cers, directors, or trustees related to your highest compensat employees or Cl Yes 13? No relationships? If ?Yes,? identify the individuals and explain the relationship. 3a For each of-your of?cers, directors. trustees, highest compensated employees, a highest compensated independent contractors listed on lines 1a, lb, or to, attach a list howing their name, quali?cations, average hours worked, and duties. is Do any of your of?cers, directors, trustees. highest compensated employees, an highest Yes E, No compensated independent contractors listed on lines 1a, to, or 1c receive comp nsation from any other organizations, whether tax exempt or taxable, that are related to you through common control? If "Yes," identify the individuals, explain the relationship between you and the other organization. and describe the compensation arrangement. kkikk 4 In establishing the compensation for your of?cers, directors, trustees, highest compensated employees, and highest compensated independent contractors listed on lines 13, 1b, and 1c, the following practices are recommended, although they are not required to obtain enemptlon. Answer ?Yes? to all the practices you use. a Do you or will the individuals that approve compensation arrangements follow a confii of Interest policywill you approve compensation arrangements in advance of paying co pensation? Yes He Do you or will you document in writing the date and terms of approved compens tion arrangements? Yes Ci No Form 1023 (Rev. 6-2006) The Exempt Organization Tax Review February 2008 -- Vol. 59, No. 2 173 Obtained and Uploaded by the Center for Responsive Politics (OpenSecrets.org) . . .. . Focus on the IRS compensation arrangements? Do you or will you approve compensation arrangements based on information about compensation paid by Yes No similarly situated taxable or tax-exempt organizations for similar services, current mpensation surveys compiled by independent firms. or actual written offers from similarly situated organl atlons? Refer to the instructions for Part V. lines 1a. 1b, and 10. for information on what to include as co pensation. Form 1023 (Rev. 6-2006) Name: VoterAlilance to Improve Democracy EIN: 20 - 5853546 Page 4 Compensation and Other Financial Arrangements With Your icers, Directors, Trustees. . Employees, and independent Contractors (Continued) . Do you or will you record in writing the decision made by each individual who cided or voted on Yes No Do you or will you record In writing both the information on which you relied to ase your decision Yes Cl No and its source? If you answered ?No? to any item on lines 4a through 4f, describe how you set ompensation that is reasonable for your of?cers, directors. trustees, highest compensated employ s, and highest compensated independent contractors listed in Part V. lines 1a. 1b, and 10. 5a Have you adopted a conflict of interest policy consistent with the sample co ?ict of interest policy Er Yes No in Appendix A to the instructions? If "Yes," provide a copy of the policy and lain how the policy has been adopted, such as by resolution of your governing board. if ans er lines 5b and 50. What procedures will you follow to assure that persons who have a con?ict of nterest will not have influence over you for setting their own compensation? What procedures will you follow to assure that persons who have a con?ict of interest will not have influence over you regarding business deals with themselves? Note: A conflict of Interest policy is recommended though it is not required to obtain exemption. Hospitals, see Schedule 0, Section Lima 14. 6a Do you or will you compensate any of your of?cers, directors, trustees, highest co pensated employees. El Yes No and highest compensated independent contractors listed in lines 1a, 1b, or is ugh non-fixed payments, suoh as discretionary bonuses or revenue~based payments? if "Yes," ascribe ail non-?xed compensation arrangements, including how the amounts are determined, who is arrangements, whether you place a limitation on total compensation. and how yo determine or will determine that you pay no more than reasonable compensation for services. Rafa to the instructions for Part V. lines 1a, 1b, and is, for information on what to include as compensation. Do you Or will you compensate any of your employees. other than your chip 3. directors, trustees. Yes No or your ?ve highest compensated employees who receive or will receive com ensation of more than $50,000 per year, through non-fixed payments. such as discretionary bonus or revenue-based payments? if ?Yes,? describe all non-?xed com ensation arrangements. incl ing how the amounts are or will be determined. who Is or will be all his for such arrangements. ether ou place or will place a limitation on total compensation. and ow you determine or will det ine at you pay no more than reasonable compensation for services. Refer to the instructions to Part V, lines 1a. 1b, and 1c. for information on what to include as compensation. 7a Do you or will you purchase any goods. services. or assets from any of your officers, directors, Yes El No trustees, highest compensated employees, or highest com ensated independent contractors listed in lines 1a, 1b, or to? if "Yes." describe any such purchaset at you made or htend to make, from whom you make or will make such purchases, how the terms are or will be 'iegotiated at arm's - length, and explain how you determine or will determine that you pay no more than fair market value. Attach copies of any written contracts or other agreements relating to such purchases. Do you or will you sell any goods. services, or assets to any of y0ur of?cers, directors. trustees, Yes [3 No highest compensated employees, or highest compensated independent co tractors listed in lines 1a, 1b, or to? if I?Yes." describe any such sales that you made or intend to ma te, to whom you make or will make such sales, how the terms are or will be negotiated at arm?s iang h. and explain how you determine or will determine you are or will be paid at least fair market vaiu . Attach copies of any written contracts or other agreements relating to such sales. Re Do you or will you have any leases. contracts, loans. or other agreements th your officers, directors. Cl Yes No trustees. highest compensated employees, or highest compensated indepe dent contractors listed in lines 1a, 1b. or 1c? if "Yes," provide the information requested in lines 8b rough 8f. Describe any written or oral arrangements that you made or intend to mak . identify with whom you have or will have such arrangements. Explain how the terms are or will be negotiated at arm?s length. 9 Explain how you determine you pay no more than fair market value or you are paid least fair market value. Attach copies of any signed leases. contracts, loans, or other agreements relat ng to such arrangements. 9e Do you or will you have any leases, contracts, loans. or other agreements with any organization in El Yes No which any of your of?cers. directors. or trustees are also of?cers, directors, or trustees. or in which any individual of?cer, director. or trustee owns more than a 35% interest? if "Yes," provide the information requested in lines 9b through 9f. Form 1023 (Rev. 6?2006) 174 February 2008 Vol. 59, No. 2 The Exempt Organization Tax Review 234 Obtained and Uploaded by the Center for Responsive Politics (OpenSecrets.org) Focus on the IRS Form 1023 (Rev. sauce) Name: Voter Alliance to Improve Democracy em: 20 - 5853546 pug. 5 Compensation and Other Financial Arrangements With Your Of?cers, Directors, Trustees, Employees, and Independent Contractors (Continued) Describe any written or oral arrangements you made or intend to make. 0 identify with whom you have or will have such arrangements. Explain how the terms are or will be negotiated at arm's length. a Explain how you determine or will determine you pay no more than fair market value or that you are paid at least fair market value. Attach a copy of any signed leases, contracts, loans, or other agreements relating to such arrangements. Your Members and Other Individuals and Organizations That Reiceive Benefits From You The following "Yes" or ?No? questions relate to goods. services, and funds you provide 0 individuals and organizations as part of your activities. Your answers should pertain to past, present, and planned activities. (See instructions.) 1a In carrying out your exempt purposes, do you provide goods, services, or funds If Yes Ell No "Yes," describe each program that provides goods, services, or funds to individual . In carrying out your exempt purposes, do you provide goods, services, or funds to organizations? if Cl Yes No "Yes," describe each program that provides goods services, or funds toorganizations. 2 Do any of your programs limit the provision of goods, services, or funds to a speci'ic individual or Yes i] No group of speci?c individuals? For example, answer "Yes," if goods, services, or fur ds are provided only for a particular individual, your members, individuals who work for a particular employer, or graduates of a particular school. if "Yes," explain the limitation and how recipients are selected for each program. 3 Do any individuals who receive goods, services, or funds through your programs ve a family or Yes No business relationship with any of?cer, director, trustee. or with any of your highest cmpensated employees or highest compensated independent contractors listed in Part V, lines a, 1b, and 10? If "Yes." explain how these related individuals are eligible for goods. services, or fun s. Part VII Your History The following ?Yes? or ?No? questions relate to your history. (See instructions.) 1 Are you a successor to another organization? Answer "Yes," if you have taken or All" take over the Cl Yes No activities of another organization; you took over 25% or more of the fair market vs no of the net assets of another organization; or you were established upon the conversion of an organization from for-profit to non~profit status. if "Yes," complete Schedule G. 2 Are you submitting this application more than 27 months after the end of the month In which you Yes No were legally formed? If "Yes," complete Schedule E. Part Your Specific Activities The following ?Yes? or "No" questions relate to speci?c activities that you may conduct. Check the appropriate box. Your answers should pertain to past, present, and planned activities. (See instructions.) 1 Do you support or oppose candidates In political campaigns in any way? If ?Yes,' explain. Yes [3 No 23 Do you attempt to in?uence legislation? If "Yes," explain how you attempt to Win. ence legislation Ell Yes El No and complete line 2b. if go to line 3a. Have you made or are you making an election to have your legislative activities measured by El Yes No i expenditures by ?ling Form 5768? it "Yes," attach a copy of the Form 5768 that was already ?led or attach a completed Form 5768 that you are ?ling with this application. if des ribe whether your attempts to In?uence legislation are a substantial part of your activities. Include the? time and money spent on your attempts to influence legislation as compared to your total activities . 3a Do you or will you operate bingo or gaming activities? If "Yes," describe who conducts them, and Cl Yes 3? No list all revenue received or expected to be received and expenses paid or expected to be paid in operating these activities. Revenue and expenses should be provided for the time periods speci?ed in Part IX, Financial Data. I: Do you or will you enter into contracts or other agreements with Individuals or org nlzatlons to Cl Yes No conduct bingo or gaming for you? if "Yes," describe any written or oral arrangemeIHts that you made or intend to make, identify with whom you have or will have such arrangements, plain how the . .. terms are or will be negotiated at arm's length, and explain how you determine or will determine you pay no more than fair market value or you will be paid at least fair market value. Attach copies or any written contracts or other agreements relating to such arrangements. List the states and local jurisdictions, including lndlan Reservations, in which you conduct or will conduct gaming or bingo. Form 1023 (Rev. 6-2006) The Exempt Organization Tax Review I February 2008 - Vol. 59, 'No. 2 175 235 Obtained and Uploaded by the Center for Responsive Politics (OpenSecrets.org) Focus on the i Form 1023(Flev. 6-2006) Name: Voter Alliance to Improve Democracy am; 20- 5853545 page 5 it Part Vlil Your Speci?c Activities (Continued) 43 Do you or will you undertake fundraising?? If "Yes," check all the fundraising programs you do or will El Yes No conduct. (See instructions.) mail solicitations phone solicitations email solicitations accept donations on your website 3 personal solicitations receive donations from another organization's website 1} Ci vehicle, boat, plane, or similar donations Ci government grant sol-citations i: foundation grant solicitations Ci Other Attach a description of each fundraislng program. Do you or will you have written or oral contracts with any individuals or organ zations to raise funds Yes No for you? If ?Yes,? describe these activities. include all revenue and expenses from these activities and state who conducts them. Revenue and expenses should be provided for the time periods specified in Part lX, Financial Data. Also, attach a copy of any contracts or agreements. 0 Do you or will you engage in fundraising activities for other organizations? If "Yes," describe these Yes No arrangements. Include a description of the organizations for which you raise funds and attach copies of all contracts or agreements. cl List all states and local jurisdictions in which you conduct fundraising. For ea state or local jurisdiction listed, specify whether you fundraise for your own organization, fundraise for another organization, or another organization fundraises for you. Do you or will you maintain separate accounts for any contributor under whi the contributor has El Yes No the right to advise on the use or distribution of funds? Answer "Yes" if the or may provide advice iills- on the types of investments, distributions from the types of investments, or distribution from the donor's contribution account. if "Yes," describe this program, Including the pe of advice that may be provided and submit copies of any written materials provided to donors. If}. 2* 5 Are you affiliated with a ggvernmentai unit? if "Yes," explainwill you engage in economic development? if "Yes," describe yo program. Yes No Describe in full who benefits from your economic development activities andT-iow the activities git promote exempt purposes. 7a Do or will persons other than your employees or volunteers develop?your fa litles? if "Yes," describe Yes No each facility, the role of the developer, and any business or family relationshl between the . developer and your officers, directors, or trustees. Do or will persons other than your employees or volunteers manage your ac ivitles or facilities? If CI Yes No "Yes," describe each activity and facility, the role of the manager, and any siness or family reiatlonship(s) between the manager and your officers, directors, or trustees. .- .- w? If there is a business or family relationship between any manager or develo and your of?cers, directors. or trustees, identify the individuals, explain the relationship, descrl how contracts are negotiated at arm's length so that you pay no more than fair market value, submit a copy of any contracts or other agreements. -- treated as partnerships, in which you share pro?ts and losses with partners ther than section 8 Do you?or will you enter into joint ventures, including partnerships or limit: liability companies Yes a No I 501(c)(3) organizations? if "Yes," describe the activities of these joint ventu in which you participate. 9a Are you applying for exemption as a childcare organization under section 501(k)? If ?Yes.? answer [3 Yes No lines 9b through 9d. if go to line 10. Do you provide child care so that parents or caretakers of children you care for can be aintuliy Yes No employed (see instructions)? if explain how you qualify as a childcare organization described in section 501(k). Of the children for whom you provide child care, are 85% or more of them cared for by you to Yes No enable their parents or caretakers to be gainfully employed (see instructions 7 If explain how you qualify as a childcare organization described In section 501(k). Are your services available to the general public? if describe the spec tic group of people for Yes No whom your activities are available. Also, see the instructions and explain ho you qualify as a childcare organization described in section 501(k). . 10 Do you or will you publish, own, or have rights in music, literature, tapes, 3 orks, choreography, Yes No scienti?c discoveries, or other intellectual property? it "Yes," explain. Des ribe who owns or will own any copyrights, patents, or trademarks, whether fees are or will be ch ed, how the fees are determined, and how any items are or will be produced, distributed, and keted. Form 1023 (Rev. 6-2006) 176 February 2008 - Vol. 59, No. 2 The Exempt Organization Tax Review 236 Obtained and Uploaded by the Center for Responsive Politics (OpenSecrets.org) Focus on the IRS Form 1023 (Rev. 6-2006) Part Your Specific Activities (Continueg) 11 12a 14a Name; Voter Alliance to Improve Democracy Do you or will you accept contributions of: real property; conservation easements; closely held securities; intellectual property such as patents, trademarks, and copyrights; works of music or art; licenses; royalties; automobiles, boats, planes, or other vehicles; or collectibles of any type? if "Yes," describe each type of contribution, any conditions imposed by the donor on the contribution, and any agreements with the donor regarding the contribution. Do you or will you operate in a foreign country or countries? if ?Yes,? answer lines 2b through 12d. If go to line 13a. Name the foreign countries and regions within the countries in which you operate. Describe your operations in each country and region in which you operate. Describe how your operations in each country and region further your exempt purpo 5. Do you'cr will you make grants, loans, or other distributions to organization(s)? If ?Yes,? answer lines 13b through 13g. If go to line 14a. Describe how your grants, loans, or other distributions to organizations further your exempt purposes. Do you have written contracts with each of?these organizations? lf f?Yes," attach a copy of each contract. identify each recipient organization and any relationship between you and the recipi nt organization. Describe the records you keep with respect to the grants, loans, or other distribution you make. Describe your selection process, including whether you do any of the following: Do you require an application form? if "Yes," attach a copy of the form. (ii) Do you require a grant proposal? If "Yes." describe whether the grant proposal 5 eci?es your responsibilities and those of the grantee, obligates the grantee to use the grant only for the purposes for which the grant was made, provides for periodic written reports con eming the use of grant funds, requires a ?nal written report and an accounting of how grant fun 3 were used, and acknowledges your authority to withhold and/or recover grant funds in case uch funds are, or appear to be, misused. Describe your procedures for oversight of distributions that assure you the resource are used to further your exempt purposes, including whether you require periodic and ?nal repo on the use of resources. Do you or will you make grants, loans. or other distributions to foreign organizations If "Yes," . answer lines 14b through 14f. If go to line 15. Provide the name of each foreign organization, the country and regions within a cou try in which each foreign organization operates, and describe any relationship you have with eac foreign organization. Does any foreign organization listed in line 14b accept contributions earmarked for or speci?c organization? If ?Yes,? list all earmarked organizations or countries. Do your contributors know that you have ultimate authority to use contributions ma discretion for purposes consistent with your exempt purposes? if "Yes," describe information to contributors. speci?c country to you at your you relay this Do you or will you make pre~grant inquiries about the recipient organization? if ?Yes describe these inquiries, including whether you inquire about the recipient?s financial status, its tax- xempt status under the lntemal Revenue Code, its ability to accomplish the purpose for which th resources are provided, and other relevant information. Do you or will you use any additional procedures to ensure that your distributions to foreign organizations are Used in furtherance of your exempt purposes? If "Yes," describe these procedures, Including site visits by your employees or compliance checks by impartial experts, to verify that grant funds are being used appropriately. EIN: 20 - 5853546 Ci Yes Ci Yes_ Yes Yes Page 7 MNO END ENO EINO Citric Form 1023 (Rev. 6-2006) The Exempt Organization Tax Review 237 February 2008 - Vol. 59, No. 2 177 Obtained and Uploaded by the Center for Responsive Politics (OpenSecrets.org) Focus on the IRS Form 1023 (Rev. e-zoos) Name: Voter Alliance to Improve Democracy EIN: 20 - 5853546 Page 8 Part Your Speci?c Activities (Continued) 15 Do you have a close connection with any organizations? If "Yes," explainAre you applying for exemption as a cooperative hospital service organization ur der section Yes [3 No 501(9)? If "Yes," explain. 17 Are you applying for exemption as a cooperative service organization of operati 9 educational Cl Yes [i No? 3?5; organizations under section 501 if ?Yes.? explain. Bill: 18 Are you applyingfor exemption as a charitable risk pool under section 501 If ?Yes," explain. yes 12' No . ling, 19 Do you or will you operate a school? if "Yes." complete Schedule B. Answer "Yes whether you Yes No . operate a school as your main function or as a secondary activity. 20 layour main function to provide hospital or medical care? if ?Yes.? complete Sc dule will you provide low-income housing or housing for the elderly or han icapped? if Yes [if No .31- ?Yes.? complete Schedule F. 22 Do you or will you provide scholarships, fellowships, educational loans, or other :lucational grants to CI Yes l3, No 1 individuals. including grants for travel, study, or other similar purposes? if "Yes." complete Schedule H. Note: Private foundations may use Schedule to request advance approval of 'ndivlduai grant procedures. Form 1023 (Rev. 6-2006) 178 February 2008 - Vol. 59, No. 2 - The Exempt Organization Tax Review 238 Obtained and Uploaded by the Center for Responsive Politics (OpenSecrets.org) Focus on the IRS Form 1023 (Fiev. 3-2005) Name: Voter Alliance to Improve Democracy Em, 20- 5853546 9 Financial Data For purposes of this schedule. years in existence refer to completed tax years. if in exl tence 4 or more years, complete the schedule for the most recent 4 tax years. if in existence more than 1 year but less than 4 years. complete the statements for each year in existence and provide projections of your likely revenues and expenses ed on a reasonable and good faith estimate of your future ?nances for a total of 3 years of ?nancial information. If in exist nce less than 1 year. provide projections of your likely revenues and expenses for the current year and the 2 following years, based on a reasonable and good faith estimate of your future finances for a total of 3 years of ?nancial Information. (See ctlons.) A. Statement of Revenues and Expenses Type of revenue or expense Cunent tax year 3 prior tax years or 2 succeeding tax years Fromm/21.0.6..- From (0) Provide Total for To 12.11.31.195. To 129.1107. To 1201108.- To 1 Gifts. grants, and contributions received (do not include unusual grants) 20.000 111.000 12:.103 255.103 2 Membership fees received 0 0 0 3 Gross investment income 0 0 0 0 4 Net unrelated business income 0 0 0 0 5 Taxes levied for your bene?t 0 0 0 0 6 Value of services or facilities furnished by a governmental unit without charge (not 3 including the valua of services 3 generally furnished to the . public without charge) 0 0 0 7 Ahy revenue not otherwise listed above or in lines 9-12 below (attach an itemized list) 0 0 8 Total of lines 1 through 7 20.000 111,000 12t-.108 255,103 9 Gross receipts from admissions. merchandise sold or services performed. or furnishing of facilities in any activity that is related to our exempt purposes attach itemized list) 0 0 0 0 10 Total of lines 8 and 9 20.000 111.000 124 .108 255.108 11 Net gain or loss on sale of capital assets (attach schedule and see I 0 0 0 12 Unusual grants 0 0 0 13 Total Revenue Add lines 10 through 12 20,000 111,000 124 .108 255.108 14 Fundraising expenses 1.000 1.000 1.000 15 Contributions. gifts, grants. and similar amounts paid out (attach an itemized list) 0 16 Disbursements to or for the bene?t of members (attach an itemized list) 0 a, 17 Compensation of of?cers, 3 directors. and tmstees 0 0 13 Other salaries and wages 7.980 49,880 54 .333 19 interest expense 0 0 20 Company (rentitllities. etc.) 1704 8.560 9 .416 21 Depreciation and depletion 0 0 0 22 Professional fees 3.760 23.400 25.740 23 Any expense not otherwise classified, such as program services (attach itemized list) 2,734 21 ,534 23 .687 24 Total Expenses Add lines 14 through 23 17.178 104,374 111 .711 Form 1023 (Rev. 6-2006) The Exempt Organization Tax Review ebruary 2008 - Vol. 59, No. 2 179 239 Obtained and Uploaded by the Center for Responsive litics (OpenSecrets.org) ii . Focus on the ii Form 1023 (Rev. 6-2006) Name: Voter Alliance to improve Democracy 5m; 20'- 5853546 Page 10 13: anancial Data (Continued) B. Balance Sheet (for your most recently cmieted tax year) Year End: 2006 Assets (Whole 1 0 2 Accounts receivableinventories - - - - - - - - .. - - - - 3 4 Bonds and notes receivable (attach an itemized listCorporate stocks (attach an itemized listLoans receivable (attach an itemized list) 5 0 7 Other investments (attach an itemized listDepreciabie and depletable assets (attach an itemized listOther assets (attach an itemized listTotal Assets (add lines 1 through 10) .. - 11 Liabilities 0 12 Accounts payable .. - - . 12 0 13 Contributions, gifts. grants, etc. payable .. .. .. 13 0 14 Mortgages and notes payable (attach an itemized listOther liabilities (attach an itemized listTotal Liabilities (add lines 12 through 15) - 16 0 - Fund Balances or Net Assets 17 Total fund balances or net assets .. .. 17 0 18 Total Liabilities and Fund Balances or Net Assets (add lines 16 and 17) .. 13 19 Have there been any substantial changes in your assets or liabilities since the end of the period Yes No shown above? If "Yes." explain. mpubiic Charity Status Part is designed to classify you as an organization that is either a private found ion or a public charity. Public charity status is a more favorable tax status than private foundation status. if you are a private fo ndation, Part is designed to further determine whether you are a private operating foundation. (See instructions.) 1a Are you a private foundation? if Wes." go to line 1b. if go to line 5 and proceed as instructed. CI Yes No. if you are unsure. see the instructions. As a private foundation, section 508(e) requires special provisions in your org nizing document in addition to those that apply to all organizations described in section 501(c)(3). Check the box to con?rm that your organizing document meets this requirement. whether by ex ress provision or by reliance on operation of state law. Attach a statement that describes speci?c ily where your organizing document meets this requirement, such as a reference to a particu ar article or section in your organizing document or by operation of state law. See the instructions, i eluding Appendix B, for information about the special provisions that need to be contained in your organizing document. Go to line 2. - 2 Are you a private operating foundation? To be a private operating foundation kou must engage [3 Yes El No directly in the active conduct of charitable, religious, educational, and similar ctivities, as opposed to out these activities by providing grants to Individuals or other organizations. it ?Yes.? go to line 3. it go to the signature section of Part Xi. 3 Have you existed for one or more years? it ?Yes.? attach ?nancial information showing that you are a private E) yes [if No operating foundation; go to the signature section of Part XI. if continue to line 4. 4 Have you attached either (1) an affidavit or opinion of counsel. ?nciuding a written af?davit or opinion Cl Yes No from a certi?ed public accountant or accounting ?rm with expertise regarding this tax law matter). that sets forth facts concemlng your operations and support to demonstrate that you are likely to satisfy the requirements to be classi?ed as a private operating foundation; or (2) a statement describing your proposed operations as a private operating foundation? 5 if you answered ?No? to line 1a, indicate the type of public charity status you are 'equesting by checking one of the choices below. You may check only one box. The organization is not a private foundation because it is: a 509(a)(1) and church or a convention or association of churches. Complete and attach Schedule A 509(a)(1) and school. Complete and attach Schedule a. 509(a)(1) and hospital, a cooperative hospital service organization, or a medical research CI organization operated in conjunction with a hospital. Complete and attach Schedule C. organization supportan either one or more organizations described in line 5a through publicly supported section 501(c)(4). (5). or (6) organization. Complete and attach Schedule D. 0' Form 1023 (Rev. 6-2006) 180 February 2008 - Vol. 59, No. 2 The Exempt Organization Tax Review 240 Obtained and Uploaded by the Center for Responsive Politics (OpenSecrets.org) i? ll . Focus on the I ?l 1 r-I Form 1023 (Rev. 6-2006) Name: Voter Alliance to Improve Democracy EN: 20 5853546 Page 12 User Fee Information You must include a user fee payment with this application. it will not be processed without your paid user fee. If your average annual g'ross receipts have exceeded or will exceed $10,000 annually over a 4-ye1r period, you must submit payment of $750. if your gross receipts have not exceeded or will not exceed $10,000 annually over a 4-year period, the required user fee payment Is $300. See instructions for Part XI. for a de?nition of gross receipts over a 4-ye period. Your check or money order must be _d made payable to the United States Treasury. User fees are subject to change. Check our website at and type "User (i Fee" in the keyword box, or call Customer Account Services at 1-877-829-5500 for current information. 1 Have your annual gross receipts averaged or are they expected to average not mere than $10,000? Yes Ci No it ?Yes,? check the box on line 2 and enclose a user fee payment of $300 (Subject to change?see above). if check the box on line 3 and enclose a user fee payment of $750 (Subject to change?see above). 2 Check the box if you have enclosed the reduced user fee payment of $300 (Subie ct to change). 3 Check the box if you have enclosed the user fee payment of $750 (Subject to ob: nge). (2i i declare under the penalties of perjury that I am authorized to sign this application on behalf of the above organization and that I have examined this application. including the accompanying schedules and attachments, and to the best of my knowledge it is true. correct. and complete. Please Sign _Ngrl 5191 Here (Signature of Officer, Director, Trustee. or other (Type or print name of signer) - 2.63%) - - - authorized of?cial) President (T ype or print title or an hority of signer), - ii! Reminder: Send the completed Form 1023 Checklist with your ?lie Form 1023 (Rev. 6-2006.-..- - . 'al_ua 3:22-35:17 4;.1 . 182 February 2008 - Vol. 59, No. 2 The Exempt Organization Tax_ Review 242 Obtained and Uploaded by the Center for Responsive Politics (OpenSecrets.org) 54 Focus on the MS Form 1023 (Rev, 5.2005) Name; Voter Alliance to Improve Democracy 20 5853546 page 13 Schedule A. Churches 1a Do you have a written creed, statement of faith, or summary of beliefs? if "Yes," attach copies of Cl Yes No relevant documents. Do you have a form of worship? if "Yes," describe your form of worshipyou have a formal code of doctrine and discipline? If ?Yes,? describe your co :le of doctrine and Cl Yes El No discipline. . Do you have a distinct religious history? if "Yes," describe your religious history. Ci Yes No 0 Do you have a literature of your own? If "Yes," describe your literature. Ci Yes No 3 Describe the organization's religious hierarchy or ecclesiastical government. 43 Do you have regularly scheduled reiigiol??s services? if "Yes," describe the nature of the services and Cl Yes El No provide representative copies of relevant literature such as church bulletins. What is the average attendance at your regularly scheduled religious services? 5a Do you have an established place of worship? If ?Yes,? refer to the instructions for the information Yes No required. Do you own the property where you have an established place of worshipyou have an established congregation or other regular membership group? If refer to the instructions. Ci Yes El No 7 How many members do you have? 88 Do you have a process by which an individual becomes a member? If "Yes," de ribe the process Ci Yes CI No and complete lines Bb?Bd, below. If you have members, do your members have voting rights, lights to participate religious functions. Yes Ci No or other rights? it ?Yes,? describe the rights your members have. May your members be associated with another denomination or churchyour members part of the same family? Yes . No 9 Do you conduct baptisms, weddings, funerals, etc? Yes Ci No 10 Do you have a school for the religious instruction of the youngyou have a minister or religious leader? If "Yes," describe this person?s role and explain whether Yes Cl No the minister or religious leader was ordained, commissioned, or licensed after a prescribed course of study. Do you have schools for the preparation of your ordained ministers or religious leadersyour minister or religious leader also one of your officers, directors, or trustees? Yes Ci No 13 Do you ordain, commission. or license ministers or religious leaders? if ?Yes,? de crlbe the El Yes El No requirements for ordination, commission, or iicensure. 14 Are you part of a group of churches with similar beliefs and structures? If "Yes," #xplaln. include the Cl Yes No name of the group of churches. - 15 Do you issue church charters? if describe the requirements for issuing a c1arterchurch charter? if ?Yes,? attach a copy of the charter. Yes El No 17 Do you have other information you believe should be considered regarding your status as a church? Yes CI No If ?Yes,? explain. Form 1023 (Rev. 6-2006) The Exempt Organization Tax Review 243 L'ebrualry 2008 - Vol. 59, No. 2 183 Obtained and Uploaded by the Center for Responsive Politics (OpenSecrets.org) u-L-u?er-v?n-f-I?v: . . Hb?ga-H; - - Err-I .. Focus on the IRS Form 1023 (Rev. 6-2006) Operational Information 1a Do you normally have a regularly scheduled curriculum, a regular faculty of quali?ed teachers. a Name; Voter Alliance to improve Democracy Schedule B. Schools, Colleges, and Universities if you operate a school as an activity, complete Sci reguiady enrolled student body, and facilities where your educational activities ar on? If do not complete the remainder of Schedule B. is the primary function of your school the presentation of formal instruction? If school in terms of whether it is an elementary. secondary, college, technical, or :eduie a regularly carried es," describe your ther type of school. EN: 20 - 5553545 Yes Yes Page 14 . ?31151? .- - nut: .22: - if do not complete the remainder of Schedule B. 2a Are you a public school because you are operated by a state or subdivision of a state? if "Yes," Ci Yes No- explain how you are operated by a state or subdivision of a state. Do not complete the remainder of Schedule B. Are you a public school because you are operated wholly or predominantly from government funds Ci Yes No or property? if "Yes," explain how you are operated wholly or predominantly from QOVemment funds or property. Submit a copy of your funding agreement regarding government funding. Do not complete the remainder of Schedule B. 3 in what public school district, county, and state are you located? 4 Were you formed or substantially expanded at the time of public school desegre ation In the above Ci Yes No school district or county? 5 Has a state or federal administrative agency or judicial body ever determined you are racially Yes Ci No discriminatory? if ?Yes,? explain. 6 Has your right to receive financial aid or assistance from a governmental agency ever been revoked Ci Yes Ci No or suggended? If ?Yes.? explain. . 7 Do you or will you contract with another organization to develop, build, market, finance your Yes No facilities? lf "Yes," explain how that entity is selected, explain how the terms of ny contracts or other agreements are negotiated at arm's length, and explain how you determin that you will pay no more than fair market value for services. Note. Make sure your answer is consistent with the information provided in Pa line 7e. 8 ?Do you or will you manage your activities or facilities through your own employ or volunteers? If Yes Ci No attach a statement describing the activities that will be managed by othe the names of the persons or organizations that manage or will manage your activities or facilities, nd how these managers were or will be selected. Also, submit copies of any contracts, propo ed contracts, or other agreements regarding the provision of management services for your acti ties or facilities. Explain how the terms of any contracts or other agreements were or will be negotiated, and explain how you determine you will pay no more than fair market value for services. Note. Answer "Yes" if you manage or intend to manage your programs through your own employees or by using volunteers. Answer ?No? if you engage or intend to engage a separate organization or independent contractor. Make sure your answer is consistent with the information provided in Part Vill, line 7b. Establishment of Racially Nondiscriminatory Policy Information required by Revenue Procedure 115-50. 1 Have you adopted a racially nondiscriminatory policy as to students in your or anizing document, [3 Yes No bylaws, or by resolution of your governing body? If "Yes," state where the poll can be found or supply a copy of the policy. If you must adopt a nondiscriminatory polio as to students before submitting this application. See Publication 557. 2 Do your brochures, application forms, advertisements, and catalogues dealing student Yes Ci No adilrnissions, programs, and scholarships contain a statement of your racially no "idiscriminatory po icy? If "Yes," attach a representative sample of each document. If by checking the box to the right you agree that all future printed materials. including website content, will contain the reguired nondiscriminatory policy statement. 3 Have you published a notice of your nondiscriminatory policy in a newspaper 0 general circulation Yes Ci No that serves all racial segments of the community? (See the instructions for epedl?c requirements.) if explain. 0'9) 4 Does or will the organization (or any department or division within it) discriminate basis of race with respect to admissions: use of facilities or exercise of student privileges; faculty or administrative staff; or scholarship or loan programs? if ?Yes,? for any of the above, explain fully. Form 1023 (Rev. 6-2006) 184 February 2008 Vol. 59, No. 2 The Exempt Organization Tax Review 244 Obtained and Uploaded by the Center for Responsive Politics (OpenSecrets.org) Focus on the IRS Form 1023 (Rev. 6?2006) Name: Voter Alliance to improve Democracy EN: 20 5853546, Page 15 Schedule B. Schools, Colleges, and Universities (C 5 Complete the table below to show the racial composition for the current academic academic year, of: the student body, the faculty, and the administrative sta percentages for each racial category. if you are not operational. submit an estimate based on the best information avaliab the community served), ontinued) ear and projected for the next lff. Provide actual numbers rather than a (such as the racial composition of Racial Category Student Body Faculty Administrative Staff Current Year Next Year Current Year Next Yes? Current Year Next Year Total 6 in the table below, provide the number and amount of loans and scholarships awarc led to students enrolled by racial Procedure 75-50? it explain. (See instructions.) categories. Racial Category Number of Loans Amount of Loans Number of Scholarships Amount of Scholarships Current Year Next Year Current Year Next Year Curre??aNext Year Current Year Next Year Total 73 Attach a list of your incorporators, founders, board members, and donors of land or buildings, whether individuals or organizations. Do any of these individuals or organizations have an objective to maintain segregatld public or Cl Yes No private school education? if ?Yes,? explain. 8 Will you maintain records according to the non~discrimination provisions contained Revenue Ci Yes No Form 1023 (Rev. 6-2006) The Exempt Organization Tax Review February 2008 - Vol. 59, No. 2 185 245 Obtained and Uploaded by the Center for Responsive Politics (OpenSecrets.org) j?n-?hn?n Focus on the NB I Form Name: VoterAIllance to Improve Democracy EIN: 20 5853546 Page 16 ?9 Schedule 0. Hospitals and Medical Research Cir anizations Check the box if you are a hospital. See the instructions for a de?nition of the term ?hospital,? which includes an organization whose principal purpose or function is providing hospital 0 medical care. Complete Section below. - Check the box if you are a medical research organization operated in conjunction with a hospital. See the for a de?nition of the term ?medical research organization." which re ers to an organization whose principal purpose or function is medical research and which is dtectly engaged in the continuous active conduct of medical research In conjunction with a hospital. Compl Hospitals 1a Are all the doctors in the community eligible for staff privileges? if give the reasons why and Cl Yes explain how the medical staff is selected. 2a Do you or will you provide medical services to all individuals in your communityI who can pay for El Yes themselves or have private health insurance? it explain. Do you or will you provide medical services to all individuals in your community who participate in Yes Medicare? if explain. Do you or will you provide medical services to all individuals in your community who participate in El Yes Medicaid? If explain. 3a Do you or will you require persons covered by Medicare or Medicaid to pay a deposit before El Yes receiving services? if "Yes," explain. - Does the same deposit requirement, if any, apply to all other patients? if explainwill you maintain a full-time emergency room? if explain why you do not maintain a Yes full-time emergency room. Also, describe any emergency services that you provide. Do you have a policy on providing emergency services to persons without apparent means to pay? If Cl Yes "Yes." provide a copy of the policy. Do you have any arrangements with police, fire, and voluntary ambulance serv oes for the delivery or Cl Yes admission of emergency cases? If ?Yes,? describe the arrangements, including whether they are written or oral agreements. If written, submit copies of all such agreements. te Section llyou provide for a portion of your services and facilities to be used for charity patients? if "Yes," Yes answer so through 5a. Explain your policy regarding charity cases. including how you distinguish between charity care and bad debts. Submit a cepy of your written policy. Provide data on your past experience in admitting charity patients, including amounts you expand for treating charity care patients and types of services you provide to charity care patients. Describe any arrangements you have withfederai, state, or locai governments or government agencies for paying for the cost of treating charity care patients. Submit copies of any written agreements. No Do you provide services on a sliding fee schedule depending on ?nancial ability to pay? it ?Yes,? Ci Yes El No submit your sliding fee schedulewill you carry on a formal program of medical training or medical research? If ?Yes,? Ci Yes El No describe such programs, including the type of programs offered, the scope of such programs, and af?liations with other hospitals or medical care providers with which you can-y on the medical training or research programs. Do you or will you carry on a formal program of community education? If describe such Cl Yes No programs, including the type of programs offered, the scope of such program . and affiliation with other hospitals or medical care providers with which you offer community education programs. 7 Do you or will you provide of?ce space to physicians carrying on their own medical practices? if Ci Yes Cl No "Yes," describe the criteria for who may use the Space, explain the means used to determine that you are paid at least fair market value, and submit representative lease agreements. 8 is your board of directors comprised of a majority of individuals who are repr sentative of the Cl Yes Cl No community you serve? include a list of each board member?s name and busi ess, ?nancial, or professional relationship with the hospital. Also. identify each board member ho is representative of the community and describe how that individual is a community representativ . 9 Do you participate in any joint ventures? if "Yes," state your ownership perce tags in each joint Ci Yes Ci No venture,?iist your investment in each joint venture, describe the tax status of her participants in each joint venture (including whether they are section 501(c)(3) organizations), describe the activities of each joint venture, describe how you exercise control over the activities of ash joint venture, and describe how each joint venture furthers your exempt purposes. Also, submit copies of all agreements. Note. Make sure your answer is consistent with the information provided in Part Vill, line 8. Form 1023 (Rev. 6-2006) 186 February 2008 - Vol. 59, No. 2 The Exempt Organization Tax Review 246 Obtained and Uploaded by the Center for Responsive Politics (OpenSecrets.org) Focus on the IRS Form 1023 (Rev. 6-2006) Name: Voter Alliance to Improve Democracy Schedule C. Hospitals and Medical Research Organiz Hospitals (Continueci 10 Do you or will you manage your activities or facilities through your own employee attach a statement describing the activities that will be managed by others, managers were or will be selected. Also. submit copies of any contracts, propos how you determine you will pay no more than fair market value for services. Note. Answer "Yes" if you do manage or intend to manage your programs throu provided in Part Vill, line 7b. 11 incentives and attach copies of all written recruitment incentive policies. Do you or will you lease equipment, assets, or of?ce space from physicians who professional relationship with you? if ?Yes,? explain how you establish a fair mark lease. 12 13 physicians or other persons with whom you have a business relationship, aside fr ?Yes.? submit a copy of each purchase and sales contract and describe how you market value, including copies of appraisals. 14 Have you adopted a con?ict of interest policy consistent with the sample health conflict of interest policy In Appendix A of the Instructions? it "Yes," submit a cop explain how the policy has been adopted, such as by resolution of your govemlng explain how you will avoid any conflicts of interest in your business dealings. Medical Research Organizations persons or organizations that manage or will manage your activities or facilities, a tions (Continued) 5 or volunteers? if the names of the nd how these contracts, or other agreements regarding the provision of management services for your activit as or facilities. Explain how the terms of any contracts or other agreements were or will be nego iated, and explain your own employees or by using volunteers. Answer "No" if you engage or intend to engag a separate organization or independent contractor. Make sure your answer is consistent wit the information Do you or wili you offer recruitment incentives to physicians? if "Yes," describe ytiiur recruitment "lave a ?nancial or at value for the Have you purchased medical practices, ambulatory surgery centers, or other business assets from the purchase? if arrived at fair care organization of the policy and board. if EIN: 20 5853546 Page written agreements with each hospital that demonstrate continuing relationshi the hospital(s). 2 'Attach a schedule describing your present and proposed activities for the direct research; describe the nature of the activities, and the amount of money that has spent in carrying them out. - devoted to medical research. 1 Name the hospitals with which you have a relationship and describe the relationilp. Attach copies? between you and onduct of medical been or will be 3 Attach a schedule of assets showing their fair market value and the portion of your assets directly Form 1023 (Rev. 6-2006) 247 The Exempt Organization Tax Review February 2008 Vol. 59, No. 2 187 Obtained and Uploaded by the Center for Responsive Politics (OpenSecrets.org) Focus on the IRS Form-1023 (Rev. 5.2005) Name; VoterAlliance to Improve Democracy em; 20 5853546 Page 13 Schedule D. Section 509(a)(3) Supporting Or anizations ldentifyinanformation About the Supported Organizational) 1 State the names, addresses, and EINs of the supported organizations. if additional space ls needed, attach a separate sheet. Name . Addres EIN 2 Are all supported organizations listed in line 1 public charities under section 50 or if "Yes," El Yes No go to Section II. If go to line 3. 3 Do the supported organizations have tax-exempt status under section 501(c)(4) 501(c)(5), or Yes El No 501(c)(6)? . If ?Yes.? for each 501(c)(4), (5), or (6) organization supported, provide the folio mg ?nancial information: - A . Part IX-A. Statement of Revenues and Expenses, lines 1?13 and Part X, lines 6b(ii)(a), 6b(il)(b), and 7. if attach a statement describing how each organization you support is a aublic charity under section or (2). Section ll Relationship with Supported Test To be classi?ed as a supporting organization. an organization must meet one of three relationship tests: Test 1: ?Operated, supervised. or controlled by" one or more publicly supported organizations, or Test 2: ?Supervised or controlled in connection with" one or more publicly sup sorted organizations, or Test 3: "Operated in connection with? one or more publicly supported organizations. 1 Information to establish the ?operated, supervised, or controlled by" reiatlonsh (Test 1) is a majority of your govemlng board or of?cers elected or appointed by the pported Yes No organization(s)? If "Yes," describe the process by which your governing board is appointed and elected; go to Section if continua to line 2. .2 Information to establish the ?supervised or controlled in connection with" relationship (Test 2) Does a majority of your governing board consist of individuals who also serve on the governing El Yes No board of the supported organization(s)7 it "Yes," describe the process by which your governing board is appointed and elected; go to Section If go to line 3. 3 lnforrnatlon to establish the ?operated in connection with" responsiveness test (Test 3) Are you a trust from which the named supported organization(s) can enforce nd compel an El Yes No accounting under state law? If "Yes," explain whether you advised the suppo ed organization(s) in writing of these rights and provide a copy of the written communication docu enting this; go to Section ll, line 5. If go to line 4a. 4 Information to establish the alternative ?operated in connection with? responsiveness test (Test 3) a Do the of?cers, directors, tmstees, or members of the supported organizationls) elect or appoint one Yes No or more of your of?cers, directors, or trustees? if "Yes," explain and provide cocumentation; go to line 4d, below. If go to line 4b. Do one or more members of the governing body of the supported organization(s) also serve as your Yes Cl No of?cers, directors, or trustees or hold other important offices with respect to you? if "Yes," explain and provide documentation; go to line 4d, below. if 90 to line 4c. Do your of?cers, directors, or trustees maintain a close and continuous worki'ig relationship with the Yes No of?cers, directors, or trustees of the supported organization(s)? If ?Yes,? expl in and provide documentation. Do the supported organization(s) have a signi?cant voice in your investment olicies. in the making Cl Yes Cl No and timing of grants, and in otherwise directing the use of your income or as ets? if ?Yes,? explain and provide documentation. Describe and provide copies of written communications documenting how ycu made the supported organization(s) aware of your supporting activities. Form 1023 (Rev. 5-2005) 188 February 2008 - Vol. 59, No. 2 - - The Exempt Organization Tax Review 248 Obtained and Uploaded by the Center for Responsive Politics (OpenSecrets.org) Focus on the IRS Form 1023(Flev. 6-2006) Name: VoterAlIlance to Improve Democracy EIN: 20 5853546 page 19 Schedule D. Section 509(a)(3) Supporting Organizations (Continued) Section II Relationship with Supported Tests (Continued) 5 Information to establish the "operated In connection with" integral part test est i) Do you conduct activities that would otherwise be carried out by the supported If Yes No ?Yes,? explain and_go to Section Ill. if continue to line 6a. 6 information to establish the alternative ?operated in connection with" integral part test (Test 8) a Do you distribute at least 85% of your annual net income to the supported orgarization(s)? If "Yesline 6b. (See instructions.) if state the percentage of your income that you distribute to each supportec organization. Also explain how you ensure that the supported organization(s} are attentive to your operations. How much do you contribute annually to each supported organization? Attach a schedule. What is the total annual revenue of each supported organization? If you need add tional space, attach a list. Do you or the supported your funds for support of a part cular program or Cl Yes No activity? If "Yes," explain. 7a Does your organizing document specify the supported organization(s) by name? If "Yes." state the Cl Yes No article and paragraph number and go to Section if answer line 7b. Attach a statement describing whether there has been an historic and continuing "elationship between you and the supported organization(s). Wizational Test 1a If you met relationship Test 1 or Test 2 in Section II, your organizing document st specify the Yes No organization(s) by name, or by naming a similar purpose or charitable ass of bene?ciaries. If your organizing document complies with this requirement, answer ?Yes." If your organizing document does not comply with this requirement, answer and se the instructions. If you met relationship Test 3 in Section ll, your organizing document must gener ly specify the Yes No supported organization(s) by name. if your organizing document complies with requirement. - answer "Yes," and go to Section IV. If your organizing document does not comply with this requirement, answer and see the instructions. Disquali?ed Person Test You do not qualify as a supporting organization if you are controlled directly or indirecin by one or more disqualified persons (as defined in section 4946) other than foundation managers or one or more organizatzons that you support. Foundation managers who are also disqualified persons for another reason are disqualified persons with respect to you. 1a Do any persons who are disquali?ed persons with respect to you, (except individu 5 who are Yes No disqualified persons only because they are foundation managers), appoint any of our foundation managers? if ?Yes,? (1) describe the process by which disquali?ed persons appoi any of your foundation managers. (2) provide the names of these disquali?ed persons and the oundatlon managers they appoint, and (3) explain how control is vested over your operation (including assets and activities) by persons other than disquali?ed persons. Do any persons who have a farniiy or business relationship with any disquali?ed respect to you, (except individuals who are disquali?ed persons only because the managers), appoint any of your foundation managers? if "Yes," (1) describe the pr individuals with a family or business relationship with disqualified persons appoint foundation managers, (2) provide the names of these disqualified persons, the indi family or business relationship with disquali?ed persons, and the foundation mana and (3) explain how control is vested over your operations (including assets and a tivities) in individuals other than disquali?ed persons. Do any persons who are disqualified persons, (except individuals who are disquall led persons only Yes Ci No because they are foundation managers), have any in?uence regarding your operati ns, including your assets or activities? If "Yes," (1) provide the names of these disqualified persons. explain how influence is exerted over your operations (including assets and activities), and (3) plain how control rsons with Yes No are foundation is vested over your operations (including assets and activities) by individuals other than disquali?ed persons. Form 1023 (Rev. 6-2006) The Exempt Organization Tax Review February 2008 - Vol. 59, No. 2 189 249 Obtained and Uploaded by the Center for Responsive Politics (OpenSecrets.org) FocUs on the IRS - Form 1023 (Rev. 6-2006) Name: VoterAlliance to improve Democracy em; 20 5353546 page 20 Schedule E. (?anizations Not Filianorm 1023 Within 27 MO?lths of Formation SchedulaE is intended to determine whether you are eligible for tax exemption undfr section 501(c)(3) from the postmark date of your application or from your date of incorporation or formation, whichever is ea ier. If you are not eligible for tax exemption under section 501(c)(3) from your date of incorporation or formation, Schedule is ISO intended to determine whether you are eligible for tax exemption under section 501(c)(4) for the period between your date df incorporation or formation and the postmark date of your application. 1 Are you a church, association of churches, or integrated auxiliary of a church? if ?Yes,? complete Yes No Schedule A and stop here. Do not complete the remainder of Schedule E. 2a Are you a public charity with annual gross receipts that are normally $5,000 or less? If ?Yes,? stop Yes No here. Answer "No" if you are a private foundation, regardless of your gross receipts. If your gross receipts were normally more than $5,000, are you ?ling this appli cation within 90 days Yes No from the end of the tax year in which your gross receipts were normally more han $5,000? If "Yes," stop here. 3a Were you included as a subordinate in a group exemption application or letter? If go to line 4. Yes CI No If you were included as a subordinate in a group exemption letter. are you filing this application Cl Yes No within 27 months from the date you werenoti?ed by the organization holding the group exemption letter or the lntemal Revenue Service that you cease to be covered by the group exemption letter? If "Yes," stop here. 0 If you were included as a subordinate In a timely ?led group exemption request that was denied, are Cl Yes Cl No you filing this application within 27 months from the postmark date of the int al Revenue Service ?nal adverse ruling letter? If ?Yes,? stop here. 4 Were you created on or before October 9, 1969? If ?Yes,? stop here. Do not complete the remainder El Yes CI No of this schedule. 5 if you answered ?No? to lines 1 through 4, we cannot recognize you as tax from your date of Yes No formation unless you qualify for an extension of time to apply for exemption. 0 you wish to request an extension of time to apply to be recognized as exempt from the date you are formed? If ?Yes,? attach a statement explaining why you did not ?le this application within the 7-month period. Do not answer lines line 6a. date of this application. Therefore, do you want us to treat this application as a request for tax Be It you answered "No" to line 5, you can only be exempt under section 501(c)(t from the postmark CI Yes No ling. Complete Part X, exemption from the postmark date? If "Yes," you are eligible for an advance line 6a. If you will be treated as a private foundation. Note. Be sure your ruling eligibility agrees with your answer to Part X, line 6. Do you anticipate signi?cant changes in your sources of support in the future? if ?Yes,? complete Yes No line 7 below. Form 1023 (Rev. 5-2006) . .l I run'?E?J-Fzrg?a: . ~49: In @141." - 3.3; I I: - 190 February 2008 - Vol. 59, No. 2 _The Exempt Organization Tax Review 250 Obtained and Uploaded by the Center for Responsive Politics (OpenSecrets.org) Focus on the le Form 1023 (Rev. 6-2006) Name: VoterAliiance to Improve Democracy Schedule E. organizations Not Filing Form 1023 Within 27 Monti 7 Complete this item only if you answered "Yes" to line 6b. Include projected revenuei for the ?rst two full years following the current tax year. 20 5853546 is of Formation (Continuec? Page 21 Type of Revenue Projected revenue fo' 2 years following current tax year Gifts, grants. and contributions received (do not include unusual grants) From From To To - Total Membership fees received Gross investment income Net unrelated business income Taxes levied for your bene?t of services or facilities furnished by a governmental unit without charge (not including the value of services generally furnished to the public without charge) Any revenue not otherwise listed above or in lines 9-12 below (attach an Itemized list) Total of lines 1 through 7 Gross receipts from admissions, merchandise sold, or services performed, or furnishing of facilities in any activity that is related to your exempt purposes (attach itemized list) 10 Total of lines 8 and 9 11 Net gain or loss on sale of capital assets (attach an itemized list) 12 Unusual grants 13 Total revenue. Add lines 10 through 12 8 According to your answers. you are only eligible for tax exemption under section 501(c)(3) from the postmark date of your application. However, you may be eligible for tax exemptlor under section 501 from your date of formation to the postmark date of the Form 1023. Tax section 501(c)(4) allows exemption from federal income tax, but generally not ded contributions under Code section 170. Check the box at right if you want us to tre this as a request for exemption under 501(c)(4) from your date of formation to the postmark date. xemption under tibility of Attach a completed Page 1 of Form 1024, Application for Recognition of Exemption Under Section 501(a), to this application. Form 1023 (Rev. 6-2006) - A The Exempt Organization Tax Review Obtained and Uploaded by the Center for Responsive P0 251 +bruary 2008 - Vol. 59, No. 2 191 litics (OpenSecrets.org) . aqagw~__ - leT'J'. m? 7737?: .. - -.-- ?now-.4 Focus on the 1 Form 1023 (Rev. 6-2006) Name: Voter Alliance to improve Democracy Schedule F. Homes for the Elderly or Handicapped an General information About Your Housing . EIN: 20 ?5853546 Low-income Housing Describe the type of housing you provide. Page 22 2 Provide copies of any application forms you use for admission. 3 Explain how the public is made aware of your facility. 4a Provide a description of each facility. What is the total number of residents each facility can accommodate? What is your current number of residents in each facility? Describe each facility in terms of whether residents rent or purchase housing from you. Attach a sample copy of your residency or homeownership contract or agreer+nt Do you participate in any joint ventures? if "Yes," state your ownership percen age in each joint Yes venture, list your investment in each joint venture, describe the tax status of ot er participants in each joint venture (including whether they are section 501(c)(3) organizations), escribe the activities of each joint venture, describe how you exercise control over the activities of ach joint venture. and describe how each joint venture furthers your exempt purposes. Also, submit opies of all joint venture agreements. Note. Make sure your answer is consistent with the information provided in line 8. Do you or will you contract with another organization to develop, build. marke or ?nance your housing? if "Yes," explain how that entity is selected, explain how the terms 0 any contract(s) are negotiated at arm?s length. and explain how you determine you will pay no than fair market value for services. Yes Note. Make sure your answer is consistent with the information provided in rt Vlii, line 7awill you manage your activities or facilities through your own employees or volunteers? it attach a statement describing the activities that will be managed by othe re, the names of the persons or organizations that manage or will manage your activities or facilitle}, and how these El Yes managers were or will beselected. Also, submit copies of any contracts. prop sed contracts, or other agreements regarding the provision of management services for your ac ivities or facilities. Explain how the terms of any contracts or other agreements Were or will be negotiated, and explain how you determine you will pay no more than fair market vaiUe for services. Note. Answer ?Yes? if you do manage or intend to manage your programs through your own employees or by using volunteers. Answer ?No? if you engage or intend to engage a separate organization or independent contractor. Make sure your answer is consistent with the information provided in Part Vlii, line 7b. Do you participate in any government housing programs? if ?Yes,? describe these programs. Yes Do you own the facility? If describe any enforceable rights you possess to purchase the facility in the future; 90 to line 100. If "Yes," answor line 10b. How did you acquire the facility? For example, did you develop it yourself, purchase a project, etc. Attach all contracts, transfer agreements, or other documents connected with the acquisition of the facility. Do you lease the facility or the land on which it is located? if "Yes," describe the parties to the iease(s) and provide copies of all leases. . Ci Yes Yes Form 1023 (Rev. 6-2006) 192 February 2008 - Vol. 59, No. 2 252 Obtained and Uploaded by the Center for Responsive Politics (OpenSecrets.org) The Exempt Organization Tax Review Focus on the RS Form 1023 (Rev. 6-2006) 1a 2a Name: Voter Alliance to improve Democracy Schedule F. Homes for the Elderly or Handicapped and Low-In Homes for the Elderly or Handicapped Do you provide housing for the elderly? if "Yes," describe who quali?es for your age, or other criteria and explain how you select persons for your housin Do you provide housing for the handicapped? if "Yes," describe who qualifies for terms of disability. income levels, or other criteria and explain how you select per: housing. - - Do you charge an entrance or founder?s fee? If "Yes," describe what this charge a one-time fee, how the fee is determined. whether it is payable in a lump sum or basis. whether it is refundable, and the circumstances, if any. under which it may Do you charge periodic fees or maintenance charges? If ?Yes.? describe what the and how they are determined. is your housing affordable to a signi?cant segment of the elderly or handicapped community? identify your community. Also, if "Yes," explain how you determine affordable. ousing in terms of 9. your housing in one for your overs. whether it is on an installment be waived. 3e charges cover :ersons in the our housing is EIN: 2D - 5853546 some Housing 1Continued) Yes Yes Yes Yes Yes Page you have an established policy concerning residents who become unable to charges? If ?Yes,? describe your established policy. Do you have any arrangements with government welfare agencies or others to ah the cost of maintaining residents who become unable to pay their regular charge these arrangements. Do you have arrangements for the healthcare needs of your residents? if ?Yes,? d' arrangements. By their regular orb all or part of . If "Yes," describe ascribe these Yes Yes Yes No No No 5 MLow-income Housing 1 Are your facilities designed to meet the physical, emotional, recreational, social, re other similar needs'of the elderly or handicapped? if ?Yes,? describe these design eligious. and/or features. Do you provide low?income housing? If ?Yes,? describe who qualifies for your hoising in terms of income levels or other criteria. and describe how you select persons for your hou ing. "Yes," describe what these charges cover and how they are determined. in addition to rent or mortgage payments, do residents pay, periodic fees or malnTnance chargesyour housing affordable to low income residents? If ?Yes,? describe how your affordable to low-income residents. Note. Revenue Procedure 96-32, 1996-1 03. 717, provides guidelines for providi housing that will be treated as charitable. (At least 75% of the units are occupied tenants or 40% are occupied by tenants earning not more than 120% of the very for the area.) Do you impose any restrictions to make sure that your housing remains affordable residents? If "Yes," describe these restrictions. Do you provide social services to residents? If "Yes," describe these services. using is made 9 low-income by low?income low-income levels eto low-income El Yes DYes Ci Yes No Form 1023 (Rev. 6-2006) The Exempt Organization Tax Review February 2008 - Vol. 59, No. 2 253 Obtained and Uploaded by the Center for Responsive Politics (OpenSecrets.org) 193 1' Focus on the IRS Name: Voter Alliance to Improve Democracy Schedule G. Successors to Other Organi ations ta Are you a successor to a for-pro?t organization? If "Yes," explain the relatior'shlp with the predecessor organization that resulted in your creation and complete line ?lb. Explain why you took over the activities or assets of a for-pro?t organization or for-pro?t to nonprofit status. Are you a successor to an organization other than a for-pro?t organization? An wer "Yes" if you have taken or will take over the activities of another organization; or you have taken will take over 25% or more of the fair market value of the net assets of another organization. if explain the relationship with the other organzatlon that resulted In your creation. Provide the tax status of the predecessor organization. Did you or did an organization to which you are a successor previously apply tax exemption under section 501(c)(3) or any other section of the Code? if ?Yes,? explain how the application was resolved. Was your prior tax exemption or the tax exemption of an organization to whic you are a successor revoked or suspended? if ?Yes.? explain. Include a description of the correctio you made to i re-estabiish tax exemption. 3 Explain why you took over the activities or assets of another organization. Form 1023 (Flev. 6-2006) 20 5853546 Page 24 Yes No I, converted from Yes Provide the name. last address, and EN of the predecessor organization and cescribe its activities. Name: EIN: Address: 4 List the owners, partners, principal stockholders, of?cers, and governing board members of the predecessor organization. if: Attach a separate sheet if additional space is needed. Name Address Share/Interest (if a tor-prom) .. 'irj. ii l-l?will any of the persons listed in line 4, maintain a working relationship you? If "Yes," describe the relationship in detail and include copies of any agreements with Any of these persons or with any for-profit organizations in which these persons own more than a 35% interest. Yes No Were any assets transferred. whether by gift or sale, from the predecessor on; if "Yes," provide a list of assets, indicate the value of each asset, explain how determined, and attach an appraisal, if available. For each asset listed. also e: was by gift. sale,?or combination thereof. Were any restrictions placed on the use or sale of the assets? If "Yes," explai. Provide a copy of the agreement(s) of sale or transfer. anization to you? the value was :plain if the transfer 1 the restrictions. Were any debts or liabilities transferred from the predecessor for?pro?t organifatlon'to you? if "Yes," provide a list of the debts or liabilities that were transferred to you, ir each. how the amount was determined. and the name of the person to whom owed. Will you lease or rent?a??y property or equipment previously owned or used by for-pro?t organization, or from persons listed in line 4, or from for-pro?t orgar persons own more than a 35% interest? If ?Yes,? submit a copy of the lease dlcating the amount of the debt or liability is the predecessor izations in which these 3r rental agreement(s). indicate how the lease or rental value of the property or equipment was Will you lease or rent property or equipment to persons listed in line 4, or to tor-profit organizations in which these persons own more than a 35% interest? if "Yes," attach a list of the property or equipment. provide a copy of the lease or rental agreement(s), and indicate how the lease or rental value of the property or equipment was determinedYes Form 1023 (Rev. 6-2006) 194 February 2008 - Vol. 59, No. 2 254 Obtained and Uploaded by the Center for Responsive The Exempt Organization Tax Review olitics (OpenSecrets.org) ,r Focus on the IRS Form 1023 (Rev. 6-2006) Name: Voter Alliance to Improve Democracy Schedule H. Organizations Providing Scholarships, Fellowships, Educational Grants to individuals and Private Foundations Requesting Advance Approval Names of individual recipients are not required to be listed in "(Dll? EIN: 20- 5853545 Page 25 Loans, or Other Educational of Individual Grant Procedures heduie H. Public charities and private foundations complete lines 1a throggh 7 of this section. See the instructions to Part if you are not sure whether you are a pu foundation. lic charity or a private Describe the types of educational grants you provide to individuals, such as fellowships, loans, etc. Describe the purpose and amount of your scholarships, fellowships. and other educa award. If you award educational loans, explain the terms of the loans Gnterest rate, length, fo Specify how your program is publicized. Provide copies of any solicitation or announcement materials. Provide a sample copy of the application used. Do you maintain case histories showing recipients of your scholarships, fellowships, loans, or other educational grants, including names, addresses, purposes of awards, grant, manner of selection, and relationship (if any) to of?cers, trustees. or donors of refer to the instructions. Describe the speci?c criteria you use to who is eligible for your program. (F criteria could consist of graduating high school students from a particular high school scholarly works about American history, etc.) Describe the Speci?c criteria you use to select recipients. (Forexample, speci?c seleo academic performance, ?nancial need, etc.) Describe how you determine the number of grants that will be made annually. Describe how you determine the amount of each of your grants. ional grants and loans that you rgiveness, etc.). ducational Ci Yes No mount of each unds to you? if or example, eligibility selection who will attend college, writers of tion criteria could consist of prior (For example, speci?c requirements or conditions could consist of attendance at a to r-year college, maintaining a certain Describe any requirement or condition that you Impose on recipients to obtain, malnTn, or qualify for renewal of a grant. grade point average, teaching in public school after graduation from college, etc.) Describe your procedures for supervising the scholarships, fellowships, educational Icians, or other educational grants. Describe whether you obtain reports and grade transcripts from recipients, or you pay an arrangement whereby the school will apply the grant funds only for enrolled studer describe your procedures for taking action if the terms of the award are violated. Who is on the selection committee for the awards made under your program, lncludln members, criteria for committee membership, and the method of replacing committee 1 grants directly to a school under its who are In good standing. Also, 9 names of current committee members? 255 Are relatives of members of the selection committee, or of your officers, directors, or ubstantial Ci Yes No contributors eligible for awards made under your program? if ?Yes,? what measures re taken to ensure unbiased selections? Note. If you are a private foundation, you are not permitted to provide educational grant to disquali?ed persons. Disquali?ed persons include your substantial contributors and foundation man gers and certain family members of disquali?ed persons. Private foundations complete lines 1a through 4f of this section. Public charities do not . complete this section. 1a if we determine that you are a private foundation. do you want this application to be Yes No NIA considered as a request for advance approval of grant making procedures? For which section(s) do you wish to be considered? or fellowship grant to an individual for study at an educational institution CI grants, Including loans, to an individual for travel, study, or other similar purposes, to enhance a particular skill of the grantee or to produce a speci?c product 2 Do you represent that you will (1) arrange to receive and review grantee reports annually El Yes El No and upon completion of the purpose for which the grant was awarded, (2) Investigate diversions of funds from their intended purposes, and (3) take all reasonable and appropriate steps to recover diverted funds, ensure other grant funds held by a grantee are used for their intended purposes, and withhold further payments to grantees until you obtain grantees' assurances that future diversions will not occur and that grantees wil take extraordinary precautions to prevent future diversions from occurring? 3 Do you represent that you will maintain all records relating to individual grants, includ ng Cl Yes CI No information obtained to evaluate grantees, identify whether a grantee is a disquali?ed person, establish the amount and purpose of each grant. and establish that you undertook the supervision and investigation of grants described in line Form 1023 (Rev. 5-2005) The Exempt Organization Tax Review February 2008 - Vol. 59, No. 2 195 Obtained and Uploaded by the Center for Responsive Pdlitics (OpenSecrets.org) Focus on the Form 1023 (Rev. 6-2006) Name: Voter Alliance to Improve Democracy 5m; 20 5853546 p39,3 26 Schedule H. Organizations Providing Scholarships, Fellowships, Educational Loans, or Other Educational Grants to individuals and Private Foundations Requesting Advance Approval of individual Grant Procedures (Continued) Private foundations complete lines 1a through 4f of this section. Public charities do not complete this section. (Continued) 4a Do you or will you award scholarships,fellowships, and educational loans to attend an educational institution based on the status of an individual being an employee a particular employer? if "Yes," complete lines 4b through 4f. El Yes [1 No Will you comply with the seven conditions and either the percentage tests ts and circumstances test for scholarships, fellowships, and educational loans to atten an educational institution as set forth in Revenue Procedures 76-47, 1976?2 CB. 70, and 80-39, 1980-2 CB. 772, which apply to inducement, selection committee, eligi requirements, objective basis of selection, employment, course of study, and 0 her objectives? (See lines 40, 4d, and 4e, regarding the percentage tests.) Do you or will you provide scholarships,? fellowships, or educational loans to a educational institution to employees of a particular employer? if "Yes," will you award grants to 10% or fewer of the eligible applicants who were actually considered by the selection committee in Selecting recipients of grants in that year as provided by Revenue Procedures 76-47 and 80739? Cl Yes No nd an Yes EINO El Yes Do you provide scholarships, fellowships, or educational loans to attend an educational institution to children of employees of a particular employer? If ?Yes,? will you award grants to 25% or fewer of the eligible applicants who were actually considered by the selection committee in selecting recipients of grants in that year as provided by Revenue Procedures 76?47 and 80~397 If go to line 49. Elm: Yes NIA El Yes if you provide scholarships, fellowships, or educational loans to attend an edu aticnal No institution to children of employees of a particular employer, will you award gr ts to 10% or fewer of the number of employees' children who can be shown to be eligibl for grants (whether or not they submitted an application) in that year, as provided by Rev nue Procedures 7647 and 80-39? El Yes El NIA If ?Yes,? describe how you will determine who can be shown to be eligible for rants without submitting an application, such as by obtaining written statements or ther information about the expectations of employees' children to attend an educat nai institution. if go to line 4f. Note. Statistical or sampling techniques are not acceptable. See Revenue Pro edure 85-51, 1985-2 CB. 717, for additional information. if you provide scholarships, fellowships, or educational loans to attend an edu ational institution to children of employees of a particular employer without regard to ither the 25% limitation described in line 4d, or the 10% limitation described in line 4e, award grants based on facts and circumstances that demonstrate that the gra be considered compensation for past, present, or future services or othenivise provide a signi?cant benefit to the particular employer? If ?Yes,? describe the facts and circumstances that you believe will demonstrate that the grants are neither compensatory nor a significant bene?t to the particular employer. In your explanation, describe why you cannot satisfy either the 25% test described in line 4d or the 10% test described in line 4e. Cl Yes No Form 1023 (Rev. 6-2006), 213;; 195 February 2008 - Vol. 59. No. 2 - 256 The Exempt Organization Tax Review Obtained and Uploaded by the Center for Responsive Politics (OpenSecrets.org) Focus on the IRS Form 1023 Checklist (Revised June 2006). Application for Recognition of Exemption under Section 501(c)(3) of the Internal Revenue Code Note. Retain a copy of the completed Form 1023 in your permanent records. Refer to the General Instructions regarding Public Inspection of approved applications. Check each box to ?nish your application (Form 1023). Send this completed Checklist with your filled-in application. if you have not answered all the items below, your application may be returned to you as incomplete. El Assemble the application and materials in this order: Form 1023 Checklist Form 2848, Power of Attorney and Declaration of Representative (if filing Form 8821, Tax Information Authorization (if filing) Expedite request (if requesting) I Application (Form 1023 and Schedules A through H, as required) Articles of organization Amendments to articles of organization in chronological order Bylaws or other rules of operation and amendments Documentation of nondiscriminatory policy for schools. as required by Schedule Form 5768, Election/Revocation of Election by an Eligible Section. 501(c)(3) Organization To Make Expenditures To Influence Legislation (if filing) All other attachments, including explanations, financial data, and printed materials or publications. Label each page with name and EIN. User fee payment placed in envelope on top of checklist. .DO NOT STAPLE or otherwise attach your'check or money order to your application. Instead, just place it in the envelope. El Employer Identi?cation Number (EIN) El Completed Parts through XI of the application, including any requested 'nformation and any required Schedules A through H. You must provide specific details about your past, present. and planned activities. Generalizations or failure to answer questions in the Form 1023 application will prevent us from recognizing you as tax exempt. Describe your purposes and proposed activities in specific easily undenstood terms. Financial information should correspond with proposed activities. Schedules. Submit only those schedules that apply to you and check either ?Yes? or "No" below. Schedule A Yes No_ Schedule Yes No Schedule Yes_ No_ Schedule Yes No (Schedule No__ Schedule Yes_ No__ Schedule Yes_ No__ Schedule Yes-__ The Exempt Organization Tax Review February 2008 - Vol. 59, No. 2 197 257 Obtained and Uploaded by the Center for Responsive Politics (OpenSecrets.org) Focus on the IRS An exact copy of your complete articles of organization (creating document). Absence of the proper purpose and dissolution clauses is the number one reason for delays in the Issuanze of determination letters. L?ocation of Purpose Clause from Part line 1 (Page, Article and Paragraph Number) Location of Dissolution Clause from Part line 2b or 2c (Page. Article and Paragraph Number) or by operation of state law - El Signature of an of?cer, director, trustee, or other of?cial who is authorized to sign the application. . Signature at Part XI of Form 1023. El Your name on the application must be the same as your legal name as it appears in your articles of organization. Send completed Form 1023, user fee payment, and all other required information, to: i: internal Revenue Service PO. Box 192 Covington, KY 41012-0192 If you are using express mail or a delivery service, send FOrm 1023, user fee payment, and attachments to: Internal Revenue Service 201 West Rivercenter Blvd. Attn: Extracting Stop 312 Covington, KY 41011 1?3: 198 February 2008 - Vol. 59, No. 2 The Exempt Organization Tax Review 258 Obtained and Uploaded by the Center for Responsive Politics (OpenSecrets.org) Voter Alliance to Improve Democracy E.I.N. 20-5853546 Form 1023 Attachment A Part II, line 1 - Articles of Incorporation See Exhibit A Part II, line 5 - Bylaws See Exhibit Part IV - Narrative Description of Activities The Voter Alliance to Improve Democracy ("Vote was formed to raise Americans? awareness about a range of progressive issues and to encourage Americans to vote and engage in other forms of civic participation. Speci?cally, the organization will conduct public opinion research; nonpartisan issue advocacy, including educat? ing voters about candidates? positions on issues and encourage candidates for public of?ce to adopt positions and engage in public debate on particular issues; and voter registration and get-out-the-vote activities. Vote AID will engage Americans in civic participation by raising their awareness and advocating positions on issues that touch their lives and their communities such as war and peace, health care, unemployment, poverty, the environment, reproductive health and human rights. Through this pairing of issues and civic participation, Vote AID intends to influence state and federal policies that impact all Americans. Polling and Opinion Research Vote AID plans to conduct polling and other survey research to support its programs and determine public views on issues. While some of the research will be conducted by Vote AID exclusively, there is also an interest in collaborating with other organizations that work on similar issues. In some cases Vote AID will share the results of its research with the media and general public; in other cases the research will be used exclu- sively to inform its programs and the activities of other organizations. Vote AID intends to ask a range of questions to determine peoples? attitudes about Specific issues. The issues covered in the surveys will be identi?ed by staff or consultants who will make recommendations for ?nal approval by the Board of Directors. The most important criteria for selection will be whether an issue has the potential to motivate individuals to vote or engage in other types of civic participation. Based on the survey results, Vote AID will identify 2-3 issues that will be the focus of its work for a 2-year period. Vote AID intends to ask questions about attitudes toward public of?cials, celebrities and other well-known individuals in order to determine who might motivate individuals to vote. The research will also attempt to identify attitudes toward current elected officials, who may also be or are likely to become candidates for public office in the election cycle. Vote AID could provide a sample survey questionnaire. The Exempt Organization Tax Review 259 Focus on the IRS In order to condu ct public research in a cost effective manner, Vote AID int ends to buy questions on polls being conducted by other organizations and conduct joint research projects. For example, Vote AID will identify other organizations that may be interested in similar issues and work with them to conduct polls and focus groups. Vote AID will review public opinion research and information that is available through public sources including the Internet. Vote AID intends to provide links from its website to other organizations? websites to make this information more readily available. Particularly given Vote "ted budget, providing ready access to other relevant 5 and research will be critical to the group?s educati nal objectives. Voter Registrati Vote AID intends to motivate the general public to register to vote through discussion of critical issues. Research demonstrates that by raising current issues of importance, organizations are likely to increase their success in getting mdividuals to register to vote and become active in the democratic process. Based on public opinion research, Vc te AID will select the issues that that have the greatest hance of motivating voters to vote. After identifying most compelling issues, Vote Aid will design mate that ask prospective voters to register to vote in rder to have their voices heard on these issues. In so cases the issues will be presented with Vote po 'tion stated. For example, a pamphlet might state: "It is time to ele public of?cials who understand our issues and protect our environment and right to affordab health care. The threat of global warming has go unaddressed' of Americans has no health e. Register and vote this year so - you can point 5 country in a different direction.? "Many of us in the community are fed up with Congress giving axbreaks to the rich and failing to fund our schoo adequately to give children a better education We know the only way to get the attention of poli 'cians is to increase the numbers of people voting. you registered to vote or can I help you registe today so your voice is heard when we vote in Nov mber?? Vote AID will (1 sign and target its voter registration and other activitie based on demographic informatiOn as well as issue terests. Extensive and sophisticated information is now available to better understand demo- graphic groups and even identify speci?c individual interests. This targ- used to select parti? sting and microtargeting data will be :ular groups of prospective registrants and voters and to tailor messages that? are most likely to be successful in ativating them to vote. Vote AID will use information from a state voter ?le, such as previOus voting history on ample, church men tal organizations, 1: available through 1 activities and mes global warming, fo ballot initiatives, as well as, for ex- ibership, membership in environmen? tagazine subscriptions, and other data vendors to target its voter registration sages. The message listed above on example, may be used to reach out to February 2008 Vol. 59, Na. 2 199 Obtained and Uploaded by the Center for Responsive Politics (OpenSecrets.org) L3- .- win .p .- Focus on the IRS individuals who are members of environmental organi- zations in order to motivate them to register and vote. Similarly, communications highlighting the issues sur? rounding public school education and encouraging peOple to register and vote might be targeted to parents of school age children. It is anticipated that using micro- targeting techniques will increase (1) the likelihood of individuals responding to the messages to vote and (2) the cost effectiveness of the programs by avoiding hap- hazard approaches to general populations. Voter Guides Vote AID will prepare and distribute a series of voter guides to the general public through canvasses and the Internet. The races for which the guides will be prepared will be targeted based on a variety of factors including: areas where there are signi?cant numbers of Vote AID members or activists or where Vote AID might be likely to attract new supporters based on its analysis of micro- targeting data geographic diversity (at least one race will be selected in each geographic region of the country); districts of important incumbent legislators such as chairs of key committees that work on issues of impor- tance to Vote and areas where the issues that Vote AID has identi?ed have the greatest likelihood of becom? ing part of the public debate. The guides will provide a nonpartisan presentation of all viable candidates in a particular race. The candidate information will include: biographical information, sources of campaign contributions, ratings by interest groups and positions on the issues identified through the public opinion research discussed above. In light of the historic dif?culty in getting candidates to respond to these questionnaires, Vote AID does not plan to send questionnaires to candidates seeking responses. Vote AID will conduct research on every candidate using a broad range of sources (many of which were listed in RS Fact Sheet 2006-17, including: periodicals, public statements, campaign literature, websites, Project Vote Smart and other organizations. Each issue covered in a guide will be described in neutral, unbiased terms accompanied by a summary of the public information available on the candidates? positions. It a candidate has no publicly available position on an issue, the guide will note that the I candidate?s position is unknown. Over the course of the election cycle, Vote AID will send out 3-4 guides covering the candidates in each race selected. The guides will be distributed in the fall leading up to the election and will be available on the website through Election Day. Each guide will cover one issue or a few issue areas. For example, the first guide might cover environmental issues, followed by guides on edu- cation, health issues (including reproductive health), and jobs. Vote AID will distribute some of the guides by canvass; depending on the duration and coverage of the canvass, households will get one or more of the voter guides. The guides will also be disseminated through e?mail and on the Vote AID website. Individuals may select the campaigns and issues in which they have an interest and view that information. Through the site, Vote AID will provide links to the resources used to prepare the guides and other information available on the Inter- 200 February 2008 - V01. 59, No. 2 260 net that might assist people seeking to learn more about the issues covered in the guide. Educating Candidates and Encouraging Public I Debate As part of its public education campaign, Vote AID will encourage members of the general public to learn more about key issues and to ask candidates for public of?ce to addr 3 those issues in their campaigns. The objective of issue campaign is to more effectively control and rai the level of public debate about issues by asking the blic to bring the issues to the candidates. Once the can ?dates understand that the public cares about their po 'tions on issues, the candidates are more likely to play role in making them part of die public debate as well 5 take action if elected. To kick off this initiative, Vote AID will circulate, through the temet and at public events, a pledge related to one fits key issues. For example, the pledge on public educ tion will be: will not ote for any candidate for President or Congress 0 does not have an immediate plan and public osition to address the critical needs of our public ucation system.? The pledge the environment will be: will not ote for or support any candidate for public offic who does not have a plan to immedi- the threat of global warming and take ition on this issue in his or her cam? The pledge are intended to highlight one or more important issu that should be addressed by candidates without indicating in any way which candidate or can~ didates agree ?or disagree with the organization?s position and, therefore, should be supported or opposed. The pledge will not identify candidates whose positions on these issues are consistent (or inconsistent) with the views of the organizations supporting the pledge. Fur- thermore, the generality of the pledge will provide considerable rc om for candidates to take a Wide range of positions with respect to the issue in ways a voter might deem to meet the pledge. Vote AID will circulate the pledge to voters and members of the public with the objective of raising these issues to public prominence. A tally of the total number of pledge supporters will be maintained on the website. Vote AID will also identify a network of volunteers who are willing to pose questions and discuss key issues at candidates? public appearances such as forums and speeches. Vote AID will identify 1-2 key issues that it wishes to highlight in the media and among the public. Volunteers will be encouraged to attend public appear- ances of the candidates, to ask candidates questions about the issue and to report the responses to the organization by e?mail. The responses will be posted on the Internet for visitors to review and gain a better understanding of the c'andidates? positions on these issues. - The Exempt Organization Tax Review Obtained and Uploaded by the Center for Responsive Politics (OpenSecrets.org) Focus on the IRS Part V, line 3a Qualifications, etc. Name Title Qualifications Wkly Hours Duties Nan Aron President, Director President and founder of na- 4 Develop organizational vision; tional advocacy nonpro?t or? lead board meetings; preside ganization; attorney. at annual meeting; form alli- ances with other organiza? tions. Jeff Malachowsky Treasurer, Director President and founder of ad- 1 vocacy nonprofit organization; trainer of norrprofit leaders. Oversee budget; prepare fi- nancial reports; make pay- ments as appropriate. Shannon Garrett Secretary, Director tions; attorney. Conducted public advocacy 1 work at nonprofit organiza- Attend and keep record of board and annual meetings; oversee Vote AID correspon- dence. Part V, line 5a Conflicts of Interest The Board of Directors passed a resolution by unani- mous consent adopting the Con?ict of Interest policy, which is attached as Exhibit C. Parth, line 2a Attempts to In?uence Legislation The Organization will engage in attempts to influence legislation within the limits imposed by I.R.C. Sections and 4911. Form 5768 is enclosed. Part V111, line 4a Description of Pundraising Program Mail solicitations: Periodically, but no more than twice a year, the Organization may send letters requesting contributions to support its educational and charitable purposes. The letters will be sent to those individuals, organizations, and other entities on the Organization's mailing list or in its database. E?mail solicitations: Periodically, the Or anization may send an email seeking contributions to ose indi- viduals, organizations, and other entities who signed up to receive its emails or who are otherwise on the Orga? nization?s mailing list or in its database. Personal solicitations: Staff and/ or board members and volunteers will solicit friends, family members, vol? unteers, and others through mail, email, phone and face to face meetings. Foundation grant solicitations: The Organization may submit pr0posals to private foundations or other 501(c)(3) public charities seeking funding for its educa- tional and charitable purposes. The Exempt Organization Tax Review 261 Accept donatio on your website: The Organization's website may con a section which provides contact information about how to make a contribution or which allows visitors make connibu?ons directly to the Organization via the Internet. If the Organization launches a blog, i may also encourage blog readers to contribute to the rganization. Receive donati ns from another organization?s web? site: The Organiz ?on does not anticipate seeking other organizations that will accept contributions on its behalf, but will receive donations if another entity chooses to accept donations earmarked for the Organization Part line 4d List of States in Which Fundraising is Conducted Currently none but anticipated in California, Mary- land, New York, Virginia, Washington, DC, and possibly all local jurisdictions within these states. In each jurisdiction, the Organization will fundraise for itself. It is pc ssible that Alliance for Justice may fundraise as well. The Organization will not fundraise for another organization. Part V111, line 15 Close Connection to Other Organi- zation Alliance for Justice will provide limited staff assis- tance to the Organization in its stages, as well as a grant to cover stat-up expenses. One of the Organiza- tion's board members, Nan Aron, is the President of Alliance for Justice. Alliance for Justice does not exercise in?uence over the Organization?s activities. February 2008 - Vol. 59, No. 2 201 Obtained and Uploaded by the Center for Responsive Politics (OpenSecrets.org) Focus on the IRS Part IX Financial Data Line 23 Itemized List of Expenses: Line 23 Itemized Expenses 2006 2007 2008 Advertising 8: $320 $2,000 $2,200 a i. Promotions Bank Charges $50 $200 $220 Bc oks and $50 $200 $220 Periodical Design, Printing a: $400 $2,400 $2,640 Copying Insurance $100 $600 $660 Internet Fees $200 $1,000 $1,100 List Rental $0 $5,000 $5,500 etings and $160 $1,000 $1,100 nferences Tt?avel Expenses $1,024 $6,400 $7,040 Supplies $130 $854 $939 Postage 8: $140 $880 $968 Deliveries Miscellaneous $160 $1,000 $1,100 Total $2,734 $21,534 $23,687 202 Febrnary 2008 - Vol. 59, No. 2 The Exempt Organization Tax Review 262 Obtained and Uploaded by the Center for Responsive Politics (OpenSecrets.org) EXHIBIT 6: LETTER TO LOIS LERNER (DE C. 14, 2007) 263 Obtained and Uploaded by the Center for Responsive Politics (OpenSecrets.org) Full Text Correspondence Attorneys Ask IRS for Political Activities Guidance That Re?ects Determination Letter In a December 14 letter, several attorneys recommend that the IRS promulgate formal guidance that articulates the positions it took in a recent determination letter for a section 501(c)(3) organization that plans to conduct polling, voter registration, and other activities designed to encourage Ameri- cans to vote. 0' December 14, 2007 VIA Hand Delivery and US. Mail Ms. Lois Lerner Director of Exempt Organizations Division Internal Revenue Service 1750 Avenue, NW Washington, DC. 20224 Dear Ms. Lerner: The undersigned practitioners urge the Service to promulgate formal guidance re?ecting the administra- tive positions underlying the recent determination letter issued to Voter Alliance to Improve Democracy ("Vote Vote AID filed an application for tax-exempt status under section 501(c)(3) of the Internal Revenue Code that contained a detailed description of its pro- posed activities involving issue advocacy in the context ?of an election campaign. On May 31, 2007, the Service issued a determination letter recognizing Vote tax-exempt status under section 501(c)(3) of the Internal Revenue Code. A cepy of the Form 1023 and the deter- mination letter are attached. Vote AID is organized to "raise Americans? awareness about a range of progressive issues and to encourage Americans to vote and engage in other forms of civic participation.? Vote proposed activities, described in detail in Attachment A to the Form 1023, include polling, voter registration, voter guides and educational activities directed to candidates. Many of the proposed activities are not currently addressed in Internal Revenue Service or Treasury guidance. Helpfully, in the context of the application for exemption, the IRS deter- mined that these activities are consistent with tax-exempt status under IRC section 501(c)(3). While Revenue Ruling 2007?41 has been useful to charitable organizations, additional clarity, particularly in the context of a modern election, is needed to ensure that organizations understand the activities that may be undertaken Without jeopardizing their exemptions or triggering excise tax under section 4955. The approval of the application for Vote AID provided answers to some of the most common activities. We request they be used as the basis for guidance on the following fact patterns: The Exempt Organization Tax Review application provic Focus on the IRS Polling: Vote AID proposes to conduct polling to determine peoples attitudes about specific issues and the most important criteria used to identify those issues will be "w motivate individu of civic participat questions about p1 individuals some didates. The organ nities to publicize by other organiz. research. Voter Registration rent issues of inte success in getting 1 nether the issue has a potential to 315 to vote or engage in other types ion." Similarly, Vote AID will ask .1th of?cials and other well-known of whom are likely to become can- iization will also identify opportu- public opinion research conducted ations and establish links to this Vote AID intends to identify curd rest that are most likely to increase ndividuals to register and vote. The [as two examples using issues that are central in the public debate, describing the moti? Vational messages and indicating that Vote position may be stated in some cases. Voter registra- tion will be targeted based on demographic as well as issue interests. Us mg sophisticated demographic data as well as micro?targeting, Vote AID will be able to' select particular groups of prosPective registrants based on their irterest in specific issues and tailor messages that are likely to be successful in motivating them to vote. Voter Guides: Vote AID will prepare and distribute voter guides. that are based on research of the candi- date?s records, not questionnaires completed by the candidates as contemplated in the Service?s guidance. While there will be a series of guides distributed throughout the ection cycle, each guide will cover one issue area. the course of the series, Vote AID will be covering erous, but certainly not all, of th issues pertinent a given race. Education of the andidates: Finally, Vote AID intends to encourage me bers of the public to ask candidates for public of?ce 0 address key issues of interest to paign in order to raise the level of attention devoted to these issues in the campaign. This project will be with a pledge that Vote AID will circulate for si tures through the Internet and at public events. In ividuals will be asked to pledge not to vote for a didate who does not address a particular issue. The pledge will not identify any candidate or discuss the position of any particular candidate. Instead, it is intended to encourage indi- viduals to ?nd out where the candidates stand. Many public charities are interested in conducting similar activities but, without suf?cient guidance, have been reluctant to undertake them for fear of je0pardizing their exemptions or incurring excise tax. We are taking steps to publicize application and the determination letter as the package provides additional information to . the exempt community about activities that have been 264 approved by the Service in a form that is more reassuring to the charitable sector than a fact sheet or similar communication, such as the Service has used in the past to communicate its administrative positions. The docu? ments will be posted on the Alliance for Justice website to inform public discussion at conferences and meetings February 2008 - Vol. 59, No. 2 169 Obtained and Uploaded by the Center for Responsive Politics (OpenSecrets.org) 1? Focus on the IRS and to guide planning in this election cycle. We respect- fully request that the Service consider amplifying its formal guidance to incorporate these types of activities as examples of the issue-based initiatives that are available to charities to assist them in achieving their exempt purposes. Please contact Holly Schadler at 202-464-0352 if you would like to discuss these issues further. We would be glad to arrange a meeting if that would be helpful. Sincerely, Gregory Colvin Silk, Adler 8t Colvin Gail Harmon Harmon, Curran, Spielberg Eisenberg, LLP Holly Schadler Trister Ross, PLLC I 1 i Marcus Owens I i? Caplin James Joseph Arnold 8r l?orter LLP -. -. Rosemary Fei Silk, Adler 8: Colvin Elizabeth Kingsley . Harmon, Curran Spielberg 8: Eisenberg, LLP f; :sw?r-riz- 1:44: - - Michael Trister Lichhnan, Trister Ross, PLLC -vu Douglas Varley Caplin 8t hw- Liz Towne Alliance for Justice Attachments: Form 1023 Letter of Determination . .4 eye. . 1 3-31": . . :15; a, cc: Robert Choi Director, EO Rulings and Agreements Judith E. Kindell Tax Law Specialist, E0 Rulings and Agreements I: 170 February 2008 - Vol. 59, No. 2 The Exempt Organization Tax Review 265 Obtained and Uploaded by the Center for Responsive Politics (OpenSecrets.org)