Watchdog groups Democracy 21 and the Campaign Legal Center have called on the Internal Revenue Service to investigate whether Crossroads GPS, a 501(c)(4) tax-exempt organization reportedly founded by former George W. Bush advisors Karl Rove and Ed Gillespie, is operating in violation of its tax status.

The groups claim that Crossroads GPS “has a primary purpose of participating in political campaigns in support of, or in opposition to, candidates for public office."

Crossroads Grassroots Political Strategies was organized in July 2010 as a "non-profit social action organization" under Section 501(c)(4) of the Internal Revenue Code. In order to qualify for such tax status, the organization must not be "primarily engaged" in participating or intervening in political campaigns to support or oppose candidates. Crossroads GPS is affiliated with American Crossroads, a Section 527 group.

The letter notes, "The status of Crossroads GPS as a section 501(c)(4) entity allows its donors to evade the public disclosure requirements that would apply if the organization was registered as a section 527 political organization."

According to the letter, "if, in fact, Crossroads GPS is impermissibly operating as a section 501(c)(4) organization  in order to conceal its donors from the American people, the IRS has an obligation to take steps to protect the integrity of our tax laws and to make clear that such abuses will not be permitted in future elections."

"Absent timely and appropriate action by the IRS, such abuses will become commonplace in the 2012 presidential and congressional races, at the expense of the credibility of the tax laws and of the right of the American people to know the identity of the donors providing the money to influence their votes," the letter said.

A spokesman for the group called the claims “baseless,” according to USA Today, and said the group follows all the laws.

Register or login for access to this item and much more

All Accounting Today content is archived after seven days.

Community members receive:
  • All recent and archived articles
  • Conference offers and updates
  • A full menu of enewsletter options
  • Web seminars, white papers, ebooks

Don't have an account? Register for Free Unlimited Access