Senate Finance Committee chairman Max Baucus, D-Mont., has sent a letter to IRS Commissioner Doug Shulman requesting him to investigate the use of tax-exempt groups for political advocacy.

Baucus asked for the investigation after recent media reports uncovered instances of political activity by nonprofit organizations secretly backed by individuals advancing personal interests and organizations supporting political campaigns. Under the Tax Code, political campaign activity cannot be the main purpose of a tax-exempt organization and limits exist on political campaign activities in which these organizations can participate.

Tax-exempt organizations also cannot serve private interests. Baucus expressed serious concern that if political groups are able to take advantage of tax-exempt organizations, these groups could curtail transparency in America’s elections because non-profit organizations do not have to disclose any information regarding their donors. 

“Political campaigns and powerful individuals should not be able to use tax-exempt organizations as political pawns to serve their own special interests,” Baucus said in a statement. “The tax exemption given to nonprofit organizations comes with a responsibility to serve the public interest, and Congress has an obligation to exercise the vigorous oversight necessary to ensure they do. When political campaigns and individuals manipulate tax-exempt organizations to advance their own political agenda, they are able to raise and spend money without disclosing a dime, deceive the public and manipulate the entire political system.”

Baucus asked Shulman to review major 501(c)(4), (c)(5) and (c)(6) organizations involved in political campaign activity. He asked the commissioner to determine if these organizations are operating for the organization’s intended tax exempt purpose, to ensure that political activity is not the organization’s primary activity and to determine if they are acting as conduits for major donors advancing their own private interests regarding legislation or political campaigns, or are providing major donors with excess benefits. Baucus instructed Shulman to produce a report for the Senate Finance Committee on the agency’s findings as quickly as possible.

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