"Social welfare" groups face pressure for transparency
Requests have been sent to so-called "social welfare" organizations on both the right and left. The New York Times, which first reported the inquiry, reports that among the groups that have received requests are the GOP-aligned Crossroads GPS and American Action Network and the Democrat-aligned Priorities USA Action.
"Social welfare" groups are ostensibly focused on education, not politics. For that reason, they can raise unlimited funds and do not have to disclose their donors. But the IRS has been less than clear on how much politics these groups - which are believed to be spending hundreds of millions to influence the 2012 elections - are allowed to engage in.
Schneiderman's move appears to be his latest effort to bring some transparency to these groups, which provide businesses and individuals with mechanisms to influence politics without their involvement becoming public. In June, a source told CBS News that he is investigating the National Chamber Foundation, the charitable arm of the U.S. Chamber of Commerce, for using charitable funds for non-charitable purposes.
The IRS, meanwhile, also appears to be moving toward bringing greater transparency to the groups. On June 22, an IRS official indicated that the IRS is sending a questionnaire to "social welfare" organizations that claim tax-exempt status. Such questioners can set the stage for audits. IRS officials suggested last month they may revise the regulations that govern the groups, a move opposed by Senate Republicans.
Schneiderman, a Democrat, is claiming jurisdiction in conjunction with New York State law requirements that tax-exempt groups file their financial information with his office if they solicit or receive contributions of at least $25,000 during a fiscal year from sources in the state. The move is part of the office's review of tax-exempt organizations engaged in advocacy activities. According to a source familiar with the investigation, the inquiries from Schneiderman's office state that the attorney general could subpoena groups that do not comply with his request.
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