Public Citizen has filed a complaint with the IRS against the U.S. Chamber of Commerce and the Institute for Legal Reform (ILR), which is an affiliated entity. It’s alleged that the two entities failed to report millions in taxable spending from 2000 to 2004 intended to influence state-level attorney general and Supreme Court races, as well as federal races around the country. Public Citizen also asked the IRS to investigate whether the U.S. Chamber and ILR, which are said to be two separate legal entities, combined funds in a shared bank account to hide accurate reporting of investment or interest income for tax avoidance.

Court records, internal corporate documents, and media reports indicate that the Chamber and the ILR engaged in a massive campaign to affect the outcome of state and federal races through direct expenditures and grants made to organizations that carried out the Chamber’s wishes. Public Citizen President Joan Claybrook observed:

The Chamber is playing an elaborate shell game to conceal its gambit to stack the courts with hand-picked pro-corporate judges. The IRS should promptly investigate its dubious tax reports and address any abuses that it finds.

All 501(c) groups are required to report political expenditures on Line 81 of the IRS Form 990. Despite its own assertions of millions of dollars spent on electioneering, the Chamber and ILR failed to report any political spending from 2000 to 2003. Public Citizen has asked the IRS to investigate whether the failure of the two groups to report political expenditures and to provide accurate accounting of their grants to outside organizations resulted in tax avoidance and a violation of disclosure requirements.

In 2000, the Chamber claimed it spent $6 million on judicial races and bragged about credit for winning 15 out of 17 state Supreme Court contests. In 2002, the Chamber said it planned to spend $40 million on political campaigns, divided equally between congressional and state-level attorneys general and judicial races. As I understand it, none of these activities were reported on their tax returns from 2000 to 2003. In 2004, the first year since at least 2000 which the Chamber and the ILR reported political expenditures, according to reliable sources, both organizations appear to have underreported their spending. They reported a combined $18 million, but in a “President’s Update” memo released the day after the November elections, Chamber President Thomas Donohue claimed the group had spent up to $30 million in races around the country. I am not sure that he wasn’t being very conservative with that number.

The Chamber and ILR also failed to report grants and allocations to outside groups as required by Line 22 of IRS Form 990. Both organizations reported no grants to outside groups from 2000 to 2004. But in a 2005 deposition, a Chamber official acknowledged that the Chamber had partnered with at least six outside groups to advance its agenda to avoid garnering unwanted critical attention. At least two 501(c) organizations, the Washington, D.C.-based American Taxpayers Alliance and the Columbus, Ohio-based Citizens for a Strong Ohio, reported receipt of large contributions from the U.S. Chamber. We know what ATA did in Alabama judicial races. Taylor Lincoln, research director of Public Citizen’s Congress Watch division, stated:

The Chamber’s efforts are fundamentally a campaign to reduce corporate accountability in the courts and slam the courtroom door on consumers. Given the egregious corporate scandals of the past five years, the Chamber should prioritize cleaning up its own house before attempting a hostile takeover of the courts.

It will be interesting to see how the IRS reacts to Public Citizen’s request. Clearly, the matter should be thoroughly investigated and appropriate action taken. The Chamber of Commerce has no business being a political organization, in my opinion. Even if that role is appropriate, at least they should follow the law.

Source: Public Citizen

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