Forum Post: ALEC "Is a Corporate Lobby Masquerading as a Charity"

ALEC Is Subject to Three Complaints Alleging Tax Fraud

ALEC is registered as a 501(c)(3) non-profit organization, which means that corporations can theoretically deduct the thousands of dollars they pay ALEC to get their legislative wish lists in the hands of lawmakers. ALEC has routinely told the IRS that it engages in zero lobbying, even though numerous communications have been obtained through open records requests and other sources that show ALEC asking for legislation to be introduced, urging that specific legislation be adopted, and taking credit when its legislation becomes law. ALEC is no “charity” – it is a lobby that has routinely boasted to its corporate members that each year nearly 1,000 ALEC bills are introduced in state legislatures and nearly 20% become law.

A review of ALEC task forces by CMD revealed that almost all of the for-profit corporations that participate in ALEC task forces are represented by their registered lobbyists or are described by their employers as their “government affairs” staffer within the corporation’s internal lobbying shop. CMD and Common Cause have also obtained documents showing that corporations have secretly and routinely sponsored bills at ALEC Task Force meetings and then voted on those bills with legislators at ALEC meetings. Under ALEC’s published bylaws, its state legislative leaders are tasked with a “duty” to get ALEC bills “introduced,” and they do. Some ALEC corporations then lobby for them without disclosing they pre-voted on them.

That is, as Common Cause pleaded to the IRS, the for-profit corporations that are part of ALEC may also be liable under federal tax laws for taking charitable deductions for activity that is at its root lobbying for legislation through ALEC. CMD agrees with the words of the late former Congressman Bob Edgar, “ALEC is a corporate lobby masquerading as a charity.” The potential liability for the tax fraud alleged could subject ALEC, and possibly those bankrolling it, to criminal and civil liability according to Marcus Owens, the former chief of the IRS’ non-profit division.

ALEC has repeatedly claimed to the IRS that it spends no money on travel for federal or state officials, but CMD has extensively documented that these claims are also contrary to the evidence. DBA Press and CMD obtaineda three-year spreadsheet of corporate funding for trips by lawmakers along with the names of every corporation that funded the trips and all of the lawmakers who took them.

The amounts spent on lawmaker travel totaled about $500,000 per year for lawmakers’ hotel, airfare, and other expenses, yet each year ALEC claimed it spent nothing for travel. As CMD wrote in its joint report with DBA Press and Common Cause, ALEC’s “scholarships” warrant a thorough IRS investigation of its operations.

CMD also documented that lawmakers routinely solicit funds for these trips from corporations with business before the state and that corporations were told that they could take a charitable deduction for such gifts. ALEC has taken in millions of dollars cumulatively for this travel including one check from PhRMA for $356,000. http://www.truth-out.org/news/item/19749-alec-is-a-corporate-lobby-masquerading-as-a-charity