High-profile nonprofits that invest millions of dollars in political campaign ads regularly omit from their tax returns information about the companies they hire, according to a Center for Public Integrity investigation.
These annual tax documents are signed under the penalty of perjury when submitted to the Internal Revenue Service. Nevertheless, deep-pocketed groups — both conservative and liberal — appear to have bungled reporting rules requiring nonprofits to disclose the names of their highest paid independent contractors.
Three of these groups — Crossroads GPS, the Club for Growth and Patriot Majority USA— acknowledged their errors when informed of them and said they plan to correct them.
At least four others — Americans for Tax Reform, the American Future Fund, the 60 Plus Association and the Revere America Association — also appear to have made reporting mistakes but did not respond to requests for comment.
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The groups’ mistakes ranged from the relatively minor — excluding one particular vendor from a longer list — to the wholesale omission of vendor information.
Take, for instance, Americans for Tax Reform and Patriot Majority USA — ideologically opposed “social welfare” nonprofits that each unleashed a barrage of political attack ads ahead of the 2012 election.
Both groups hired media buying firms and consultants to help execute their spending plans and produce advertisements, according to Federal Election Commission filings.
But when the IRS asked each group how many independent contractors received more than $100,000 in compensation, both said “zero.”
Americans for Tax Reform, a Republican-aligned group headed by anti-tax advocate Grover Norquist, paid seven firms nearly $16 million for TV ads and other messages that advocated for the election or defeat of politicians, according to FEC filings. And Patriot Majority USA, a Democratic-leaning operation led by strategist Craig Varoga, told the FEC it spent about $7.5 million on such expenditures.
In an email, Varoga said his group’s answer on its tax return amounted to “an inadvertent omission.”
He said Patriot Majority USA would file an amendment that showed the nonprofit had actually paid 17 firms more than $100,000 in 2012, with media buying firm Waterfront Strategies garnering the top spot at nearly $9.4 million.
Waterfront Strategies, which is closely tied to President Barack Obama’s political machine, is favored by several high-powered liberal political committees, as well as union and environmental organizations.
Patriot Majority USA’s other top vendors were: The New Media Firm, a media buying company (paid $2.8 million); Bynum Consulting Group, a direct mail firm ($1.6 million); Mullen & Co. for “digital media buys & production” ($1.2 million) and Fieldworks for “voter registration” ($1 million).
This story is part of Consider the Source. Seeking to ‘out’ shadowy political organizations flourishing in the wake of the Supreme Court’s Citizens United ruling. Click here to read more stories in this investigation.
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Copyright 2014 The Center for Public Integrity. This story was published by The Center for Public Integrity, a nonprofit, nonpartisan investigative news organization in Washington, D.C.
- Politics & Government
- Internal Revenue Service