IRS

Is ALEC a Lobbying Group? British Answer is ‘Yes’

Is ALEC a Lobbying Group? British Answer is ‘Yes’

editor’s note:  VLTP has filed a whistleblower complaint with the IRS regarding ALEC’s 501(c)3 tax-exempt status noting that ALEC admits to being a lobbyist by virtue of statements in its own by-laws.  The IRS has received 3 such whistleblower complaints, with VLTP’s being given the master number for the potential investigation.

This report by our researcher in the North Sea, is smoking gun evidence of ALEC”s lobbying efforts in England and the European Union.

 

Definition of LOBBY:

  • intransitive verb: to conduct activities aimed at influencing public officials and especially members of a legislative body on legislation
  • transitive verb1: to promote (as a project) or secure the passage of (as legislation) by influencing public officials
  • 2: to attempt to influence or sway (as a public official) toward a desired action

 
It’s not very often you get the chance to follow a piece of lobbying from inception to end point but there are several occasions in which ALEC has allowed this to happen.

In San Diego August 2010,  a resolution was proposed by Brandie Davis (Phillip Morris International) calling on ALEC ‘to oppose plain packaging bills in legislatures around the world’

Resolution Urging Congress to Pass a Ban on 'Plain Packaging'

Martin Callanan MEP (UK Conservative Party) and Michal Kaminski MEP (Poland) were both in attendance at this meeting.

 

In July 2012 we received FOI responses from two UK government departments and the European Union regarding letters received from ALEC covering both plain packaging and smokeless tobacco products.

The response from the UK government departments involved:

“Both Dr Vince Cable (Secretary of State for Business Innovation and Skills) and Mark Prisk MP (Minister of State for Business and Enterprise) received letters dated 22 December 2010 from one Karla Jones who is Director of International and Federal Relations at ALEC. Neither letter was solicited.

As is the case with much Ministerial correspondence the letters were reviewed by BIS officials. In this case the letters were so reviewed and were placed on the Department’s information keeping system. Neither Minister saw the letters and no advice was provided to Ministers by officials. No further action was taken.”
_______________________________________________________________
Karla Jones 12-22-10_________________________________________________________________Karla Jones-Mark Prisk MP--12.22.10________________________________________________________________
Noble Ellington-European Commission 12-17-10, pg 1Noble Ellington-European Commission 12-17-10, pg 2Noble Ellington-European Commission 12-17-10, pg 3Noble Ellington-European Commission 12-17-10, pg 4

The review of the European Tobacco Product Directive can be found at
http://ec.europa.eu/health/tobacco/docs/tobacco_consultation_en.pdf
It’s an 11 page document, with the cover shown below:
European Commission-Possible Revision of the Tobacco Products Directive

ALEC’s letter to the EU in response to this consultation document doesn’t even acknowledge the document.

Karla Jones-John Dalis 12-22-10

This cover letter from Karla Jones was accompanied by the same 4 page letter from Noble Ellington which had previously been sent to the European Commission on 12/17/10.  ALEC just keeps its head down and keeps charging.

It should be noted that for lobbying to take place it is not necessary that the outcome be that sought by the lobbyist.

na-Saighneain
na-Saighneain

 

 

IRS to investigate VLTP Whistleblower Complaint re ALEC

Good news – the IRS has accepted the ALEC IRS claim for an award that we filed back in August.  They assigned a master claim number to the case, 2013-000818 and under that two other claim numbers are provided; 2013-000820 and 2013-000821.

The letter advises that as soon as they determine whether or not to open a full investigation based upon our information they will advise and that any award made will only come after possibly years of investigation and negotiations with the delinquent or tax avoiding party/parties.  The reason given is initial determinations and subsequent appeals that may cause a lengthening of any recovery–like we did this for any award.  We did this to end ALEC’s abuse of their tax exempt 501(c)3 status.

They indicate that if any additional information is available or we wish to forward such along to them for inclusion in the case evaluation we should send along to the assigned IRS rep.  If any of you have data, documents of specific info you believe would strengthen the VLTP case, please send it along to Bob Sloan or me, and we will forward it to the Whistleblower’s office.

Found This Personally Interesting

Never Stop Being Amazed at the Reach of the Internet


Please click here to see the actual posting from the APNS, and navigate yourself around their publication.  Hey, like I said, I found this personally very interesting,

Third IRS Whistleblower Complaint Brought Against American Legislative Exchange Council (ALEC)

BREAKING NEWS FROM VLTP –

Earlier this year two complaints were filed against the American Legislative Exchange Council (ALEC) by Common Cause and Clergy Voice, alleging major violations of IRS Code lobbying prohibitions committed by ALEC, a “charity” which enjoys a 501(c)(3) tax exempt status with the IRS.

ALEC claims their activities are all related to educating lawmakers and that none are related to lobbying for or against legislation or a particular candidate.  Nearly all of their activities, however, appear to be directly related to creating thousands of pieces of model legislation and lobbying for passage of each one in most U.S. states.  ALEC openly boasts a success rate of 17% of “their” model legislation becoming law.

The first two complaints address issues of lobbying and soliciting contributions from corporations, businesses and other organizations.  The contributions are then used to reimburse ALEC state legislative members for their travel, lodging and incidental expenses related to attending any of ALEC’s three annual events (Summits or Meetings).  The money is requested by ALEC’s state chairmen and when received they forward the funds to ALEC to “hold” until an event is concluded.  Then state legislators submit requests for reimbursement for the costs of their attending, and ALEC disburses the held funds.

A third issue involves state lawmakers strategizing with corporate lobbyists or representatives at these annual meetings to develop proposed legislation in one or more of nine (9) ALEC task forces.  Once adopted by ALEC these model bills are sent back to states with ALEC members who are required by ALEC’s by-laws to ensure introduction of any legislation adopted by ALEC.

The Voters Legislative Transparency Project (VLTP), Inc. filed a third complaint and in it reports that it concurs with and supports the allegations put forth in both of the now pending complaints.

HP, Deere, CVS, MillerCoors, BestBuy Exit Controversial ALEC

Five more companies, including Hewlett-Packard Co. (NYSE: HPQ), the No. 1 computer maker, have left the controversial American Legislative Exchange Council (ALEC) since the Feb. 26 killing of Trayvon Martin, 17, in Sanford, Fla.

ALEC is a Washington, D.C.-based group that lobbies for laws in state legislatures, including the “stand your ground” law. George Zimmerman, 28, who’s been charged with second-degree murder in the case, has cited the law as part of his defense.

The others to resign are CVS Caremark (NYSE: CVS), Deere & Co. (NYSE: DE), private MillerCoors LLC and BestBuy (NYSE: BBY), respective giants in drugstores, tractors, beer and electronics retailing.

For more on this important breaking story, please click here

Violations of the Internal Revenue Laws by the American Legislative Exchange Council

This article is written by Marcus S. Owens,  Director, Exempt Organizations Division, Internal Revenue Service, 1990-2000

Please click here to see Mr. Owens’ c.v. which establishes him incontrovertibly as an expert in this matter.

Now, let’s release Mr. Owens’ smoking gun report about ALEC’s 501(c)3 status, which Common Cause is challenging.

The information in this submission, a great deal of which was not presented in prior complaints, confirms that ALEC has deliberately and repeatedly failed to comply with some of the most fundamental federal tax requirements applicable to public charities.  The information in this submission also suggests, quite strongly, that the conduct of ALEC and certain of its representatives violates other civil and criminal tax laws and may violate other federal and state criminal statutes as well.  Thus, Clergy VOICE urges the Service to investigate immediately, and after verifying this information to assess penalties and other appropriate sanctions–including revocations of ALEC’s tax-exempt status.  Indeed, given the visibility of the organization, any inaction on the part of the Service would undermine the integrity of the law itself.

OVERVIEW OF KEY FINDINGS

  • A pattern of lobbying activity far beyond the limits set by Federal Tax Law;
  • Excessive private benefit to corporate members, including the promotion of legislation applicable to only one or a small number of corporate members;
  • Excessive private benefit to state legislators, including unreported taxable income for personal expenses, which may also implicate state ethics laws and federal anti-bribery laws;
  • Excessive private benefit to the Republican Party in a manner similar to that in American Campaign Academy v. Commissioner
  • A pattern of filing multiple inaccurate Forms 990–which include affirmative statements that ALEC engaged in no lobbying activities (even in years when it had registered two of its attorneys as lobbyists for the organization) and affirmative statements that ALEC made no payments to or for the benefit of government officials (even when it paid travel and entertainment expenses for state legislators and their families)–indicating both civil and Criminal violation of federal tax laws.

Wow!  And he’s just getting warmed up. 

  • ALEC’s legislative activities are not limited to promoting “model legislation” that is drafted by and intended to advance the interests of its corporate members.  The organization also mobilizes its Legislative Members to prevent the passage of legislation that threatens the interests of its corporate members.  [sites examples from the NY Times]
  • Incredibly ALEC reports on its annual information returns that the organization engages in no lobbying activity. a position that was recently affirmed by the organizations counsel.  ALEC’s primary activity is to craft the “model legislation” for which it is famous and advocate for its passage nationwide.  Indeed ALEC’s Bylaws state that its corporate purposes include “disseminat[ing] model legislation and promot[ing] the introduction of companion bills in Congress and state legislatures…
  • A survey of ALEC’s model legislation reveals numerous examples of bills that were crafted by industry representatives  to advance their business interests, including:  The Drug Liability Act, The Hydraulic Fracturing Fluid Disclosure Composition Act, Stand Your Ground Legislation; Model Legislation to Limit Successor Asbestos-Related Liability for Crown Holdings; The No Sanctuary Cities for Illegal Immigrants Act; etc.–not the business of a charity.
  • ALEC filed that it had registered lobbyists in North Dakota.
  • South Carolina, Indiana, and Colorado have laws explicity stating that ALEC does not have to disclose its lobbying expenditures in their states..  If they weren’t lobbying, what was the purpose of these laws.
  • ALEC failed to register as lobbyists in Minnesota when it hosted an event with lobbyists and state GOP lawmakers.
  • ALEC national meetings. generally held in luxury resorts and hotels, include perks such as meals, recreational activities, and subsidized childcare for legislators and their families.  Golf tournaments, open bar parties, baseball games–all subsidized directly or indirectly by ALEC’s corporate members.
  • In 1999 and 2000 it appears that taxpayers paid at least $3 million in expenses claimed by lawmakers while they received industry-funded “legislative scholarships” from ALEC to cover their expenses.
  • ALEC’s legislative scholarships are not merit awards as one would expect from the use of the word “scholarship:  They are not even made for educational pursuit,  ALEC Form 990s show that these are just payments made by ALEC to “reimburse [state legislators] for travel expenses incurred.
  • A $3454 reimbursement to State Representative Seth Morgan in 2009 for “entertainment and childcare for his 3 children at ALEC’s “Kids Congress, his wife’s cost to attend the meeting, and travel expenses for the entire family
  • Ohio’s Todd Snitchler likewise received a “scholarship” to cover entertainment, childcare, his wife’s costs to attend, and airfare.
  • Ohio’s Kris Jordan and John Adams received “Scholarships” for their spouses to attend the Annual Meeting.
  • And NONE of these legislators reported the payments for ramily travel and entertainment on their state disclosure forms.  It bears emphasis that this practice appears to be replicated in other states.
  • Yet ALEC takes the incredible position that the scholarships are neither revenues or expenses of ALEC.  ALEC treats amounts related to spousal and family travel as compensation.

According to the law, upheld by the Supreme Court, “the presence of a single non-exempt purpose, if substantial in nature, will disqualify an organization from tax exempt status, even if the organization also conducts charitable activities…In other words, if ALEC is serving private interests other than incidentally, they do not qualify for 501(c)3 tax exempt status.

Based on the facts, ALEC appears to be operated to benefit the private interests of its corporate donors.  It dedicates the bulk of its time, energy, and resources to formulating, disseminating and supporting its model legislation.   Each piece of model legislation constitutes a legislative proposal that ALEC supports, and thus qualifies as “Special legislation under the law.  Likewise the expenses incurred by ALEC in researching, drafting and promoting each piece of its model legislation are all lobbying expenditures.

The misstatements and omissions on ALEC’s Form 990 may expose the organization to far more than civil penalties,  If the misstatements or omissionswere made knowingly or willfully, ALEC and those involved could be subject to criminal prosecution.

Under Federal Criminal Code, there are penalties for certain conduct relating to filing required or information returns with the IRS.  DOJ has indicated a greater willingness to seek criminal prosecutions of individual [associated with charities] who falsify information.

But the actions of ALEC and its members may violate criminal laws in addition to civil and tax laws, especially if the courts consider ALEC’s violations of the Federal Criminal Codes to be tantamount to a Conspiracy to Defraud the United States Government.  These include the Honest Services Fraud, “Pay-to-Play” prohibition, and RICO violations.

CONCLUSION

“This submission, together with the IRS complaint filed by Common Cause and media accounts regarding ALEC’s activities, raise a number of complicated and significant questions regarding the organizations continued qualification for exemption from tax. Given the influence wielded by ALEC and its members, the nature of he violations, and he fact that they are ongoing, we urge you to take immediate action to investigate ALEC and, if appropriate, assess penalties and other sanctions–including revocation–to ensure that these abuses do not continue to occur.”

There is a lot more to this article than I could summarize.  A good understanding of the legal issues facing ALEC is important to understanding the way it does things.  Please click here to read the entire report.  Given the qualifications of Marcus S, Owens, this is an article to be taken seriously while learning about and understanding the tax code attacks on ALEC.  Hey it was the IRS that took Al Capone down.

IRS Denial of Tax Exemption to U.S. Political Group Spurs Alarms

An Internal Revenue Service decision revoking the tax-exempt status of a small political nonprofit organization may foreshadow an investigation into groups such as Crossroads GPS and Priorities USA that spend millions on the 2012 U.S. presidential election.

At risk would be the groups’ nonprofit status, which lets them collect millions of dollars from individuals and corporations while keeping donors anonymous…

…“There’s a boatload of groups that they should looking at,” said Melanie Sloan, executive director of Citizens for Responsibility and Ethics in Washington, a watchdog group. “When you look at the budgets of these groups, it’s clear that their primary purpose is political activity.”

Sloan said donations would shrink if the nonprofits lose their exempt status and contributors had to be identified.

“There are people who are now making the choice to give because they want their identities hidden,” she said. That fundraising advantage “will disappear if a few of those donors are revealed.”

Even so, any IRS interest won’t affect the groups in 2012…”Organizations that are prepared to be super aggressive until the election probably can”  Isn’t that reassuring!

To read the entire article about this possibly landmark ruling by the IRS and how it could affect our political system–post Citizens United–please click here

Clean-Energy Requirements Targeted by ALEC, Norquist

By Jim Snyder – Apr 23, 2012

Small-government groups including the American Legislative Exchange Council, whose advocacy for Florida’s Stand-Your-Ground law and other measures have drawn calls to revoke its tax-exempt status, are taking aim at state mandates requiring renewable energy use.

While environmentalists view the clean-energy standards as vital to reducing the country’s reliance on fossil fuels, groups like ALEC and the Grover Norquist-run Americans for Tax Reform say the mandates are a hidden tax on consumers and a drag on state economies.

To read more about ALEC’s latest threat, please click here

One of our VLTP members has already mad a very appropriate comment:  “Always Remember —The British East India Company Never Dies …It Merely Changes Its PR Firm …”