With ALEC Exposed, Common Cause Demands an IRS Audit of Corporate-Funded Group’s Gaming of State Lawmaking

With ALEC Exposed, Common Cause Demands an IRS Audit of Corporate-Funded Group’s Gaming of State Lawmaking

With ALEC Exposed, Common Cause Demands an IRS Audit of Corporate-Funded Group’s Gaming of State Lawmaking

Revelations about American Legislative Exchange Council project to link corporate interests with state legislators to impose an agenda that protects polluters, privatizes public education, breaks unions and undermines democracy raises questions about whether group is “evading lobbying disclosure laws,” violating tax breaks designed to encourage charitable contributions and doing “an end-run around state ethics laws.”


The American Legislative Exchange Council has since 1973 operated in relative secrecy, avoiding scrutiny from the media and watchdog groups as it has sought to impose a one-size-fits-all corporate agenda on all fifty states.

Now, however, ALEC’s scheming to game the lawmaking process—with “model legislation” penned by corporation insiders and their legislative minions, and with resolutions that outline initiatives to protect polluters, privatize public education, break unions and undermine democracy—has been revealed.

And the nation’s premier watchdog group is asking the Internal Revenue Service to audit ALEC, an organization that counts among its alumni House Speaker John Boehner, Wisconsin Governor Scott Walker, Ohio Governor John Kasich and other key players in the current push to restructure federal and state government with tax breaks for the rich, regulatory breaks for corporations, privatization strategies and draconian “Voter ID” laws that threaten to make it harder for millions of Americans to cast ballots.

“ALEC spends most of its time developing and distributing model bills to state elected officials, with the intent those bills be introduced and passed in as many state legislatures as possible.” argues Common Cause President Bob Edgar. “It’s time for ALEC to stop masquerading as a nonpartisan public interest group.”

A leak of documents detailing the agenda and activities of the organization, and the influence of wealthy right-wing zealots such as the billionaire brothers Charles and David Koch on the organization and its agenda, made it possible for The Nation and the Center for Media and Democracy to bring ALEC out of the shadows.

One day after the details of ALEC’s activities became public, Common Cause asked the IRS to investigate evidence that suggests the group has under-reported its lobbying activities and may have engaged in federal tax law violations.

“The American Legislative Exchange Council is the mechanism through which some of America’s largest corporations are seeking to secure legislation designed to advance their bottom lines,” explains Edgar. “They have every right to do so, but they appear to be evading lobbying disclosure laws and the tax breaks they’re exploiting constitute a public subsidy for their profit-driven lobbying. That’s not right.”

Specifically, Common Cause is arguing that, while ALEC has claimed in repeated IRS filings that it does no lobbying, its bylaws state that its goals include the dissemination of model legislation and the promotion of that legislation in Congress and state legislatures. The nonpartisan watchdog group notes that ALEC’s 2009 tax return reported an expenditures of more than $2.6 million for the work of the council’s corporate/legislator task forces and an additional $1.9 million for a series of annual conferences at which bills are drafted and presented to legislators.

A letter from Common Cause’s lawyers to the IRS outlines concerns that ALEC—which has more than 2,000 conservative legislators, along with more than 300 corporations and conservative foundations—may have filed false tax returns. The letter raises detailed questions about whether ALEC, which operates under Section 501(c)(3) of the Internal Revenue Code (a section that places strict limits lobbying activity) has engaged in activities that put its tax-exempt, charitable status at risk. Corporations, which peovide major funding for ALEC currently take advantage of those tax benefits to deduct contributions to ALEC from their taxable income.

Referencing revelations regarding the extent of ALEC’s activities in the state—more than 850 pieces of “model legislation” are included in the ALEX Exposed archive, along with details of the linking of corporate representatives and legislators on ALEX task forces—as well as tax returns, ALEC publications and correspondence exchanged by legislators and ALEC and obtained by Common Cause through freedom of information requests, the letter to the IRS argues that “it seems incontrovertible that ALEC is substantially and indeed primarily engaged in attempting to influence legislation. All of its efforts are geared toward developing and promoting favored state legislation. These proposals are generated in a private process where the business interests of its corporate members are highlighted, then shared only with the organization’s legislator members so they can take the proposals back to their states and introduce them as their own idea.”

“By claiming to be a charity and calling participating legislators `members,’ ALEC attempts to evade disclosure of its lobbying, allows corporate members to deduct their payments as charitable contributions rather than non-deductible lobbying expenses, and does an end-run around state ethics laws intended to restrict the ability of businesses to buy access to legislators in order to promote their policy agendas,” explains the Common Cause request. “The IRS should stop allowing the continuation of this charade.”


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