Monday, April 23, 2012

ALEC's 501(c)(3) Status Under Pressure - Did Businesses Improperly Deduct Lobbying Expenses?

Questions continue regarding whether the American Legislative Exchange Council, or ALEC, qualifies for its claimed section 501(c)(3) status given its apparently extensive lobbying.  Common Cause has long complained that ALEC underreports its lobbying activities, including filing a complaint making this allegation with the IRS last year.  Its concerns have recently attractive significant media attention, including a New York Times article this weekend and NPR coverage last week and today.  The recent attention began in the wake of the Trayvon Martin shooting because of ALEC's support of "stand your ground" laws, which led a number of corporate supporters of ALEC to end their funding (see, e.g., CBS News story), but has now grown beyond that limited issue .  Common Cause recently filed a second complaint with the IRS, the details of which it plans to release later today.

ALEC states it "works to advance the fundamental principles of free-market enterprise, limited government, and federalism at the state level through a nonpartisan public-private partnership of America’s state legislators, members of the private sector and the general public."  It has both state legislator members and private members, including prominent business corporations.  One significant advantage of ALEC being classified as a section 501(c)(3) organizations is that the private members could deduct contributions to the group as charitable contributions, while contributions to other types of 501(c) organizations are generally not deductible to the extent they are used for lobbying (under Internal Revenue Code sections 162(e) and 6033(e)).

LHM

http://lawprofessors.typepad.com/nonprofit/2012/04/alecs-501c3-status-under-pressure-did-businesses-improperly-deduct-lobbying-expenses.html

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