When Congress banned federal funds from going to ACORN in 2009, the group’s leaders in many states simply reorganized under new names.
In Texas, the ACORN operatives shifted operations to a newly formed advocacy group called Texas Organizing Project (TOP) that is allowed to participate in partisan politics, and a second tax exempt educational group called TOP ED. Shortly thereafter, funds raised for TOP ED – which is not allowed to be involved in partisan political campaigns – began to show up in TOP’s bank account.
| ‘In Texas, ACORN operatives shifted operations to a newly formed advocacy group called Texas Organizing Project (TOP).’ |
That arrangement appears to take improper advantage of a loophole in the law, according to Karen Groen, senior counsel for Cause of Action, a nonprofit taxpayer watchdog group based in Washington, D.C. TOP is classified by the IRS as a 501(C)(4), which is allowed to be involved in partisan politics. Contributions to such groups are not tax deductible. TOP ED is a 501(c)(3), which provides donors with a tax deduction but such organizations are barred from partisan political activities.
Groen estimates that 80 percent of the $640,000 TOP ED reported raising was given to TOP. The latter organization recently posted on its web site an invitation for volunteers to man phone banks and do other partisan activities on behalf of Democratic candidate for the Texas state legislature.
“While fiscal sponsorships are legal, it is not legal for a 501(C)(3) organization, such as TOP ED, to give money to any organization that engages in political activity, without triggering various tax consequences,” Groen said in a letter to J. Russell George, Treasury Inspector General for Tax Administration.
“Moreover, TOP either is or is not a 501(C)(4) organization. If TOP is not a 501(C)(4) organization, then it should be taxed according to its status, including any applicable back taxes, and any taxes that may be triggered by its electioneering communications,” she said.
You can read the full Cause of Action letter here.
Mark Tapscott is executive editor of The Washington Examiner.
