Huffpost Politics

Americans For Prosperity: Democrats File IRS Complaint Against Conservative Group

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WASHINGTON — The Democratic Party has filed a complaint with the Internal Revenue Service complaining that a conservative foundation spending millions of dollars on ads in election battleground states is violating its status as a tax-exempt organization.

The Democratic Congressional Campaign committee filed the complaint this week, charging that Americans for Prosperity Foundation, founded by billionaire conservative David Koch, is airing ads that violate federal regulations because they "constitute political campaign intervention."

The foundation began running $4.1 million in ads last week in 13 states. This week it went on the air with a $1.4 million ad campaign that will run in Arizona, Florida, Ohio and Pennsylvania through Sept. 8.

The ads don't mention candidates or parties, but attack Obama administration policies to rescue the financial sector, the economic stimulus and the new health care law. The criticism echoes themes used by Republican candidates and GOP-leaning groups to attack Democrats.

"We are confident the complaint is without merit," foundation president Tim Phillips said in a statement Friday. "The ads are genuine issue ads that expose the big government policies embraced by some politicians."

President Barack Obama singled the group out by name recently in criticizing outside groups with "with harmless sounding names" that are spending millions during the election.

The foundation is covered by a section of the tax code that applies to charities that are "prohibited from directly or indirectly participating in, or intervening in, any political campaign on behalf of (or in opposition to) any candidate for elective public office," according to the IRS. the organization may carry out educational activities, however.

Donations are tax deductible and contributors to such organizations do not have to be disclosed. In a recent interview with the Associated Press, Phillips said the ads are designed to "condition the landscape."

"We don't mention candidates, we couldn't anyway, we wouldn't want to, we don't need to," Phillips said. "We want to make sure that Americans broadly continue to think about this."

Phillips is also president of a separate organization with an almost identical name, Americans for Prosperity. That group can carry out political activity but its donations are not tax exempt.

"With that we work to make sure that individual Americans understand where their candidates and specifically where their incumbent members of Congress stand on these issues," Phillips said.

The DCCC complaint cites ads aired by the foundation in Kansas, Michigan and Missouri that closely followed ads by its sister organization in four congressional districts in those states that criticized specific candidates.

"There is no nonpolitical rationale for the APF advertisements," the complaint states.

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