WASHINGTON -- Sen. Sheldon Whitehouse (D-R.I.) took to the Senate floor Wednesday to remind Americans that the Internal Revenue Service's inappropriate questioning of conservative groups is "not the only IRS scandal." He said the agency is also "allowing big shadowy forces to meddle in elections anonymously through front groups that file false IRS statements."
Those "shadowy forces" fund large nonprofits run by top-flight political consultants who had worked in Democratic or Republican, but mostly Republican, administrations. The nonprofits often spend nearly half of their budgets on political campaign activity while claiming tax-exempt status to shield the identities of their contributors, according to Whitehouse.
Groups claiming nonprofit status and not disclosing their donors spent more than $400 million in "dark money" on direct campaign activity and sham issue ads targeting political candidates in the 2012 election. Whitehouse does not want this issue pushed to the side as Congress investigates how the IRS reviewed the tax-exempt status of smaller tea party organizations.
"Picking on the little guy is a pretty lousy thing to do. Rolling over for the powerful and letting them file false statements is pretty lousy too," Whitehouse said. "Two scandals -- let's not let one drown out the other."
Whitehouse also blasted the IRS and the Department of Justice for not reviewing or prosecuting some of these groups, including conservative nonprofits like the American Action Network and Crossroads GPS, for filing applications for 501(c)(4) tax-exempt status that claimed they would not engage in substantial political activity and subsequently spending tens of millions of dollars on political campaign TV ads.
The senator lit into what he called the "false statements" made by some of these politically active groups claiming nonprofit status.
He noted that the news organization ProPublica looked at 104 nonprofits that spent money on political campaigns and found that 32 of them had told the IRS they would not spend money on politics. One group, he said, told the IRS that it spent only $5 million on politics when it reported spending $19 million to the Federal Election Commission, while another told the IRS that it would accept contributions only from individuals and then accepted a $2 million contribution from the Pharmaceutical Research and Manufacturers of America, the chief lobbying arm of the drug industry.
Whitehouse called for the IRS to refer these cases to the Justice Department for prosecution under false-statements statutes and criticized both agencies for failing to have done so already.
"Apparently, no matter how flagrant the false statement, no matter how great the discrepancy between the statements filed at the IRS and the statements filed at the election agencies, no matter how baldly the organization in practice contradicts how it answered IRS questions about political activity, the IRS never makes a referral to the Department of Justice," Whitehouse said. "It is a mockery of the law, and it is a mockery of the truth."
In 2012, Whitehouse was the lead sponsor of Senate legislation, filibustered twice by Republicans, that would have required greater disclosure by groups engaging in direct political activity, including 501(c)(4) groups. The legislation, known as the Disclose Act, would have mandated that any organization engaging in a significant level of reportable political campaign activity must disclose its donors to the FEC.
As University of California-Irvine election law professor Rick Hasen wrote in a Slate article, the Disclose Act would "take the IRS and others out of the business of trying to police disclosure, by stopping the cat-and-mouse game whereby donors try to hide their election-related contributions through this or that provision of the tax code."
Whitehouse has indicated he plans to reintroduce a Senate version of the Disclose Act later in 2013.