Tax-exempt politics – IRS rule opens door

A new breed of tax-exempt organizations has flexed its political muscle this year, donating more than $130 million into political campaigns, the Associated Press reported Nov. 3.

The groups have benefited from an IRS classification for political groups that have been around for years but have gained popularity recently.

The classification frees the groups from political funding limits and allows them to avoid paying taxes on donations they receive.

Contributors to these organizations do not qualify for tax deductions.

More than 10,000 tax-exempt groups throughout the U.S. are registered to engage in local and national political activity, the first IRS filings by these new organizations show.

The groups, which have spent more than $132.6 million in political races since July 1, offer an avenue for the wealthy to fund their favorite causes.

A group called Pro Choice Vote, for example, has a single donor, Jane Fonda, who gave it $11.7 million to fund abortion groups in battleground states such as Missouri, Pennsylvania and Minnesota.

The Republican Leadership Council has funded ads designed to persuade Al Gore voters to support Ralph Nader.

“I don’t think George W.Bush could have gotten away with what we did,” said Mark Miller, the group’s executive director.

Politicians also are taking advantage of the IRS classification. Many have created tax-exempt groups and collected donations far larger than the Federal Elections Commission allowed for their campaigns. 

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