Wednesday, January 16, 2013

Watchdog groups call on IRS to investigate ATP

Two campaign finance watchdog groups are calling on the IRS to investigate American Tradition Partnership, the “dark money” group at the center of a ProPublica/Frontline investigation last fall.

According to the letter from the watchdog groups:

“…the apparently false information included misrepresentations made to the IRS by WRP in urging expedited approval of its application and misrepresentations in its application to the IRS, asserting that it would not participate or intervene in elections.”

According to Democracy 21 President Fred Wertheimer:

“This is yet another case where a group apparently has claimed status as a section 501(c)(4) “social welfare” organization in order to keep secret from the American people the donors financing its campaign activities. According to news reports published by ProPublica and Frontline, American Tradition Partnership (ATP) appears to have knowingly misled the IRS about its campaign activities and knowingly submitted false information to the IRS to obtain its tax-exempt status on an expedited basis.”

The groups are calling on the IRS to investigate and “take appropriate action against ATP.”

According to the letter submitted to the IRS Tuesday, WTP submitted its Form 1024, Application for Recognition of Exemption under Section 501(a), to the IRS on July 21, 2008.

A report by ProPublica and Frontline found that WTP submitted a letter to the IRS on September 29, 2008, while their IRS application was still pending, requesting that the IRS expedite processing of its application. According to the report, the request for expedition stated that Jacob Jabs, who was described as the organization’s “primary donor,” had promised to make a $300,000 donation to the group but only if WTP received recognition from the IRS for tax-exempt status by September 29, 2008. Id.

The letter from the watchdog groups continued:

The letter further said, however, that Jabs had extended his deadline, and said he “will give us the grant if we receive our tax exempt status by October 15, 2008.  If we have not received our tax exempt status by this date, Mr. Jabs has assured us that he will no longer contribute said amount and instead will direct his donation to other organizations.”

According to the ProPublica/Frontline report, the IRS responded to WTP the next day, Sept. 30, 2008, and said that the request for expedited consideration would be granted.  Tax-exempt status as a section 501(c)(4) “social welfare” organization was granted to WTP two days later on Oct. 2, 2008.

A subsequent  ProPublica and Frontline report on Oct. 30 2012, said Jabs later said “he had never pledged money to the group, and never even been in contract with them until press stories appeared naming him.” 

The ProPublica/Frontline story states:

“I think they just grabbed my name out of a hat to forward their agenda,” Jabs told us.  “I know nothing about the group, never heard of them, never have heard of them until the last few days, and I did not, absolutely did not, commit $300,000 to start this company.” (Jabs also spoke with the Bozeman Daily Chronicle, again denying any connection to the group.)

A subsequent release of WTP’s bank records as a result of state court litigation in Montana “show[ed] no money came in from the man WTP claimed as its primary donor when it asked the IRS to expedite the approval of its application,” ProPublica/Frontline reported.

According to the letter:

Assuming the ProPublica/Frontline reports are correct, the IRS agreed to expedited processing of WTP’s application for tax-exempt status that resulted in its approval, based on apparent material fraudulent information that WTP provided to the IRS and that WTP had to know was false.

On these grounds alone, the section 501(c)(4) tax-exempt status of WTP should be revoked and the IRS should consider what, if any, other actions it should take against WTP.  The IRS should also forward any relevant information in this case to the Department of Justice so the Department can determine what, if any, action it should take against WTP for apparently submitting material false information to a federal agency in order to obtain action by the agency.

You can read the entire press release and the letter here.

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