Why the IRS Should Revoke ALEC's Charitable Status

By Bob Edgar, Guardian UK

24 April 12

Would the American Legislative Exchange Council tout its lawmaking influence to corporate backers if it wasn't a lobbyist?

ou'd think that an American business taking part in a scheme to secretly lobby for the passage of state laws tailored to fattening its profits at the expense of the public good would be shunned by customers and marginalized in the marketplace.

But today, mega-companies like Walmart, Koch Industries, Pfizer and State Farm Insurance are openly, if quietly engaged in just such an effort. They call it the American Legislative Exchange Council, or ALEC, cloak it in rhetoric about free speech and free markets, and whine like spoiled children when someone dares to tell the truth about what it's up to.

This Monday, Common Cause is announcing a whistleblower complaint against ALEC filed with the Internal Revenue Service. We've submitted several thousand pages of ALEC's internal records that we believe demonstrate, beyond debate, that ALEC is evading federal taxes by masquerading as a charity and misleading the IRS and the American public about its activities.

We're asking the IRS to end this charade, cancel ALEC's tax exemption, collect years of unpaid taxes and "impose necessary penalties." The complaint (pdf) includes ALEC memos, emails, "issue alerts," "talking points" and draft press releases touting ALEC's "model" bills. Lawmakers introduce ALEC's legislation, which often is drafted for them by corporate lobbyists, without disclosing its ALEC lineage; and they accept ALEC's backroom coaching to guide it to passage.

"ALEC boasts about how frequently its bills are introduced in state legislatures to show its influence over the legislative process," the complaint notes. In one annual scorecard, ALEC's executive director, Samuel Brunelli, told corporate backers that, with a success rate higher than 20%, "ALEC is a good investment. Nowhere else can you get a return that high."

Up to now, most press and public attention has focused on ALEC's support for legislation like the Florida "Stand Your Ground" gun law at the center of the Trayvon Martin case, and voter identification requirements that would turn hundreds of thousands of students, elderly, disabled and minority voters away from the polls. But Common Cause's tax filing focuses on a less-noticed, but perhaps more fundamental problem with ALEC - its attack on democratic values.

ALEC specializes in stealth, investing millions of dollars to entertain and lobby elected officials at swank resorts; it writes and refines their legislation through task forces where its business members wield a veto power, then stays in the background while shepherding the finished "model" bills to passage. Their mission accomplished, ALEC's business members reward their legislative allies with campaign contributions - nearly $400 million from 2000-2010 - to keep the party going.

ALEC does all this, and has the audacity to call itself a charity and claim a tax exemption. That's just wrong.

One final point: ALEC's leaders have accused Common Cause and other ALEC critics of attacking free speech; they say we want to deny business a seat at the table where public policy is made.

Nonsense. Our efforts are focused on bringing ALEC into the open, so that everyone can see and hear and evaluate its agenda, so that it will no longer be able to sweet-talk elected officials behind closed doors to work its will. The companies leaving ALEC have done so not because their speech was muzzled, but because it was amplified.