Common Cause calls on Attorney General Swanson to Investigate ALEC

Today, Common Cause Minnesota field two major complaints against the American Legislative Exchange Council’s activities in Minnesota. The first complaint was filed with the Minnesota Attorney General Lori Swanson and alleges that ALEC has engaged in false and deceptive practices. The second complaint was filed with the Minnesota Campaign Finance and Public Disclosure Board alleging that ALEC failed to register as a lobbyist in Minnesota.

The AG complaint is alleges that ALEC violated Minnesota charity law because the group operates as a corporate lobby group masquerading as a public charity. Unfortunately it appears that Minnesotan taxpayers are being forced to subsidize ALEC’s lobbying efforts.

ALEC is registered in Minnesota with the Attorney General’s office as a charitable organization, and at the federal level has tax-exempt status under section 501(c)(3) of the Internal Revenue Code.  The complaint alleges that ALEC violated Minn. Stat. §§ 309.55 subdivision 5 by misrepresenting the purpose of ALEC in forms submitted to the Minnesota Attorney General.

Read the complaint to the Attorney General: http://www.scribd.com/doc/93591786/Ag-Ltr-Final

Read the complaint to the Campaign Finance and Public Disclosure Board: http://www.scribd.com/doc/93591674/ALEC-Complaint-FINAL

In addition to the Attorney General complain, Common Cause Minnesota filed a complaint with the Minnesota Campaign Finance and Public Disclosure Board against ALEC for failing to register as a lobbyist in Minnesota. The complaint presents evidence of ALEC’s lobbying activities in Minnesota and uncovers four emails that ALEC sent Minnesota legislators clearly advocating for support of ALEC drafted legislation.

Much of this evidence is based on an IRS complaint that Common Cause filed under the Whistleblower Tax Act, seeking an investigation into ALEC’s lobbying activities, the collection of unpaid taxes, and assessment of appropriate penalties.  Based on more than 4,000 pages of ALEC documents, the complaint alleges violation of the group’s federal tax-exempt status, massive underreporting of its lobbying activities and improper tax deductions for ALEC’s corporate funders.  The complaint was filed on Common Cause’s behalf by the prominent whistleblower law firm of Phillips & Cohen LLP.

ALEC was formed as a 501(c)(3) organization, which means that it is tax-exempt and that donations to it are tax deductible.  The law limits lobbying by groups with that designation, specifying that “no substantial part” of their activity can be devoted to influencing legislation.  ALEC has declared under oath in several tax returns that it does no lobbying.  Evidence in the Common Cause filing shreds that claim; it includes several thousand pages of ALEC records, detailing extensive efforts to influence a wide range of state legislation.

You can read the full IRS complaint here: www.CommonCause.org/IRSWhistleblower

Ag Ltr Final

ALEC Complaint FINAL