The IRS has launched an investigation to determine if Karl Rove's GOP-boosting Crossroads GPS and similar organizations are violating their tax-exempt status by spending too much money promoting a party agenda and candidates. Organizations are granted tax-exempt status only if they promote a benefit to the community. The IRS is developing a questionnaire to send to some of the largest such groups to determine if they're complying with the law, which is the first step in an investigation, reports the Wall Street Journal. Crossroads GPS and a sister organization plan to spend $200 million on the 2012 race, notes the Journal.
Though the review won't likely be sewed up by November—it could, in fact, take years—any organization found to have violated its tax status could face an unpleasant reality: a massive tax bill for the millions of dollars it has scooped up tax-free. "Groups that are operated by political operatives and that seem to have a candidate orientation and seem to focus on a political party could have difficulty," warns a private lawyer who worked for 25 years in the IRS's exempt-organizations division. New York Attorney General Eric Schneiderman has launched a separate probe into money funneled to the nonprofit, tax-exempt US Chamber of Commerce for political issue ads that benefit the GOP, all subsidized by US taxpayers. (More Crossroads GPS stories.)
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