ALEC Legislators, Companies Convene in Charlotte, N.C.

Common Cause pressing states to investigate group’s tax/lobbying violations

WASHINGTON, DC – As state legislators and corporate leaders gathered in Charlotte, N.C. to draft a new series of “model” bills for the American Legislative Exchange Council (ALEC), Common Cause announced Friday that it has asked state attorneys general from coast-to-coast to examine the business lobby’s compliance with tax and lobbying laws.

“ALEC, the ‘charity’ that’s not a charity and the lobby that claims it doesn’t lobby, is at it again,” said Common Cause president and CEO Bob Edgar. “The ‘task forces’ it is convening in Charlotte this weekend are about to be spoon-fed another helping of legislation written by corporate executives and lobbyists and designed to advance private interests at public expense.”

Common Cause has sent letters to 29 state attorneys general requesting that they investigate whether ALEC’s lobbying violates its tax-exempt status. “ALEC calls itself a charity and the corporations that support it get a federal tax deduction for their contributions. But it’s clear that ALEC’s lobbying is anything but charitable,” Edgar said. “It’s critical that state authorities examine ALEC’s activities and determine whether it’s following appropriate tax and lobbying laws.”

The Common Cause letters come on the heels of an Internal Revenue Service “whistleblower” complaint the non-partisan government watchdog organization filed against ALEC last month.

“This weekend’s meetings in Charlotte are ALEC’s first get-togethers since thousands of pages of ALEC documents obtained and released by Common Cause gave Americans a clear picture of the breadth of ALEC’s agenda and the extent of its lobbying,” Edgar observed. “States should take a hard look at both.”

Common Cause’s formal submission to the Internal Revenue Service Tax Whistleblower Office charges that ALEC’s primary purpose is to serve as a vehicle for corporations to do taxpayer-subsidized lobbying. The ALEC emails, “issue alerts,” position papers and other materials filed with it show extensive ALEC efforts to lobby state lawmakers and influence a wide range of legislation, clearly violating the terms of its tax-exempt status.

The prominent whistleblower law firm Phillips & Cohen LLP is representing Common Cause pro bono on the IRS complaint. Phillips & Cohen has recovered more than $7 billion in fines and settlements for governments as a result of its whistleblower cases. The complaint seeks an IRS audit of ALEC and the payment of back taxes and penalties.

Common Cause has asked attorneys general in these states to investigate ALEC.

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