Patriot Majority USA, a social welfare nonprofit, told the Internal Revenue Service that its mission is “to encourage a discussion of economic issues.” In exchange for keeping its donors private and paying fewer taxes, it must limit its involvement in politics. Yet last year Patriot Majority, run by Democratic operative Craig Varoga in Washington, spent at least $7.5 million on TV ads attacking Republican candidates on issues such as women’s health screenings and equal pay. With the Nov. 6 election over, the nonprofit shows signs of going dormant with e-mails bouncing back unopened and phone calls unanswered.
Patriot Majority’s practices offer a glimpse of what may catch the eye of those monitoring a vast gray area in the U.S. tax code that applies to charities and social welfare groups.
Examples abound across the political spectrum: American Future Fund, founded by Republican strategists, sees its budget swell by a factor of 10 in election years, a phenomenon that Fred Wertheimer, president of the Washington-based campaign-finance advocacy group Democracy 21, said “raises serious questions” about whether the group is a political entity masquerading as a nonprofit.
Today, the U.S. House Ways and Means committee will hold what is to be the first in a series of hearings probing the IRS’s recent admission that it targeted Republican-leaning nonprofit applicants for extra scrutiny.