Tax Complaint Filed Against “Conservative” American Action Network
By Brett Neely
MPR News | March 8, 2011
WASHINGTON — A Washington ethics watchdog group has filed a complaint with the Internal Revenue Service about the tax-exempt status of the American Action Network (AAN), which is led by former Republican Sen. Norm Coleman.
The complaint by Citizens for Responsibility and Ethics and Washington (CREW) says AAN misrepresented itself to the IRS when applying for tax-exempt status by claiming it was a “social welfare” organization that would only play a “minor” role in the political process.
Following the Supreme Court’s 2010 Citizens United decision, AAN’s 501(c)4 status under the tax code meant the organization was not required to disclose its donors. According to data from Opensecrets.org, AAN spent at least $26 million during the last political campaign cycle. Much of that money was spent on so-called “issue ads” targeting Democratic candidates for the House and Senate. According to CREW’s press release, AAN’s ads were explicitly political:
One warned voters the health care reform law their Democratic member of Congress had voted for would pay for Viagra for sex offenders. Even though no vote was scheduled on repealing the law, the advertisements encouraged viewers to call their member and tell them to vote for repeal “in November.” This kind of political advertisement masquerading as an “issue” ad is political activity under tax law.
Some of those ads were directed against DFL Rep. Tim Walz. According to Opensecrets.org, AAN spent $275,000 in Walz’s congressional district last fall. MPR News has requested a statement on CREW’s complaint from Walz’s campaign, but not yet received a response.
Other candidates experienced even larger ad campaigns financed by AAN. The group spent $1.8 million on ads targeted against Rep. Gerry Connolly, D-VA.
CREW said its complaint against AAN was non-partisan.
“The American Action Network and Sen. Coleman have every right to work to elect more Republicans, but they can’t violate the tax laws to do it,” said CREW Executive Director Melanie Sloan in a statement. “If a group wants to take advantage of privileges like protecting the identity of donors, it has to follow the obligations that go along with that.”
Coleman, who serves as CEO of AAN, launched the organization in February 2010, not long after announcing he would not run for governor. He served one term as Senator before being narrowly defeated by Al Franken. AAN’s chairman is Fred Malek, a prominent Republican fundraiser.
MPR News has also requested a statement from AAN and Coleman, but has not yet received a response.
UPDATE: AAN spokesman Jim Landry wrote in with the following response: “This is a baseless complaint from a partisan group with a record of filing baseless complaints.”