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Published — November 21, 2014

Conservative group fumbles disclosure in new tax document

American Commitment to amend IRS filings after inquiry

Introduction

The conservative nonprofit American Commitment is amending its 2013 tax return with the Internal Revenue Service after questions this week from the Center for Public Integrity.

The nonprofit — led by Phil Kerpen and receiving the majority of its funding from groups within the political network of billionaire brothers David and Charles Koch — misstated key identifying information about two of the four nonprofits it financially supported last year in documents filed earlier this week with the IRS.

Last year, American Commitment split $135,000 in donations among four groups, according to its new filing.

Two of the beneficiaries — New Jersey Family First, which received $30,000, and FRC Action, which received $28,000 — are politically active “social welfare” nonprofits organized under Sec. 501(c)(4) of the tax code.

However, the employer identification numbers listed by American Commitment in each case — known as EINs — belonged to related 501(c)(3) charities that, by law, can’t engage in electoral politics.

FRC Action is the political wing of the Family Research Council that describes itself as “dedicated to preserving and advancing the interests of family, faith and freedom in the political arena.” New Jersey Family First, likewise, is the political arm of the New Jersey Family Policy Council, which describes itself as dedicated to “creating culture changers at home, in the church, in the voting booth and in the public square.”

During the 2014 election cycle, New Jersey Family First’s political activity included spending about $25,000 to advocate against U.S. Sen. Cory Booker, D-N.J.

Kerpen confirmed to the Center for Public Integrity that the money from American Commitment went to the 501(c)(4) arms of the groups.

“We are correcting the erroneous EINs of 2013 grantees,” Kerpen wrote in an email.

When groups like American Commitment make grants to other organizations, the IRS requires, under the penalty of perjury, that they provide detailed information, including the full legal name of the beneficiary, the mailing address of each recipient organization, the organization’s federal employer identification number and the section of the tax code under which the beneficiary is exempt.

The other two beneficiaries of American Commitment’s money 2013 were the Iowa-based American Future Fund, which received $65,000, and the Washington, D.C.-based Catholic Advocate, which received $12,000.

Intentional misstatements on tax returns may invite enforcement actions by the IRS. Inadvertent mistakes, however, are less worrisome to the IRS so long as they’re corrected — though they can be frustrating to those who use the documents to follow the money moving between organizations.

“Accounting mistakes make tracking the flow of money all the more difficult,” said Robert Maguire, a researcher at the Center for Responsive Politics, which monitors money in politics. “When organizations aren’t careful how they report, it is more difficult, or even impossible, to document relationships between groups.”

Politically active nonprofits on both the left and right have been known to make mistakes on their annual tax returns.

Earlier this year, for instance, both Patriot Majority USA, a liberal group, and Americans for Tax Reform, a conservative group, filed amended tax returns after they omitted information about their top vendors from recent filings, as the Center for Public Integrity previously reported.

Read more in Federal Politics

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