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Bloomington political candidate sues IRS over campaign regs

Tue, 19 Feb 2013 13:52:43 CST
By: Charlie Schlenker

A defeated Central Illinois Congressional Candidate is suing the IRS saying its rules contributed to his loss in November. The issue involves campaign spending by groups that are not forced to disclose who gives them money. Doctor David Gill lost to Republican candidate Rodney Davis by three tenths of one percent of those voting. The Bloomington emergency room physician says a 501C4 organization known as the American Action Network dumped $1.5 million in negative advertising about him into the campaign, much of it in the closing weeks, and it played a very important role in his defeat.

"All they had to do was change the votes of 501 people. I lost by 1002 votes and a million and a half dollars touched a lot of people with false claims about me."

Gill says the ads, commercials, and robocalls were ludicrously false.

"They were saying that I wanted to do away with Medicare. They were referring to me as a mad scientist. The were saying I channeled money to Solyndra. And I've never held office. They were saying I sent jobs to China."

Gill says instances of voters believing the ads happened daily, but one sticks out. On the final day of the campaign he says a man in Maroa asked him his position on Medicare to clear up confusion over the ads.

"And I said well, I stand for Medicare for all. And he said I thought so. He said my mom thinks you are against Medicare. And I said, you go tell her. And he said it's too late. She voted early."

Gill's former Campaign Manager Sherry Greenberg says the allegations affected the dynamic of the campaign.

"We had to spend an inordinate amount of time dealing with refuting these claims as well as trying to tailor our own media to counteract or attempt to counteract what was being put forth in these ads and we basically didn't know who we were going against because the donors aren't disclosed."

Gill's co plaintiff in the civil lawsuit against the IRS is CREW, or Citizens for Responsibility and Ethics in Washington, a not for profit legal watchdog group that generally gets it funding from liberal leaning foundations. Executive Director Melanie Sloan says the problem began after the Citizens United Supreme Court decision that allowed private groups unlimited fundraising for political purposes. She says the IRS created a loophole for 501C4 not for profit organizations that does not force disclosure of the source of donations if the not for profit receiving the money is classified as a social welfare or education group. But, Sloan says the IRS administrative rules botched the definition. She says the statute says 501c4s must operate exclusively for social welfare, but the IRS regulation uses the word primarily.

"By creating a regulation that conflicts with the tax code itself, the IRS has contributed to the current state of affairs."

CREW says a filing error by the insurance giant Aetna and a later disclosure by the trade and lobbying group Pharmaceutical Research and Manufacturers Association of America, or PhRMA, show the two have given at least $7.8 million to AAN in the last two years.

"It's not a coincidence that many of AAN's ads focused on healthcare and criticized Democratic Candidates for supporting Obamacare. Doctor Gill likely was targeted because he supports a single payer national healthcare plan which both Aetna and PhRMA and therefore American Action Network oppose."

Sloan says the group also illustrates another problem with the imprecise language the IRS uses to regulate group spending.

"Many groups have not been forthcoming on their applications. American Action Network, for example said it was going to be involved in a very minor amount of political activitity on its initial forms and then immediately turned around and started raising money for political ads, and I mean immediately. And that is a common thing we have seen on applications they say one thing to get their approval and then turn around and do another."

Sloan estimates AAN spends 60% of its funding on political activity even though most politically active 501c4s have adopted a 49% standard to preserve the idea of "primarily" social welfare spending.

"CREW and Doctor Gill are asking the courts to strike down the IRS regulation and enforce the tax code provision requiring 501C4 organizations to operate exclusively for the promotion of social welfare."

If successful, the suit would impact groups across the political spectrum. President Obama had a couple 501C4 groups in the last election cycle as did other Democratic Party centered organizations. CREW estimates the so called dark spending by all such groups in the last election cycle topped $300 million. The IRS has faced a rule making petition and numerous complaints over its wording in the past and said it is aware of the public concern and is reviewing the issue. The agency has not yet responded to the suit by Gill and CREW. They acknowledge the IRS may oppose the suit saying Gill lacks standing to sue or claim that he cannot definitively show he was damaged due to the variety of factors involved in a campaign. Gill and CREW do not expect a speedy resolution to the case.

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