Bill Koch's anti-wind group hit with Greenpeace IRS complaint

Bill Koch from Boston Globe

The Boston Globe ran a story today on Greenpeace's complaint to the Internal Revenue Service and Massachusetts Office of Campaign & Political Finance calling for an investigation into tax status violations by the Alliance to Protect Nantucket Sound.  The Alliance has waged a dirty tricks war against Cape Wind, the nation's first offshore wind farm, since 2001.  Today's story follows an article by Pulitzer Prize winning columnist Michael Rezendes in the Globe on Tuesday questioning whether the Alliance had violated the law.

Greenpeace and its supporters have supported the Cape Wind project from the start with field campaigning on the Cape, protests, rallies and petition drives to the Department of Interior to approve the project.

The Alliance ran attack ads against Gov. Deval Patrick about his support for Cape Wind in the run-up to November's election -ads that were clearly over the line electioneering, in clear violation of their non-profit tax free status. 

Electioneering, is working for the election or defeat of a candidate.  Groups like the Alliance and other 501c3 groups are permitted to take positions on policies but not to back candidates.  There are other tax status classes for election work, but the Alliance knows full well it doesn't qualify. 

Letters were sent to the IRS, the Massachusetts Attorney General's office and the state Office of Campaign & Political Finance voicing our complaint. 

Supporting evidence and references were attached to the letters:

Exhibit A - Common Cause Complaint

Exhibit B - The Alliance Campaign Finance Report

Exhibit C - Go Green For Less homepage

Exhibit D - Six Alliance Press Releases

Bill Koch, the other Koch brother, is a founder, Board member and one of the Alliance's principal donors. Koch has used all resources at his disposal to attempt to defeat the Cape Wind Project over the past decade.   Oxbow owns coal mines, sells petroleum coke and other products.  In addition to founding and funding the Alliance, Bill Koch deployed lobbyists from his company Oxbow Corporation, to lobby against Cape Wind in Washington DC.

From our IRS letter:

Lobbying reports filed with the Clerk of the U.S. House of Representatives and the Secretary of the Senate disclose $600,000 of expenditures made since 2006 by the Oxbow Corporation of which William Koch is the Founder, Owner and President... The lobbying reports reflect that these funds were expended to lobby on legislation relative to "issues surrounding wind energy project in Nantucket Sound" and other related matters.  If the Cape Wind development project was not relevant to the business interests of Oxbow Corporation and Mr. Koch, the company would presumably not be expending funds in that area. 

The Alliance clearly overstepped the limits of their non-profit tax status.  Our letter to the IRS defines the rules:

....50l(c) (3) organizations are absolutely prohibited from directly or indirectly participating in, or intervening in, any political campaign on behalf of or in opposition to any candidate for elective public office.  While Section 50l(c) (3) organizations are permitted to take positions generally on public policy issues "section 50l(c)(3) organizations must avoid any issue advocacy that functions as political campaign intervention.  Even if a statement does not expressly tell an audience to vote for or against a specific candidate, an organization delivering the statement is at risk of violating the political campaign intervention prohibition if there is any message favoring or opposing a candidate.."  IRS Revenue Ruling 2007-41.  2007-25 I.R.B. (June 18, 2007).  As the IRS noted, key factors in determining whether the activity is unlawful political campaign intervention includes:
    -whether the statement identifies one or more candidates for a given public office;
    -whether the statement expresses approval or disapproval for one or more candidates' positions' or actions;
    -whether the statement is delivered close in time to the election;
    -whether the issue addressed in the communication has been raised as an issue distinguishing candidates for a given office.

Our complaint identifies a specific radio ad run by the Alliance:

The radio ad clearly identified a candidate for the office of Governor.  The ad expressed strong disapproval for that candidate's position on the Cape Wind project.  The ad was repeatedly aired within days of the statewide election.  The Cape Wind project was the subject of much discussion throughout the gubernatorial campaign.  In fact, the same gubernatorial candidate who would clearly benefit from the message of the Alliance radio ads consistently published campaign materials touting his opposition to the Cape Wind project, and the fact that his opponent, Governor Patrick, supported the project.  

    This radio ad cannot in any way be described as the type of nonpartisan activity which is permitted by the Internal Revenue Code and relevant legal authority.  Rather, these ads are exactly the type of campaign activity expressly prohibited by the IRC, and relevant rulings.  Not only did the Alliance make these expenditures, but it raised funds specifically earmarked for political electioneering activity.  At least one of the individuals who funded these radio ads, who is also a member of the Board of Directors of the Alliance,  had a leadership role in the campaign of the gubernatorial candidate who would benefit from these expenditures, giving rise to a reasonable inference of coordination between the Alliance and the candidate's campaign.

And the complaint concludes:

We respectfully request that you undertake a comprehensive investigation of the Alliance's activities, contributions and expenditures.  If it has engaged in activities in violation of the IRC, we urge that you consider all appropriate fines and penalties, as well as the revocation of the Alliance's tax-exempt status. Such revocation may be the only means to ensure that public tax dollars do not continue to be improperly used by the Alliance to subsidize its various activities and the interests of its donors.