Associated Press -
Unions Don't Cite Political Funds
8/7/2001 --
The wire service ran an article highlighting comments by current IRS officials
and other leading experts on unreported political activities by unions,
including the NEA as uncovered by Landmark Legal Foundation.
By
Associated Press Writer
WASHINGTON (AP) — Eager to help Democrats, unions have spent millions on TV ads
and voter guides portraying the party favorably, and worked neighborhoods to
get voters to the polls. But they routinely report zero political expenses to
the IRS, a review of union documents shows.
IRS officials told The Associated Press that it appeared the unions were
obliged to disclose at least some of the activities on their tax forms. Failure
to report taxable political expenses can result in back taxes and fines for tax-exempt
organizations like unions.
"It could trigger an audit. It certainly could," said
AP described to IRS officials the political expenditures detailed in the
documents without identifying any specific union involved. The officials
cautioned they couldn't comment on specific unions and that auditors could not
make a determination unless they reviewed each expenditure
and its underlying documentation.
One key, the officials said, was whether the documents show the intent of
unions was to help candidates or specific political parties.
Labor officials — including those at the AFL-CIO, which spent $35 million on
activities during the 1996 election campaign but reported no political expenses
to the IRS — said they believe they have properly
filled out their tax forms.
"We feel perfectly comfortable," said
Some of organized labor's political foes did report political spending. For
instance, the U.S. Chamber of Commerce reported nearly $14 million in political
and lobbying expenses in 1996 and the National Association of Manufacturers
reported $5.2 million.
However, IRS officials said business associations also are required to separate
their political and lobbying expenses, something these groups did not do.
AP gathered the tax forms of several major unions dating to 1996. None reported
political expenses.
AP also reviewed thousands of pages of internal union documents gathered by the
Federal Election Commission during a four-year investigation of union
activities. That inquiry ultimately ended without any action against the
unions.
The documents, which otherwise would not be public, detail how tens of millions
of dollars in workers' dues were spent on activities designed to defeat
Republicans or elect labor-friendly Democrats in 1996.
For instance, a document laying out Democratic activities in North Carolina to
be approved and partly funded by unions stated a clear mission: "We seek
to: re-elect President Bill Clinton, re-elect Gov. Jim Hunt, elect Harvey Gantt
to the Senate ... win back at least two seats if not the majority in our
state's congressional delegation."
The AFL-CIO trained about 50 Democratic congressional candidates, arming them
with materials to help them better communicate with
unions and women voters.
And several unions pooled their money for a $2.7 million program called the
"96 Project." Internal project documents said the goal was to
influence the national debate over congressional Republicans' "Contract With America" and to "hold individual members of
Congress accountable" for their support of that agenda.
The unions also ran millions of dollars of so-called issue ads in congressional
districts where they hoped to defeat Republicans. The ads portrayed GOP
policies as bad and Democratic alternatives as better. Republicans are
"after Medicare again," said one ad that ran around the time of the
1996 presidential nominating conventions.
The IRS' Miller said documents indicating that the unions' intent was to help
Democrats win suggest those expenses should have been disclosed to the IRS.
"If I was an examiner and have documents showing the purpose is to elect
Democratic candidates, and they say it's not partisan,
it shifts the burden on them," he said.
Union leaders said they don't believe their activities met the IRS requirement
for reporting political expenditures.
"It's a common practice by us and every other organization I know of, and
there's no legal authority to the contrary. You are really grasping at
straws," said Laurence Gold, the AFL-CIO's associate general counsel.
The Internal Revenue Service code requires unions to list any direct or
indirect expense "intended to influence the selection, nomination,
election or appointment of anyone to a federal, state or local public
office."
Gold said one activity that unions considered possibly political — voter guide
ads — was paid for out of a segregated fund that did not require reporting to
the IRS. Everything else was not reportable, he said, in part because many
activities were aimed at union members. The ads portrayed Democrats favorably and
Republicans negatively.
Tax experts said the union documents likely would raise questions among IRS
auditors. But they also faulted the agency for not speaking clearly enough on
what political activities may be reportable for tax purposes.
"When the guidance doesn't keep up with the activity, it provides an
opportunity for aggressive interpretation of the rules," said
"These unions are the equivalent of an ATM machine for the Democratic
Party," Levin said. "The fact that they don't report a single dollar
on their tax returns is simply unbelievable."