WASHINGTON, DC, April 23, 2012 -- Phillips & Cohen LLP is representing Common Cause in a whistleblower case filed with the Internal Revenue Service (IRS) last week that says the American Legislative Exchange Council (ALEC) -- which has tax-exempt status because it claims to be a non-partisan, educational organization -- is "a corporate lobbying group masquerading as a public charity."
If the IRS determines that ALEC doesn't qualify for tax-exempt status, the business-backed group would have to repay taxes that it avoided. The IRS whistleblower submission filed by Phillips & Cohen contains thousands of documents that show the primary purpose of ALEC, which classifies itself as a 501(c)(3) organization, "is to provide a vehicle for its corporate members to lobby state legislators and to deduct the costs of such efforts as charitable contributions."
"ALEC's corporate members, like Walmart and Exxon, meet with politicians at lavish resorts to push business-friendly legislation,"
Erika A. Kelton, another Phillips & Cohen attorney, noted, "The issue of ALEC's tax-exempt status has repercussions well beyond ALEC's taxes. If Pfizer, UPS, AT&T and other corporate members deducted contributions to ALEC as so-called charitable donations, then they should pay tax on those amounts. U.S. taxpayers shouldn't have to fund cigar receptions, clay pigeon shooting or beach junkets by corporate lobbyists."
Phillips & Cohen is representing Common Cause pro bono (at no charge). Whistleblowers are entitled to a reward of 15 percent to 30 percent of the amount the IRS recovers as a result of their information. Common Cause has said it will return any reward back to taxpayers.
For more information about the IRS whistleblower claim against ALEC, see the Common Cause website.
For more information about Phillips & Cohen's record, see P&C's Successful Whistleblower Cases.