State Attorney General Looks Into Political Spending By Non-Profits

Bloomberg reports that state Attorney General Eric Schneiderman has launched an investigation into whether some New York-based non-profits are violating federal tax law by engaging in too much political activity.

According to the report, “a person familiar with the matter” said that the Attorney General’s Office has asked two dozen non-profits to explain how they raise and spend political money.

These SuperPACs — such as Crossroads GPS and Priorities USA, to name just two (one from each side of the political spectrum) — operate under section 501(c)(4) of the federal tax code and do not have to identify their donors.

I noted in a post last month that two Washington D.C.-based groups are pushing the IRS to draw some clear lines and step up its enforcement in this area, but the IRS did not make any commitment to do so.

New York’s Attorney General regulates charities that raise or spend more than $25,000 in the state.  While he cannot revoke a group’s tax exempt status, he could prevent them from operating in New York.  According to Bloomberg, if his office determines that a group made false claims regarding its activities, he could make a referral to the IRS.

The Buffalo News’ editorial board supports the Attorney General’s investigation.