‘Ending their unity ticket doesn’t absolve No Labels’ from flagrantly disregarding the law and failing to hold them accountable would set a dangerous precedent for the future’
End Citizens United filed a supplemental complaint against No Labels with the Internal Revenue Service (IRS) alleging the group broke nonprofit tax law in its effort to launch a third-party presidential campaign.
The complaint cites newly released testimony from litigation brought by No Labels against NoLabels.com Inc. which revealed that seemingly all of No Labels’ activities have been focused on benefitting the No Labels Party. However, as a 501(c)(4) nonprofit, No Labels is required to operate “exclusively for the promotion of social welfare”—meaning it must be primarily engaged in the promotion of the common good and general welfare of the people.
By its own words and the words of the No Labels Party chairs, No Labels is in full control of the No Labels Party,” wrote End Citizens United President Tiffany Muller in the complaint to the IRS. “No Labels has misused its non-profit status to funnel dark money to the No Labels Party. No Labels’ mission has been to benefit the No Labels Party—not the general social welfare. Therefore, in light of the new facts indicating that No Labels has operated for the private benefit of the No Labels Party, we respectfully ask the IRS to take immediate action to investigate whether the organization’s 501(c)(4) status should be revoked.”
The complaint builds on End Citizens United’s previous complaint filed with the IRS which alleged that No Labels cannot be considered a 501(c)(4) social welfare organization as their work primarily benefits the No Labels Party and is primarily for political campaign intervention.
Muller said of the complaint, “We previously alleged that No Labels was breaking nonprofit tax law and newly revealed testimony that came from their own litigation further proved that to be fact. Ending their unity ticket doesn’t absolve No Labels’ from flagrantly disregarding the law and failing to hold them accountable would set a dangerous precedent for the future.”
- The IRS requires 501(c)(4) nonprofits to operate “exclusively for the promotion of social welfare”—meaning these organizations must be primarily engaged in the promotion of the common good and general welfare of the people.
- The initial complaint stated that No Labels is violating its 501(c)(4) status in two ways: (1) it is primarily benefiting private individuals–the No Labels Party; (2) its primary purpose is not promoting social welfare and instead it is primarily engaged in political activity.
- Since the filing of the initial complaint, additional facts have come to light from litigation brought by No Labels against NoLabels.com Inc. for trademark infringement.
- Testimony from No Labels Director of Ballot Access and chairs of the No Labels Party in Arizona, Florida, Montana, and North Carolina reveal that seemingly all of No Labels’ activities are focused on benefitting the No Labels Party.
- While these witnesses’ testimony was intended to demonstrate that No Labels tightly controls the use of its name and trademark, what it revealed was No Labels’ absolute control over the No Labels Party, and the vast resources flowing from the 501(c)(4) organization to the state political parties.
- No Labels’ Director of Ballot Access admitted that the 501(c)(4) has absolute control over the No Labels Party:
- No Labels is in control of the conduct of the party officers and the state affiliates and in control through a number of mechanisms, party officer agreements, bylaws, and an understanding between the No Labels officers and No Labels national, that No Labels is control — is in control of the use of the name, the way the name is used, as well as the conduct of the state affiliates and any officer associated with them
- Furthermore, No Labels appears to be the sole organization funding the No Labels Party’s activities. In addition to monetary funding, No Labels is providing extensive, unreported in-kind contributions to the No Labels Party to create the infrastructure necessary for its “Unity Ticket” campaign.
- No Labels’ activities clearly benefit the No Labels Party—and only the No Labels Party—and the facts are indistinguishable from the instances where the IRS has denied exemption.
- Taken together, the facts laid out in this complaint along with the initial complaint make clear that No Labels serves the private benefit of the No Labels Party, which is prohibited as a condition of maintaining tax-exempt status.
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