In the current dysfunctional campaign finance system, partisan groups are able to receive 501(c)(4) status from the IRS. This tax designation is supposed to be for organizations dedicated to promoting social welfare.
But big-money operations like Crossroads GPS (Republican) and Priorities USA (Democrat) are really dedicated to influencing election outcomes, and that’s where the IRS could play a key role in stemming the million-dollar collections of these groups.
Currently, Crossroads and Priorities keep the names of their donors a secret. But the IRS has the power to audit these election powerbrokers, which would expose their true purpose and lead to losing their 501(c)(4) status.
Another action the IRS could take is change its rules regarding the classification of 501(c)(4) entities. Right now, these groups can keep donor names a secret if only 49% of total expenditures are for political instead of social welfare activities.
The Sunlight Foundation argues that this percentage is too high and that the IRS should lower it drastically, which would help curtail the power of Crossroads, Priorities and others.