Press Release

For immediate release: May 3, 2012

Contact: Arn Pearson (207) 272-2886

Common Cause Calls on Maine Attorney General to Investigate ALECs Compliance with State Tax and Lobbying Laws
AUGUSTA, MAINE- On the heels of filing a whistleblower complaint with the IRS charging abuse of federal tax laws by the American Legislative Exchange Council (ALEC), Common Cause today asked Attorney General William Schneider to look into the groups compliance with Maines tax and lobbying laws. ALEC is registered in Maine with the Secretary of State as a charitable organization, and at the federal level has tax-exempt status under section 501(c)(3) of the Internal Revenue Code. Common Cause filed its complaint to the IRS under the Whistleblower Tax Act on April 21, seeking an investigation into ALECs lobbying activities, the collection of unpaid taxes, and assessment of appropriate penalties. Based on more than 4,000 pages of ALEC documents, the complaint alleges violation of the groups federal tax-exempt status, massive underreporting of its lobbying activities and improper tax deductions for ALECs corporate funders. The complaint was filed on Common Causes behalf, pro bono, by the prominent whistleblower law firm of Phillips & Cohen LLP. In light of the evidence of extensive federal tax violations by ALEC, Common Causes letter to Attorney General Schneider requests an investigation into ALECs compliance with Maines tax, gift, solicitation and lobbying laws. ALEC operates as a corporate lobby group masquerading as a public charity at the taxpayers expense, said Arn Pearson, Vice President for Programs at Common Cause. Given ALECs abuse of federal tax laws and failure to report lobbying expenses, Maine citizens have every reason to be concerned about whether ALEC is operating in violation of state laws as well. Mainers should not be forced to subsidize ALECs efforts to quietly pass laws written by out-of-state lobbyists and designed to benefit the economic and political interests of ALECs corporate backers, Pearson said. ALEC has come under increased fire lately for its extremist agenda to limit voting rights, privatize schools and prisons, weaken environmental protections, and promote Stand

Your Ground gun laws based on the controversial Florida law at issue in the Trayvon Martin shooting. At least 14 major companies, including Proctor & Gamble, McDonalds, Wendys, Kraft Foods, Mars Inc. and Coca-Cola, have abandoned ALEC in recent weeks, as have 31 state legislators in 11 states from both major political parties. Companies pay between $7,000 and $25,000 per year for a corporate membership in ALEC. ALEC also spends thousands of dollars every year on scholarships for Maine legislators and their families to attend junkets and conferences at luxury resorts. These events bring corporations and lawmakers together in closed-door sessions to draft and propose ALEC legislation. Past events have included an annual clay pigeon shoot and barbeque sponsored by the NRA, and a cigar reception sponsored by Reynolds Tobacco. ALEC was formed as a 501(c)(3) organization, which means that it is tax-exempt and that donations to it are tax deductible. The law limits lobbying by groups with that designation, specifying that no substantial part of their activity can be devoted to influencing legislation. ALEC has declared under oath in several tax returns that it does no lobbying. Evidence in the Common Cause filing shreds that claim; it includes several thousand pages of ALEC records, detailing extensive efforts to influence a wide range of state legislation. You can read the full complaint here: www.CommonCause.org/IRSWhistleblower

### Common Cause is a nonpartisan, grassroots organization dedicated to restoring the core values of American democracy, reinventing an open, honest, and accountable government that works for the public interest, and empowering ordinary people to make their voices heard.