Under the Dome

Advocacy group says video shows IRS violation by group that ran Tillis ads

A liberal advocacy group says that an election night video backs up its complaint that a nonprofit previously run by current state Republican Party executive director Dallas Woodhouse is in conflict with IRS rules and laws.

In the WNCN-TV video, Woodhouse is in a celebratory mood as returns showed House Speaker Thom Tillis beating incumbent Kay Hagan for the U.S. Senate seat in North Carolina.

The reporter turns to Woodhouse and says: “You just mentioned – you spent a whole lot of money to get this man elected, right?”

To which Woodhouse replies: “$4.7 million! We did it.”

The advocacy group Citizens for Responsibility and Ethics in Washington filed a complaint with the Internal Revenue Service on Tuesday asking it to sanction the nonprofit group, Carolina Rising, because it spent almost all of the money donated to it buying TV ads that benefited Tillis’ campaign.

Carolina Rising was formed as a “social welfare” group under IRS law. That means it cannot spend more than half of its money on political activity.

Woodhouse says that a series of TV ads his group bought were “issue” ads and not political activity.

CREW contends Woodhouse’s videotaped remarks prove otherwise.

Defining when ads are political or are issue-oriented is not clear cut. Making that determination will not necessarily be based on what Woodhouse said.

The ads supported by the group’s spending would likely receive more scrutiny.

The group ran several ads during the Tillis race last year against Hagan that featured Tillis and/or Gov. Pat McCrory.

Documents show the group spent about $4.65 million in 2014 on ads that ran during the Tillis race. That is about 97 percent of the $4.8 million that Carolina Rising raised.

The Federal Election Commission has not issued definitive guidance on the question.

The IRS defines social welfare nonprofit organizations this way:

“To be operated exclusively to promote social welfare, an organization must operate primarily to further the common good and general welfare of the people of the community (such as by bringing about civic betterment and social improvements). ... The promotion of social welfare does not include direct or indirect participation or intervention in political campaigns on behalf of or in opposition to any candidate for public office. However, a section 501(c)(4) social welfare organization may engage in some political activities, so long as that is not its primary activity.”

Primary is defined as more than half of the nonprofit’s activity.

Woodhouse has said Carolina Rising was formed to promote education, free-market and government reform, and not to help Tillis win.

Another group that has looked into Carolina Rising, the Center for Responsive Politics, reports that the TV advertising contracts reported to the Federal Communications Commission were filled out to describe its purpose and said in those documents that the ad campaign was “pro-Thom Tillis.”