- August 1 - The Bush-Cheney recount fund, which evaded soft money disclosure laws for 18 months, filed disclosure reports with the Internal Revenue Service (IRS) containing thousands of errors and omissions and could be fined $850,000, Public Citizen has determined.
The Bush-Cheney 2000, Inc-Recount Fund, a 527 political group created after the November 2000 election, filed disclosure reports with the IRS on July 15, 2002. The reports were submitted at 3:25 p.m. on the last day of an IRS amnesty program that allowed out-of-compliance groups to turn in reports and avoid millions of dollars in potential fines.
But the Bush-Cheney recount fund disclosure reports are incomplete, and the
group could be subject to IRS fines in the thousands of cases where it did not
disclose the employer and occupation of individual contributors and recipients
of expenditures. Also, the recount fund apparently did not disclose to the IRS
more than 600 donors that it listed on the Bush campaignís Web site. In a letter
to IRS Commissioner Charles O. Rossotti, Public Citizen urged the IRS to "use
the Bush-Cheney recount fund as an example to send a strong signal to other 527
groups that violations of the law will not be tolerated." Click
here to view the letter, which was sent today.
"It is unacceptable for the Bush-Cheney recount fund to dodge disclosure for 18 months and then arrogantly suggest, as did the fundís lawyer when speaking recently to reporters, that the law does not apply to them," said Joan Claybrook, president of Public Citizen. "They must take responsibility for the tardy filings and they owe the public an apology, not lame excuses."
Findings from Public Citizenís examination of the disclosure reports include:
- The Bush-Cheney recount fund did not list the employer and occupation for 2,456 contributors who gave more than $200, as required by law. This information is critical to understanding which special interests were attempting to influence the election process and curry favor with Bush. These omissions totaled $2 million; the IRS can fine the fund 35 percent of these disclosure failures. Potential IRS fines for these omissions total $711,000.
- The fundís disclosure reports filed with the IRS show 6,806 contributors who gave more than $200. But a database of contributors provided on the Bush-Cheney campaign Web site lists 7,421 contributors who gave more than $200. If the Web site is accurate, this leaves a disparity of 615 contributors that the fund apparently did not report to the IRS. The IRS can assess fines of 35 percent for these undisclosed contributors; this fine could reach $43,000 if each contributor gave the $200 minimum.
- The Bush-Cheney recount fund did not list the employer and occupation for individual recipients of 143 expenditures greater than $500 and totaling $272,050 Ė as required by the IRS. The IRS can levy fines of 35 percent on these disclosure omissions, which could total $95,000.
- The Bush-Cheney recount fund failed to file five disclosure reports during the 18-month period. Ultimately, the fund reported $10.2 million in contributions and $13.8 million in expenditures. Fines for 527 groups that do not comply with the disclosure law can total 35 percent of a groupís total contributions and expenditures. Based on that percentage, fines of $8.47 million could have been assessed against the group had it not filed with the IRS on the last day of the amnesty program.
- The public can see how the recount fund spent $13.8 million in the battle
over Floridaís 25 electoral votes (click
here). These expenditures include money to Enron ($28,281), Halliburton ($2,407)
and Reliant Energy ($1,724) for use of their private jets. All three companies
are under investigation by the Securities and Exchange Commission for cooking
The fund continues to brazenly dismiss the disclosure rules. Benjamin Ginsberg, a lawyer for the fund, told The Washington Post on July 27, 2002, "We donít think we have an obligation to file this. We still think we are exempt, but the truth is: Why not take the issue off the table."
In fact, the 527 group disclosure rules are clear: The Bush-Cheney recount fund was required to file disclosure reports with the IRS. The law clearly states that a 527 political organization must file if it was created "primarily for the purpose of directly or indirectly accepting contributions or making expenditures . . . to influence the selection, nomination, election, or appointment of any individual to any Federal, State, or local public office . . . or the election of Presidential or Vice-Presidential electors" [26 U.S.C. 527(e)(1) & (2)].
Despite more than a thousand disclosure errors, it is possible the IRS will not penalize the Bush-Cheney recount fund for the compliance failures. The IRS has yet to create a compliance program for 527 groups and may not be equipped to investigate or fine any 527s, including those affiliated with a presidential campaign.
"The Bush-Cheney campaign had 18 months to comply with the law, and the IRS has had two years to create a compliance program," said Frank Clemente, director of Public Citizenís Congress Watch. "Neither has met its obligation to the law and the public."