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September 29, 2010; Source: New York Times | Democrats on the Senate Finance Committee have asked the I.R.S. to take a closer look at political spending nonprofit groups. Since the Supreme Court’s ruling in Citizens United, it has become increasingly clear that nonprofit groups are being used as improper conduits for anonymous political donors – a violation of I.R.S. regulations.

“With hundreds of millions of dollars being spent in election contests by tax-exempt entities,” Max Baucus, chairman of the Senate Finance Committee wrote, “it is time to take a fresh look at current practices and how they comport with the internal revenue code’s rules for nonprofits.”

We want to be clear on this point: While 501(c)(3) public charities are absolutely prohibited from political campaign activities [PDF], 501(c)(4) “social welfare organizations” (as well as 501(c)(5) labor organizations and 501(c)(6) business leagues) can engage in campaign activities “so long as it does not constitute the organization’s primary activity,” according to the IRS.

So far, the anonymous money has been heavily tilted toward republican politicians. As midterm elections loom, and perhaps seeing the writing on the wall, President Obama has made political spending a campaign issue. (Republicans have blocked legislation that would make it mandatory for groups running political ads to disclose their largest donors.) Based on the I.R.S’s findings, Baucus (D-Mont.), plans on instructing his committee to launch an investigation.—Aaron Lester

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