IRS urged to probe anti-tax groups

Reed ties alleged; organization rejects complaint

15 Mar 2006 // A watchdog group has asked the Internal Revenue Service to investigate two nonprofit groups operated by anti-tax activist Grover Norquist, alleging that Norquist improperly funneled Indian tribe money to Ralph Reed during anti-gambling campaigns in Alabama.

The complaint, filed on Tuesday by Citizens for Responsibility and Ethics in Washington, asks the IRS to yank the tax-exempt status of Norquist's Americans for Tax Reform and the related ATR Foundation.

The watchdog group alleges that Norquist used both organizations to help Washington lobbyist Jack Abramoff move funds from his Indian tribe clients --- with casino markets to protect --- to Reed, who would rally Christian supporters to fend off efforts to expand gambling.

Reed, who worked through his Georgia company, Century Strategies of Duluth, is accused of no wrongdoing. Melanie Sloan, executive director for CREW, said Reed's troubles are political rather than legal.

"Norquist's problems are Norquist's problems. But Reed helped create the whole system," Sloan said.

A spokesman for Reed, a Republican candidate for lieutenant governor of Georgia, defended Americans for Tax Reform as "one of the most respected conservative organizations in the nation."

Jared Thomas, Reed's campaign manager, also denounced CREW as "a radical left organization" attempting to "silence conservatives."

Mark Green, an IRS spokesman in Atlanta, said it would violate agency policy to say how --- or whether --- the IRS would respond to the complaint.

CREW has filed similar complaints to the IRS, most recently in November against Focus on the Family, a conservative, nonprofit organization based in Colorado and led by James Dobson.

The CREW complaint against Norquist focuses on efforts to fund Alabama campaigns against a lottery and opposing video poker legislation in 1999 and 2000. The Mississippi Band of Choctaw, an Abramoff client, sent a total $1.15 million to Reed for the fights.

The money was first sent to Americans for Tax Reform. Most of the money went to the Alabama Christian Coalition. The complaint notes that, in e-mails made public by a U.S. Senate investigation, Reed was involved in directing the money from group to group, with the effect of obscuring the cash's origin with the tribe.

Though he maintains the money came from the Choctaw's nongaming enterprises, Reed later apologized for keeping the source of the money secret.

CREW contends that, by acting "in a commercial manner to benefit a private party," Norquist's groups violated their tax-exempt status.

CREW also noted that, in e-mails made public by a Senate investigation, Abramoff complained that Norquist sometimes extracted a fee for making the transfers.

Because "money laundering" is a commercial enterprise, CREW alleges, those fees "are taxable business income."