The Internal Revenue Service is preparing to question some large 501(c)(4) advocacy groups about their political activities, signaling a possible investigation into whether the organizations are violating their nonprofit status, The Wall Street Journal reports.
Holly Paz of the IRS’s tax-exempt division told a conference of certified public accountants Friday that the agency is working on a questionnaire to send to such groups. The agency has not set a date for when the queries will go out.
Sending such a questionnaire is generally considered the first step in an IRS probe, according to the Journal. If the agency determines that 501(c)(4) groups have violated their tax-exempt status by engaging primarily in political work, they could be liable for large tax bills for millions of dollars in prior contributions.
Entities like Republican operative Karl Rove’s Crossroads GPS have provided major support for election advertising in recent years. Such groups, which largely tilt to the right, have been targeted by campaign-finance watchdogs and Democratic lawmakers because as nonprofits they are not required to disclose their donors. Republicans contend that closer federal scrutiny of the advocacy organizations is politically motivated.