Politics & Government

Kentucky ethics watchdog challenges conservative group's tax status

Richard Beliles, chairman of Common Cause of Kentucky, on Thursday, Jan. 5, 2012 at the Capitol in Frankfort, Ky. Richard Beliles staged a sit-in at the governor's office during our time with him, to protest mountaintop removal mining. He does the Thursday sit-in shift every week as part of a larger group of volunteer protesters associated with an organization called Stop Mounty Top Removal.  Photo by David Perry | Staff
Richard Beliles, chairman of Common Cause of Kentucky, on Thursday, Jan. 5, 2012 at the Capitol in Frankfort, Ky. Richard Beliles staged a sit-in at the governor's office during our time with him, to protest mountaintop removal mining. He does the Thursday sit-in shift every week as part of a larger group of volunteer protesters associated with an organization called Stop Mounty Top Removal. Photo by David Perry | Staff HERALD-LEADER

FRANKFORT — An ethics watchdog group is asking Attorney General Jack Conway to investigate the tax status of a conservative group made up of state lawmakers and business interests involved in legislation.

Richard Beliles, chairman of Common Cause of Kentucky, said in a letter Tuesday to Conway that the American Legislative Exchange Council enjoys tax-exempt status because it is registered with Conway's office and at the federal level as a charity. But ALEC is primarily a lobbying organization and might be in violation of its tax-exempt status, Beliles alleged.

"ALEC is a corporate lobby front group masquerading as a public charity on the taxpayers' dime," Beliles said. "Kentuckians shouldn't have to subsidize ALEC's agenda to limit voting rights, undermine our public schools, spread Stand Your Ground gun laws and weaken laws protecting our environment."

Common Cause also asked Conway to investigate whether ALEC's lobbying activities in Kentucky are being properly disclosed.

Conway spokeswoman Allison Martin said that the attorney general's staff was reviewing the letter from Beliles and that it would be inappropriate to comment further about specific allegations.

Alan P. Dye, legal counsel to ALEC, dismissed Common Cause's claim as "patently false."

"The current complaint mostly ignores applicable law and distorts what it does not ignore," Dye said in a statement. "After three decades of counseling clients on non-profit and federal disclosure requirements, it's clear to me that this is a tired campaign to abuse the legal system, distort the facts and tarnish the reputation of ideological foes."

He said Common Cause was a "partisan front group masquerading as an ethics watchdog."

Common Cause of Kentucky's letter to Conway comes after the national Common Cause group filed a whistle-blower complaint with the Internal Revenue Service, claiming that ALEC is flouting federal tax law by posing as a tax-exempt charity while spending millions of dollars to lobby for bills in state legislatures across the country.

ALEC has more than 2,000 legislative members representing all 50 states, and more than 85 members of Congress and 14 sitting or former governors. It also claims about 140 corporate members.

ALEC's state chairmen in Kentucky are Sen. Tom Buford, R-Nicholasville, and Rep. Mike Harmon, R-Danville.

Buford said about 32 state senators and 37 House members — Republicans and Democrats — in Kentucky are members of ALEC and pay $100 membership dues.

Buford said he was not a tax lawyer but was confident that ALEC's legal staff had worked properly with the federal government to get the group's tax-exempt designation.

"It's unfortunate there is an onslaught against ALEC because it pulls legislators together and, I think, provides model legislation," Harmon said. "I don't belittle it the tax-exempt status."

Beliles said the cost of corporate membership in ALEC ranges from $7,000 to $25,000, which is tax-deductible.

He said ALEC had faced scrutiny recently for its role in support of gun laws that initially shielded the killer of Florida teen Trayvon Martin from prosecution.

Since then, about a dozen companies, including McDonald's, Wendy's, Kraft Foods, Mars Inc. and Coca-Cola, have withdrawn from ALEC, Beliles said.

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