In a letter sent to the American Legislative Exchange Council (ALEC), Caplin & Drysdale's Marcus S. Owens states that the conservative nonprofit made conflicting statements to federal and state regulators in an attempt to maintain its status as a tax-exempt charitable nonprofit. For more on the story, see Roll Call's website and the excerpt below taken from the article.
The new complaint focuses on the organization's Legislative Scholarship Program, which reimburses state lawmakers for food, travel and lodging when they travel to the nonprofit's conferences. ALEC has repeatedly told the IRS that it does not control these funds, but told the state of Wisconsin the opposite, according to the complaint.
"We happen to think they were telling the truth to the state. We think they were lying to the IRS," Owens said today in an interview with Roll Call. "That is the proverbial smoking gun. Now we have documentary proof."
In May 2010, ALEC told Wisconsin's Government Accountability Board that it raises and distributes the funds to pay for lawmakers' travel itself. But in July 2012, when the group filed its IRS Form 990 covering that time period, it said the funds were not considered part of ALEC's revenue or expenses because the group "has no ownership of the funds or control over how they are spent," according to the complaint.