"Social Welfare" Groups and Tax Exemption
It seems the IRS wants to figure out if some of these groups, including Crossroads GPS and Americans for Prosperity, actually qualify as 501(c) groups (meaning a "social welfare" group or in other words, a charity) or if they are just partisan poltical groups looking to avoid taxes. As if there is any question.
The IRS calls the move a "compliance check." It asks a wide range of questions about a group's finances and internal structure. Some of the information will turn up, eventually, in a group's tax return on the Form 990. But other intriguing information will not. For instance, how did the group set the compensation for its most highly paid officers? Did it give them first-class or charter travel? How about country-club memberships? Any other perks?
The agency has targeted groups that are "self-declared." That is, they claim they qualify for 501(c) tax-exempt status, but they've never filed the application with the IRS. That lets them avoid the application form asking the group to describe its proposed tax-exempt activities.
The IRS says the questionnaire is meant "to help us understand" the self-declared groups and to learn "how they satisfy their exemption requirements."