The nation's largest tea party group, Tea Party Patriots, made a name for itself through raucous protests demanding more government transparency and fiscal responsibility. But the high standards of transparency and financial restraint that TPP's leaders expect from the Obama administration don't seem to apply to their own organization, a Mother Jones investigation has found.
TPP leaders have used dodgy accounting tricks to avoid publicly disclosing financial information. They've refused to share this information with the group's members. Tea partiers who've tried to pierce the veil of secrecy have found themselves threatened with lawsuits or shut out of the organization entirely. And the group has tried to buy the silence of former employees and disillusioned board members, offering sums as high as $20,000 to sign confidentiality agreements. (National TPP coordinators did not respond to requests for comment for this story.)
TPP has proven highly adept at raising money, and it has hired a team of high-priced PR consultants and GOP-connected direct-mail and telemarketing firms to give the group even more fundraising firepower. Yet it has failed to complete the simple bookkeeping chores required of a well-managed charitable organization.
TPP claims it is a 501(c)(4) entity. That means the group does not pay taxes, but donations to the group aren't tax-deductible. Yet despite raising millions of dollars since its founding in February 2009, TPP has not even applied to the IRS for such official status, according to a TPP spokesman. And the IRS confirms that it has not filed paperwork that would reveal basic information about its finances.
The IRS allows nonprofits like TPP to bill themselves as tax-exempt before they’ve received official approval, but they are still required to file tax forms—what are known as 990s—publicly disclosing how much money they've raised, how much top staff members are paid, and generally how its funds are spent. One glance at a 990 can often distinguish a bad nonprofit from a good one by showing how much the group invested in actual program expenses, as opposed to administrative costs like salaries and other overhead.
TPP first ratified its bylaws in February 2009 and was incorporated in Woodstock, Georgia, that June, self-identifying as a 501(c)(4). Under standard charitable organizational practices, TPP would have filed a 990 last April or (with an IRS extension) by November 15, 2010. It didn't. Instead, Randy Lewis, a spokesman for the group, says that TPP has declared a May 31 end to its fiscal year. This means that under IRS rules, TPP won't have to file its first tax form for the 2009 tax year until April 15, 2011, more than two years after its inception.
"You'd think they'd lead by example, you'd think they'd open their books and not hide behind their tax status."
There's nothing illegal about what TPP is doing—but it's certainly not the action of an outfit that welcomes public scrutiny. Marcus Owens, a DC tax lawyer with the firm of Caplin & Drysdale, who served for 10 years as the director of the Exempt Organizations Division of the IRS, says that shifting the tax year is an old trick used by political groups to delay disclosure. He noted that the IRS has said that one of its goals this year is to crack down on this type of foot-dragging by charities in light of all the anonymous money flooding the political system.
TPP's opaque operations have raised the suspicions of some tea partiers who have accused the group's leaders of hypocrisy—preaching transparency and preventing it at the same time. "You'd think they'd lead by example, you'd think they'd open their books and not hide behind their tax status," says Laura Boatright, a former TPP regional coordinator in southern California who's become one of the group's loudest critics.
While TPP hasn't deployed its significant resources to get its books in order, many smaller tea party groups it counts as affiliates have. At least one—the North Houston Tea Party Patriots—has posted its financial information on its website for anyone to see. "All over the country, small tea party groups are playing by the rules," says Florida tea party activist Robin Stublen, who served as a TPP state coordinator before becoming disenchanted with their lack of transparency. "If [TPP] hasn't filed their taxes, quite frankly, that's outrageous."
Even the Tea Party Express, which TPP national coordinator Mark Meckler has derided as an Astroturf group because it's run by a handful of California political consultants, has been more transparent than TPP. Tea Party Express, a political action committee, has come under fire for raising significant funds from tea partiers that went back to the consulting firm that organized it. But one reason activists were able to criticize the organization is that it had reported its expenditures to the Federal Election Commission, as required by law.