Business Leagues – the New 501(c)(4)s?

Huffington Post reports that the conservative Koch brothers are launching a new organization to engage in political activities, but unlike previous such groups this one will be organized as a section 501(c)(6) tax-exempt business league.  The new entity, named the Association for American Innovation, received IRS recognition of its 501(c)(6) status in 2012 according to guidestar.org, but no Form 990 is available yet on Guidestar.  This development highlights the fact that while the focus of the media, campaign finance reform advocates, and a number of state officials and legislatures has primarily been on 501(c)(4) organizations and their ability to be involved in politics without disclosing their donors, both 501(c)(5) labor unions and 501(c)(6) business associations also enjoy this ability to combine (limited) political involvement with avoiding disclosure of their funding sources (unless election law disclosure rules apply).  The Koch brothers are far from the first to realize this is the case, but their new effort is the most prominent example of not only taking advantage of existing 501(c)(5) and (c)(6) entities but actually creating a new entity within this space to exploit these shared characteristics.

LHM