Salem Health hit with IRS complaint for $50,000 anti-payroll tax PAC donation

Hey, filing a complaint against Salem Health with the Internal Revenue Service isn't my favorite thing to do. But I was pleased to spend several hours this afternoon working on Form 13909, Tax-Exempt Organization Complaint (Referral) Form.

I did this after some other citizen activists laid the groundwork for the complaint.

They discovered that Salem Health, the parent company of Salem Hospital, seemed to violate IRS rules when $50,000 to defeat the mass transit payroll tax ballot measure was donated to the Salem Area Chamber of Commerce's Create Jobs PAC (political action committee).

The Create Jobs PAC was organized as a "miscellaneous committee" to support or oppose individual candidates running for public office, along with supporting or opposing ballot measures. It isn't a "measure committee" PAC, which can't get involved with political campaigns. 

Salem Health is a tax-exempt organization.

So it is prohibited from contributing to people running for public office. But the $50,000 Salem Health contributed to the Create Jobs PAC has been commingled with money that WILL go to Chamber of Commerce-backed political campaigns.

Hence, the IRS complaint was filed on behalf of the citizens of Salem, with the support of Salem Community Vision. I'm a member of the Salem Community Vision steering committee. We talked about this issue at our bi-monthly meeting yesterday and decided the IRS complaint should be submitted. 

Salem already has too much special interest money being used in attempts to buy elections.

In this case, Salem Health may have spent big bucks on trying to influence the mass transit payroll tax in a way that wasn't legal. So after we Salem Community Vision folks agreed it was important to file an IRS complaint, I said I'd do it.

Below is what I sent off to the IRS this afternoon.

Yeah, it's kind of geeky. But not all that difficult to understand. The $50,000 from Salem Health (Salem Hospital's parent organization) went into a pot of PAC money that can be used to support or oppose individual candidates running for public office.

This appears to be a no-no for tax-exempt organizations under IRS rules.

That's why Salem Community Vision felt a complaint was in order. I and the other SCV folks are committed to transparency and doing things in this town that boost the general public interest, rather than special interests. 

Read on if you're interested in perusing what probably is the first, and maybe only, Form 13909 complaint you'll come across in your life.

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EMAILED TO IRS:

Here is a completed Form 13909 containing a Tax-Exempt Organization Complaint against Salem Health.

Download Form 13909 Complaint

 

Salem Health contributed $50,000 to the Create Jobs PAC, a Miscellaneous PAC (Political Action Committee) set up by the Salem Area Chamber of Commerce. Here is the Statement of Organization for the Create Jobs PAC from the Oregon Secretary of State’s office. This confirms that the Create Jobs PAC is a Miscellaneous PAC that can make contributions to individual political candidates.

 

Download Salem Hospital PAC contribution

"Alma" of SOS [Secretary of State] Elections Division confirmed on October 8, 2015 that if Salem Health had donated the $50,000 to a “Measure Committee” that the funds could only be used for that measure. However, the donation was to the Create Jobs PAC which is a “Miscellaneous Committee” and can make contributions to individual candidates. The reporting of expenditures through the SOS office has no way of accounting for the commingling of funds between measure related expenditures and candidate expenditures.

Under the Internal Revenue Code, all section 501(c)(3) organizations are absolutely prohibited from directly or indirectly participating in, or intervening in, any political campaign on behalf of (or in opposition to) any candidate for elective public office. Contributions to political campaign funds or public statements of position (verbal or written) made on behalf of the organization in favor of or in opposition to any candidate for public office clearly violate the prohibition against political campaign activity.  Violating this prohibition may result in denial or revocation of tax-exempt status and the imposition of certain excise taxes. 

Type of Political Action Committee

Identify the type of committee.

A “miscellaneous committee” is a committee that supports or opposes one or more of the following:

 specific candidate(s);

 entire ticket of a political party;

or

 candidate(s) and measure(s).

A “measure committee” is a committee that exclusively supports or opposes one or more measures that are certified to the ballot. A measure committee must not contribute money to candidates, miscellaneous committees, political parties, caucus committees, recall committees, or fund independent expenditures in support of or in opposition to candidates. If a measure committee wishes to make such expenditures, it must amend its Statement of Organization to become a miscellaneous committee.

A “political party committee” is a major or minor political party qualified under ORS Chapter 248 or a committee established by a major or minor party under party bylaws (e.g., county central committees).