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Overview:

American Taxpayers Alliance (ATA) Stated Purpose: Protect American taxpayers from new and onerous financial obligations. Harnesses taxpayer anger at unwise decisions by government leaders. Tax Status: 501(c)(4) Political Orientation: Republican Profile: September 2004 — The American Taxpayers Alliance (ATA) has made a practice of stirring controversy by broadcasting attack ads while refusing to disclose its funding sources. But press reports and tax documents show that at least some of the group's funding has come from electric utility firms and the U.S. Chamber of Commerce. After the ATA ran ads blaming Democratic Gov. Gray Davis for California's energy crisis in the summer of 2001, Davis sued the group, claiming it had violated state law by failing to register as a political committee and refusing to disclose its contributors. A San Francisco judge sided with Davis, but an appeals court overruled that decision because the ATA had not crossed the "express advocacy" threshold of saying to "vote for" or "vote against" a candidate.1 Davis' campaign subsequently paid the ATA $100,000 to cover legal fees.2 Newsweek later reported that two energy companies, Reliant Energy and Duke Power, funded the ATA's entire $1.8 million ad campaign.3 The ATA's filing with the IRS reported that two individuals or organizations contributed nearly $2 million and $600,000, respectively, to the group in 2001, accounting for 79 percent of the group's revenue.4 In 2002, the Sangamon County (Ill.) Democratic Party filed a complaint with the Illinois State Board of Elections charging that ATA-sponsored attack ads against Democratic state Supreme Court candidate Sue E. Myerscough amounted to a campaign contribution to her opponent. The board deadlocked 4-to-4 along party lines.5 In response to ads aired by the ATA and the Law Enforcement Alliance of America (LEAA) in 2002, the Illinois legislature passed a law stipulating that independent groups that spend more than $3,000 on communications mentioning candidates' names in the two months before state elections must file as political committees, which requires disclosure of revenues and expenditures.6 In October 2002, the ATA funded automated telemarketing messages that flashed "Win $100,000 Cash" on the caller ID displays of Missouri residents' telephones. Those who answered their phones then heard a recording asking them to thank Jim Talent for working to cut taxes. Talent, a former Republican congressman, was challenging incumbent Democrat Jean Carnahan to represent Missouri in the U.S. Senate. (ATA said the win-cash message was inadvertent.)7 The ATA also was among three groups that reportedly combined to spend $1 million in Mississippi's 2003 races for governor, lieutenant governor and attorney general.8 The ATA is led by Scott W. Reed, a lobbyist and Republican operative. Reed managed Bob Dole's 1996 presidential campaign, served as executive director of the Republican National Committee under Haley Barbour (who received ATA's assistance in his 2003 Mississippi gubernatorial bid), and established the Republican Leadership Coalition, a 527 organization that aimed to win Hispanic support for Republican candidates.9 10 Though the ATA resisted Gray Davis' lawsuit to avoid disclosing its funders in 2001, the group revealed its major 2002 contributors' names (most likely mistakenly) in the 2002 tax form it provided Public Citizen. Its top contributor that year was the U.S. Chamber of Commerce, which gave $2.6 million. The ATA received about $2.3 million of that donation in the month before Election Day.11 The Chamber reportedly employed a strategy of funding outside groups to influence judicial elections in 2002, making its role more discrete than in 2000 when it broadcast ads under its own name.12 For each of the years 2000, 2001 and 2002, the ATA reported to the IRS that it made zero political expenditures.13 In contrast to the express advocacy standard the California court relied on to rule in the Gray Davis case, the IRS defines a "political" expenditure as any that aims to influence the outcome of an election.14 Thus, the ATA's disclosure of zero political expenditures effectively claimed to the IRS that none of its advocacy communications were intended to influence the outcomes of elections. That claim seems particularly dubious in the case of the message praising Talent, who held no political office when the ATA sent out its laudatory telemarketing calls. 1   David Kravets, "Group That Attacked Governor Avoids Disclosure," Associated Press, Sept. 27, 2002. 2   Mark Sherman, "Davis Pays $100,000 For Lawsuit Over Television Ads," Associated Press, May 13, 2003. 3   Michael Isikoff, "Winks, Nods & Corporate Cash; One Wired GOP Lobbyist's Playbook for Wielding Influence," Newsweek, Feb. 25, 2002. 4   American Taxpayers Alliance 990 form, 2001. 5   Bernard Schoenburg, "Election Board Delays Ruling on Garman Ads," The (Springfield, Ill.) State Journal-Register, Nov. 5, 2002. 6   Rupert Borgsmiller, Illinois State Board of Elections Director of Campaign Disclosure, Interview with Public Citizen Senior Researcher Taylor Lincoln June 24, 2004. 7   Deidre Shesgreen, "Group's Appeal on Behalf of Talent Advertised $100,000 Prize on Caller ID," St. Louis Post-Dispatch, Oct. 25, 2002. 8   "Three Groups Spend More than $1 Million on Election Ads," Associated Press, Oct. 13, 2003. 9   Public Citizen's analysis of data contained in the New Stealth PACs database. Data collected from groups' Web sites and annual tax forms, press reports, academic papers on activities of independent political groups and interviews by Public Citizen research staff. 10   Ron Fournier, "Republican Strategist Behind Drive to Court Hispanics," Associated Press, Oct. 17, 1999. 11   American Taxpayers Alliance 990 form, 2002. 12   Robert Lenzner and Matthew Miller, "Buying Justice; For Years Trial Lawyers Owned State Courts. Now Big Business Is Striking Back," Forbes, July 21, 2003. 13   American Taxpayers Alliance 990 forms, 2000-2002. 14   IRS Form 990 Instructions, Line 81, 2003. (Available at www.irs.gov.)