Poor management allowed low-level IRS employees to single out Tea Party and other conservative groups seeking tax-exempt status for extra review, and the agency continues to drag its heels on fixing things, according to an inspector general's report obtained Tuesday by NBC News.

The IRS said in its formal response that it had satisfactorily answered all of the complaints in the audit by the Treasury Department's inspector general for tax administration. But Acting Deputy Inspector General Michael McKenney made it clear in a cover letter accompanying the document that "we do not consider the concerns in this report to be resolved," noting that the IRS objected to two of his office's nine recommendations calling for clearer regulations, stricter processes and better documentation of what the IRS is doing and why.

President Barack Obama said in a statement Tuesday evening that the report's findings were "intolerable and inexcusable." He said he had ordered Treasury Secretary Jack Lew "to make sure that each of the Inspector General's recommendations are implemented quickly."

---

The audit blamed confusion by IRS administrators for the inappropriate reviews, which Attorney General Eric Holder said Tuesday would be focus of a federal criminal investigation.

The report found that mismanagement led the IRS to ask some groups for unnecessary information — in some cases, it asked groups to list the names and address of future donors — and delayed processing of some groups' requests, some for more than three years.

The average delay was 13 months, it said.

Two IRS offices — the Washington headquarters of its Exempt Organizations unit, which is responsible for processing applications for tax-exempt status, and an office in Cincinnati called the Determinations Unit — come in for the brunt of the blame in the 48-page report, parts of which are redacted.

The audit found that in June 2011, the Cincinnati office distributed an expanded "Be On the Look Out" list of criteria for identifying potential political cases. The so-called BOLO list identified four reasons for officers to give an application special attention:

• "Tea Party," "Patriots" or "9/12 Project" is referenced in the case file
• Issues include government spending, government debt or taxes
• Education of the public by advocacy/lobbying to "make America a better place to live"
• Statements in the case file criticize how the country is being run

"The criteria developed by the Determinations Unit gives the appearance that the IRS is not impartial in conducting its mission," the audit concluded. "The criteria focused narrowly on the names and policy positions of organizations instead of tax-exempt laws and Treasury Regulations."

In its response, the IRS acknowledged "the mistakes outlined in the report," saying they were caused by "the lack of a set process for working the increase in advocacy cases and insufficient sensitivity to the implications of some of the decisions made."

Related: As applications swell, IRS nonprofit division overloaded, understaffed

The agency blamed low-level "front line career employees" acting out of what it said was "a desire for efficiency and not out of any political or partisan viewpoint."

It also claimed that some of the political groups were at fault because their applications were "vague as to the activities the applicants planned to conduct."

Groups seeking 501(c)(4) tax-exempt status can advocate for particular general political positions, but their primary purpose must be "social welfare," and they are barred from intervening in political campaigns.

"A number of applications indicated that the organization did not plan to conduct political campaign activity," the IRS said. But elsewhere in their applications, they "described activities that in fact appeared to be such activities," it said.

Many of the groups "did not understand what activities would constitute political campaign intervention," it said, even as it noted in the same document that "there are no bright-line tests" for what constitutes such activity.

"As the report discusses, these issues have been resolved," the IRS declared.

But the audit disagreed, saying: "Although the IRS has taken some action, it will need to do more so that the public has reasonable assurance that applications are processed without unreasonable delay in a fair and impartial manner in the future."

In a statement late Tuesday, the IRS contended that it didn't act out of any political bias, saying the cases singled out for review in the Cincinnati office since 2010 "included organizations of all political views."

The audit didn't specifically address allegations that Acting IRS Commissioner Steven Miller misled Congress because he knew about the inappropriate procedures but kept quiet for months before they were made public.

In a speech on the Senate floor, John Cornyn of Texas, the Republican whip, thundered that Miller "should resign today" if it is established that he "willfully misled Congress when inquiries were made earlier about this sort of scandalous political activity."

Sen. Orrin Hatch, R-Utah, said that regardless of whether it acted out of political bias, the IRS had made a mess of things.

"This was either one of the greatest cases of incompetence that I've ever seen or it was the IRS willfully not telling Congress the truth," he said.

In its statement, the IRS said it never intended to hide the issue. Instead, it said, it waited to say anything until it could see the audit "and we reviewed their findings."

In what was described as a "tough meeting" Tuesday, Senate Finance Committee Chairman Max Baucus, D-Mont., told Miller that "he is in for some serious questioning" from the committee, sources in the meeting told NBC News' Kelly O'Donnell.

The Finance Committee is expected to convene a hearing into the controversy, although one hasn't yet been scheduled. Baucus told Miller on Tuesday that the committee would accept nothing less than his "complete cooperation and transparency," one of the sources said.

Lisa Myers, Kelly O'Donnell and Richard Gardella of NBC News contributed to this report. Follow M. Alex Johnson on Twitter and Facebook.

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This story was originally published on Tue May 14, 2013 9:04 PM EDT

Last fall, a cadre of wealthy business executives and conservative groups tried to sell California voters on new campaign finance reforms.

Couched in lofty rhetoric about the importance of cutting off money from special interests to politicians and other regulations favored by reformers, their proposal sought to ban the practice of using payroll deductions for political expenditures — a popular method of union fundraising.

Once alerted to the true nature of Proposition 32, the unions and political left rose up against it.

An innocuously named nonprofit, the Iowa-based American Future Fund, proved to be one of the biggest backers of the initiative, sinking more than $4 million into the ballot measure that voters ultimately rejected.

---

As a “social welfare” organization, the American Future Fund is not required to publicly disclose its donors. But to maintain its tax-exempt status under Sec. 501(c)(4) of the U.S. tax code, influencing elections cannot be its primary purpose.

The American Future Fund’s investment in California was part of a nationwide, political advertising spree in 2012 that exceeded $29 million, according to a Center for Public Integrity analysis of state and federal records.

That amount included more than $19 million on efforts designed to oust President Barack Obama, as well as millions more to oppose Democratic candidates for Congress and even two state attorneys general. Now the group is funding ads opposing Obama’s nomination of former Republican Sen. Chuck Hagel of Nebraska for defense secretary.

Since the U.S. Supreme Court’s controversial Citizens United decision in 2010, nonprofits such as the American Future Fund have played a more prominent role in electoral contests — all while giving their supporters the ability to keep their identities hidden. During the 2010 midterm elections, politically active nonprofits outspent super PACs, which exist to fund political advertisements, by a 3-to-2 margin.

The American Future Fund ranked third among “social welfare” nonprofits in spending in the 2012 federal election, according to the Center for Responsive Politics, trailing only the Karl Rove-affiliated Crossroads GPS and Americans for Prosperity, which is backed by conservative billionaire brothers Charles and David Koch.

There are also Democratic-aligned nonprofits, but their spending was well below that of their conservative counterparts. The top left-leaning nonprofit was the League of Conservation Voters, which reported spending about $11 million in the 2012 election opposing or supporting candidates.

The American Future Fund’s spending “raises some serious questions” and “evades any form of meaningful disclosure,” said Adam Rappaport, senior counsel with watchdog group Citizens for Responsibility and Ethics in Washington (CREW).

Numerous officials with the American Future Fund did not respond to requests for comment for this story.

Advocating for ‘free-market ideas’
The American Future Fund’s mission is to “educate and advocate for conservative and free-market ideas,” according to its annual filing with the Internal Revenue Service.

Despite asserting that it isn’t primarily focused on elections, the nonprofit’s DNA is decidedly political.

Conservative political operative Nick Ryan, a longtime adviser to former GOP Rep. Jim Nussle of Iowa, founded it in 2007. Over the years, the group has paid Ryan’s firm, Concordia Enterprises, hundreds of thousands of dollars annually for consulting services.

In 2010, the New York Times reported that Iowa businessman Bruce Rastetter provided an unspecified amount of “seed money” for the organization. Ryan once represented four of Rastetter’s companies as a lobbyist, including Hawkeye Energy Holdings, one of the country’s largest ethanol producers.

The nonprofit’s first president was Nicole Schlinger, the former finance director of Iowa’s Republican Party. Its current president is veteran Republican state Sen. Sandra Greiner, who served for 14 years as the Iowa chairwoman of the pro-business American Legislative Exchange Council.

Ryan and Greiner did not respond to requests for comment.

In 2008, when the American Future Fund was seeking — and ultimately garnered — tax-exempt status from the IRS, it pledged to abstain from electoral politics, saying it would spend 70 percent of its time doing work to “educate the public on policy issues” and 30 percent engaging in efforts to “influence legislation through grassroots advocacy.”

When asked on its application if the group had any plans to spend money to “influence the selection, nomination, election or appointment” of anyone seeking public office, it answered “no.” It also vowed to stay out of the presidential race.

When the IRS subsequently inquired why the group’s advertisements “appear to be more partisan than nonpartisan,” the group’s attorney, Karen Blackistone, wrote that the efforts were “strictly issued-based and nonpartisan.”

The group takes a position on issues and encourages the public to contact their representative, she wrote in a 2008 response to the IRS.

“AFF’s advertisements have never commented on a candidate’s character, qualifications or fitness for office,” she stated.

Big money tied to post office box
The American Future Fund has raised more than $60 million, with spikes in contributions coming in election years.

Much of that money has come from another conservative “social welfare” nonprofit that doesn’t disclose its donors by name — the Arizona-based Center to Protect Patient Rights.

The nonprofit has no website and lists its address as a post office box in Phoenix. It was launched in 2009 by Republican operative Sean Noble, who has extensive ties to the vast political network underwritten by the Koch brothers.

Noble, a former chief of staff for former Rep. John Shadegg, R-Ariz., did not respond to requests for comment for this story.

For three years running, Noble’s organization has reported making substantial grants to the American Future Fund for “general support,” according to IRS filings. The nonprofit contributed more than $14 million to the American Future Fund between 2009 and 2011, or 51 percent of funds the group raised over the three-year period.

The Center to Protect Patient Rights has also given millions of dollars to a network of conservative groups, including the Koch-backed nonprofit Americans for Prosperity, as was first reported by the Center for Responsive Politics.

In addition to Noble, there is another Koch connection.

In 2008, Trent Sebits, the former manager of public and government affairs for the Kochs’ Wichita-based refining giant, Koch Industries, registered with the state of Kansas to lobby on behalf of the American Future Fund and Americans for Prosperity. Sebits did not respond to a request for comment.

The American Justice Partnership, another “social welfare” nonprofit, gave $50,000 to the American Future Fund in 2011 and $2.4 million in 2010, according to IRS filings. The group supports free enterprise and is often at odds with trial lawyers.

Dan Pero, its president, said in an emailed statement that the organization supported the American Future Fund to help “promote free enterprise and improve the fairness and predictability of the legal environment.”

Like super PACs, “social welfare” nonprofits are allowed to accept unlimited donations from individuals, corporations, unions and other organizations. The only funders whose names they are required to publicly disclose are those that make contributions earmarked for political purposes.

That’s as it should be, according to attorney Dan Backer, who is not affiliated the American Future Fund but does work with other conservative groups.

“A nonprofit makes its decisions by a board or other management structure, which is distinct from its donors,” Backer said.

Increasingly political
In 2010, the American Future Fund became far more politically active, reporting $8.6 million in political expenditures as well as millions more for “media services,” “telecommunications” and “mail service/production.” It told the Federal Election Commission that it spent $9.1 million on political advertisements.

Marcus Owens, former chief of the IRS’s nonprofits division, said it is “difficult to conjure up a situation where a particular expenditure would be reportable to the FEC but would not constitute political campaign intervention under tax law.”

Nevertheless, Owens said the organization could make a “straight-faced argument” that its orientation had simply changed over time to become more overtly political.

Of the $25 million that the American Future Fund reported spending to the FEC last year, more than 90 percent fueled ads that urged voters to support or reject candidates.

The group also sought the FEC’s advice on whether mentioning the White House or “the administration” in negative ads ahead of Election Day would be seen as referring to a “clearly identified candidate for federal office.”

Such a designation would have required the group to disclose information about its donors. (The commission deadlocked, 3-3, in a vote along party lines.)

In addition to the presidential race, the American Future Fund spent money in 20 congressional elections in 2012, including California’s 26th Congressional District, where it spent $500,000 attacking Democrat Julia Brownley, who, as a state legislator, had authored legislation to bolster disclosure for political advertisements.

She won anyway, but told the Center for Public Integrity that she is “deeply concerned” about the activities of non-disclosing groups in the wake of Citizens United and hopes to “take immediate action” to strengthen federal disclosure laws.

The American Future Fund also spent more than $542,000 to aid West Virginia Republican Patrick Morrisey in his successful quest to win the race for attorney general, records indicate, and more than $620,000 in a failed effort to sink Missouri Attorney General Chris Koster, a Democrat.

Complaints about the American Future Fund’s political activities have followed it since its creation.

In 2008, the Democratic Party in Minnesota contended that the group needed to register as a political committee after paying for ads that praised then-U.S. Sen. Norm Coleman, R-Minn. The FEC disagreed.

Two years later, in October 2010, consumer group Public Citizen and two other organizations alleged that the American Future Fund’s “huge expenditures” to aid candidates in the midterm election should have triggered requirements that the group register as a political committee and disclose its donors. That complaint is still being considered by the FEC, which often takes years to fully resolve such matters.

CREW, the watchdog organization, filed a complaint against the American Future Fund with the IRS in February 2011 that challenged whether its primary purpose was something other than influencing elections. The group has dismissed the complaint as “baseless” and contends that CREW “only targets government officials and organizations who have a differing or conservative point of view.”

Proposition 32

California’s campaign finance rules require major donors to groups that pay for political advertisements to be named in actual ads.

Thus, when a political committee called the California Future Fund for Free Markets aired ads praising Proposition 32, each advertisement included the disclaimer “with major funding by the American Future Fund.”

One ad criticized lawmakers for making “deals cut in shadows and back rooms” as dramatic music played in the background. Yet the donors to the American Future Fund itself largely remain in the shadows.

The Center for Public Integrity is a nonprofit independent investigative news outlet.  To read more of its stories on this topic go to  http://www.publicintegrity.org/politics/consider-source 

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The Supreme Court’s Citizens United decision unleashed nearly $1 billion in new political spending in the 2012 election, with media outlets and a small number of political consulting firms raking in the bulk of the proceeds.

Spending records released by the Federal Election Commission show that throughout the 2012 election, corporations, unions and individuals that could take advantage of the high court’s ruling were responsible for about $933 million of the estimated $6 billion spent during the contest.

Nearly two-thirds of the new money — about $611 million — went to 10 political consulting firms, according to a Center for Public Integrity analysis. All but one of the top 10 recipients bought advertising in various media markets on behalf of super PACs and nonprofits. Eighty-nine percent of the expenditures made to the top 10 went to spots attacking candidates, the data show.

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“For some in the industry, it has been a definite boon,” said Dale Emmons, president of the American Association of Political Consultants. “This election appears to have set a new benchmark on the amount of money that could be spent, because there were no limits on what could be spent.”

The 2010 Citizens United decision and a lower-court ruling allowed unlimited donations to super PACs and nonprofits, independent groups that used the funds primarily to fund ad campaigns.

Media buyers keep only a fraction of the total spending — usually 15 percent, according to Federal Communications Commission records, with the rest going to media outlets.

The winners
The top recipient of independent spending among media buyers was Mentzer Media Services, the Towson, Md.-based media placement firm run by longtime GOP consultant Bruce Mentzer.

Mentzer attracted nearly $204 million from conservative super PACs and other outside groups. In a tough year for Republicans, only 26 percent of the candidates who were supposed to benefit from the ads won their races, according to a Center for Public Integrity analysis.

The firm was the preferred vendor for the pro-Mitt Romney super PAC Restore Our Future, which paid Mentzer nearly $132 million to purchase air time in presidential battleground states.

A Mentzer employee who answered the phone declined to comment on the firm’s involvement in the 2012 election.

Second was Crossroads Media, which was paid about $163 million to buy media time for conservative super PACs and nonprofits in 2012. The firm is run by Michael Dubke, the former president of Americans for Job Security — a pro-Republican nonprofit and one of Crossroads’ top clients.

Waterfront Strategies, which worked for Democratic groups, ranked third, at $81 million.

Democratic-aligned Mundy Katowitz Media, fourth on the list, was the preferred vendor for the pro-Obama super PAC Priorities USA Action, placing more than $57 million in television ads for the group.

American Media & Advocacy Group, a favorite of conservative groups, ranked No. 5 at $27 million.

Target Enterprises — a Los Angeles-based media buyer for conservative super PACs — was paid $17 million, ranking it No. 6. The firm had a dismal success rate, coming in dead last among firms catering to super PACs and nonprofits. Seven percent of its preferred candidates won on Nov. 6.

A woman who answered the phone at Target Enterprises Tuesday said both principals of the company were “mid-flight” and unavailable for comment.

The Center analyzed FEC data compiled by the Sunlight Foundation and the Center for Responsive Politics. The $933 million in spending came from super PACs, nonprofits and, to a lesser extent, “527” organizations that were the favorite independent spending vehicle in past elections.

FEC coordination law a ‘joke’
The Citizens United decision opened a huge new potential market for consultants, but there was a catch. Consultants who work for candidates — but also work for “independent” groups that support those same candidates — have to be careful.

The high court’s decision did not affect the ban on donations to candidates from corporations and unions, nor did it affect contribution limits from individuals. Instead, it focused on spending by independent groups, unaffiliated with candidates.

As long as super PACs act independently of the candidate, there is no danger of corruption, the high court reasoned.

But sometimes the separation between the campaign and the like-minded super PAC or nonprofit can be hard to discern.

Waterfront Strategies, for example, in its FEC filings lists the same address as GMMB — a well-known Democratic media consulting firm and the preferred vendor for President Barack Obama’s 2008 and 2012 campaigns.

Waterfront was the beneficiary of $81 million paid by some of the biggest Democratic outside spending groups — including Majority PAC, a super PAC backing Democrats running for Senate, and the League of Conservation Voters.

The Huffington Post reported that Waterfront is an internal branch of GMMB. It was incorporated in Delaware, and its president is listed as Raelynn Olson, GMMB's managing partner.

Both Waterfront and its parent company, GMMB, worked to elect Democrat Richard Carmona in his unsuccessful bid for Arizona’s open U.S. Senate seat. Majority PAC hired Waterfront to purchase airtime for ads supporting Carmona and attacking his Republican opponent, then-Rep. and now Sen. Jeff Flake. Carmona’s campaign hired GMMB for its ad buys in the same race.

One Majority PAC ad used the same childhood photo of Carmona that was featured in an official Carmona campaign ad.

GMMB did not reply to requests for comment.

Setting up spinoffs is more about “optics” than skirting coordination rules, said Paul S. Ryan, senior counsel for the nonpartisan Campaign Legal Center.

Under current law, as long as a firm assigns each client separate consultants — and those two don’t coordinate their activities — that constitutes a satisfactory firewall, according to Ryan.

“That’s a pretty ridiculous and modest constraint on campaign coordination,” Ryan said.

Texas two-step
American Media & Advocacy, which also has no website, received nearly $27 million to buy media for super PACs and other outside groups.

The organization worked for the Congressional Leadership Fund, a super PAC that paid for ads attacking Pete Gallego, a Democrat who defeated Republican Francisco Canseco in the race for U.S. House of Representatives in Texas’ 23rd District. The firm also worked for Canseco’s campaign.

Records show that at least one of American Media’s buyers purchased media in the San Antonio market for both the Congressional Leadership Fund and the Canseco campaign.

Records show that American Media shares an Alexandria address with the high-profile, bipartisan consulting group Purple Strategies. Purple Strategies failed to respond to the Center’s repeated inquiries about any affiliation that it might have with American Media & Advocacy Group.

American Media and Advocacy is “well aware of the FEC coordination rules, including the common vendor rules,” said Jim Kahl, the group’s attorney, “and they have procedures in place to comply with them.”

In Ohio, American Media & Advocacy Group was paid by the Congressional Leadership Fund to purchase ads slamming Democrat Betty Sutton in the House race for District 16. American Media was also working for Sutton’s Republican opponent, Rep. Jim Renacci.

The same person was listed in records as buying media in the Cleveland market — at the same TV station in at least one case — for both the Renacci campaign and the Congressional Leadership Fund.

Candidates and super PACs can avoid charges of coordination altogether by sending up smoke signals in cyberspace.

For example, one of Target Enterprise’s top clients was Freedom PAC, a super PAC that paid the firm nearly $3.4 million for ad buys supporting Rep. Connie Mack, the unsuccessful Republican candidate in the Florida Senate race.

Freedom PAC released an ad containing some of the same footage that was on the Mack campaign’s YouTube channel.

Under FEC coordination rules, campaign committees and the outside groups that boost their candidates may share material as long as it is publicly available.

The Center for Public Integrity is a nonprofit independent investigative news outlet. To read more of its stories on this topic go to publicintegrity.org

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Federal prosecutors and FBI agents in Washington have launched a new criminal investigation of Illinois Rep. Jesse Jackson, Jr. involving alleged financial improprieties, including possible misuse of funds monitored by Congress, law enforcement sources tell NBC News.

The probe prompted lawyers for Jackson — who has been on a leave of absence from Congress since June for medical treatment — to meet with federal prosecutors this week in an attempt to persuade them not to bring charges against the congressman, sources said.

The sources said it was unclear whether Jackson, who has not been seen in his office for months, would be charged before the November election — a subject that was discussed between Jackson’s lawyers and the prosecutors this week. Jackson’s lawyers urged the prosecutors not to file charges before the election — but prosecutors refused to make any commitments, the sources familiar with the meeting said.

---

Either way, the new investigation could ratchet up pressure for Jackson to step aside. Despite his illness — which his office has said involves his treatment for bipolar disorder — Jackson is running for re-election, seeking a 10th term. His lawyers did not return email and phone call request for comment.

Frank Watkins, Jackson’s congressional spokesman, says he has not reached out Jackson and has not spoken to him about the investigation, and that the first he heard of the investigation was when he was contacted by the Chicago Sun Times, which first reported the story. He said he believes Jackson is still in DC.

View NBCChicago.com's complete coverage of Jackson investigation

The sources, confirming the  account in the Sun-Times, said the new probe is being run out of the U.S. attorney's office in Washington DC. They said it is unrelated to previous allegations that Jackson was part of a scheme to persuade ex-Illinois Gov. Rod Blagojevich  to name him to the Illinois Senate seat of Barack Obama in exchange for $1 million in campaign contributions from a top fundraiser.

The sources did not specify the financial irregularities being investigated. But the Sun-Times said the case involves misuse of funds or an account monitored by Congress.  It comes weeks after a report that Jackson and his wife, Chicago alderwoman Sandi Jackson, put their Washington DC home on the market for $2.5 million. A campaign spokesman said at first the home was put on the market to pay for medical bills, but the Jackson later took it off the market. 

Jackson, the son of civil rights leader Jesse Jackson Sr., stopped working June 10, his staffers revealed two weeks later. He first obtained treatment at a facility in Arizona before transferring to the famed Mayo Clinic in Rochester, Minn., where doctors said he had "depression and gastrointestinal issues."

He left the Mayo Clinic and went back to Washington, D.C. in early September but has not returned to work. 

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Dark-horse presidential candidates Gary Johnson and Virgil Goode may not be household names, but with a little help from super PACs, they could peel away precious support from Republican Mitt Romney and possibly even President Barack Obama in some key state races.

The conservative Constitution Party, which seeks to “restore American jurisprudence to its Biblical foundations,” has nominated Goode, a former congressman from Virginia, for president, potentially taking votes away from Romney in what has become a presidential swing state.

Meanwhile, Johnson, a former two-term GOP governor of New Mexico who failed to win the 2012 Republican presidential nod, has been nominated by the Libertarian Party — a perch from which he could throw a wrench in the plans of both Obama and Romney in several swing states.

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Already, at least three pro-Libertarian super PACs have registered with the Federal Election Commission to support Johnson. And former Nixon administration operative Roger Stone, famous for sporting a tattoo of the disgraced president on his back, has touted a pro-Johnson super PAC.

Super PACs are allowed to collect unlimited contributions from individuals, unions and corporations to produce political advertisements that are not coordinated with any candidate. They were made possible in the wake of the U.S. Supreme Court's Citizens United decision.

Goode, a staunch supporter of the 2nd Amendment and vocal opponent of abortion, served six terms in Congress — first as a Democrat, then as an independent and finally as a Republican, until he was unseated in 2008. Third-party candidates like Goode have no chance of winning the White House, but one only need look to the 2000 presidential election to be reminded of their potential impact.

Dark-horse presidential candidates Gary Johnson and Virgil Goode may not be household names, but with a little help from super PACs, they could peel away precious support from Republican Mitt Romney and possibly even President Barack Obama in some key state races.

The conservative Constitution Party, which seeks to “restore American jurisprudence to its Biblical foundations,” has nominated Goode, a former congressman from Virginia, for president, potentially taking votes away from Romney in what has become a presidential swing state.

Goode, a staunch supporter of the 2nd Amendment and vocal opponent of abortion, served six terms in Congress — first as a Democrat, then as an independent and finally as a Republican, until he was unseated in 2008. Third-party candidates like Goode have no chance of winning the White House, but one only need look to the 2000 presidential election to be reminded of their potential impact.

When consumer advocate Ralph Nader ran as the Green Party’s candidate, he infamously garnered more than 97,000 votes in Florida, where Democrat Al Gore lost to Republican George W. Bush by just 537 votes. Florida’s 25 Electoral College votes secured the presidency for Bush, even though Gore won the national popular vote.

One recent poll showed Goode drawing 9 percent of the vote in his home state of Virginia, whose 13 Electoral College votes are being sought by both Romney and Obama.

Similarly, a recent poll showed Johnson — an anti-war candidate who supports marijuana legalization and smaller government — receiving 5.3 percent of the national popular vote. That makes him an afterthought as a presidential candidate, but he may still have an impact in battleground states like New Mexico, Colorado, New Hampshire and even North Carolina.

Third-party candidates aren’t always suggested as options in polls. But one survey earlier this summer showed Johnson winning 12 percent of the vote in New Mexico, a state that Obama carried handily in 2008, but where Bush eked out a narrow victory in 2004.

GOP rabbi calls Adelsons 'heroes' after getting $500,000 for super PAC

Johnson garnered 7 percent of the vote in a May poll in New Hampshire, which Obama won easily four years ago but Bush carried in 2000. Earlier this month, Public Policy Polling showed Johnson pulling 7 percent of the vote in Colorado, where Obama was the first Democrat since Bill Clinton to win the state. Johnson is also polling at 3 percent in North Carolina, another swing state.

Super PAC spending on behalf of minor-party candidates like Johnson or Goode “definitely could happen,” said Rob Richie, executive director of the nonprofit FairVote, which advocates for increased ballot choice.

“Most people have made up their minds between keeping Obama or going to Romney,” Richie continued. “Some people, though, … if they realized that there was another candidate running, might abandon one of the major-party candidates.”

Will super PACs promote increased choice?
Officials with both the Obama and Romney campaigns declined to comment about whether they were concerned about the role super PACs touting third-party candidates could play in the presidential race.

Some third-party activists, though, are keen to harness super PACs — and their ability to raise unlimited funds, which they argue could increase the visibility of their preferred candidates.

“I wish we had super PACs out there supporting our candidates,” said Jim Clymer, who was the national chairman of the Constitution Party until April. He is now Goode’s vice presidential running mate.

“A couple of people who believe deeply in what we’re trying to promote could put us on the map in a way that we haven’t been,” he added. “The reality is that getting your message out takes a lot of money.”

His sentiments are echoed by Libertarian Party activists.

“A libertarian candidate like Gary Johnson doesn’t have the infrastructure behind him that the major-party candidates have,” said Austin Cassidy, the treasurer of the pro-Johnson Libertarian Victory Committee super PAC, which was formed in May.

“If voters have the chance to compare him on an even playing field that could really spark something,” Cassidy continued.

Cassidy’s Libertarian Victory Committee raised only $200 — all from Cassidy’s own pocket — before throwing in the towel earlier this month, but the pro-Johnson Libertarian Action Super PAC has raised $107,500 as of the end of June. The bulk of that money — $100,000 — came from wealthy entrepreneur Joe Liemandt, the Stanford University dropout who founded and runs the software company Trilogy.

Notably, Liemandt's wife Andra has bundled more than $200,000 for Obama's re-election efforts, and the couple alone has donated $107,400 to the Obama Victory Fund, which benefits Obama's campaign and the Democratic National Committee. Together, they have also donated more than $130,000 to the Libertarian National Committee since 2009.

Wes Benedict, the former executive director of the Libertarian Party who is now the treasurer of the Libertarian Action super PAC, stresses that $100,000 in receipts is “significant,” even if it’s dwarfed by the tens of millions of dollars raised by the pro-Obama and pro-Romney super PACs.

“In Libertarian terms, this is a big step forward,” he said. “We’re in new territory running this super PAC,” he continued. “I hope we make a difference.”

Since it was launched in April, Libertarian Action, which promotes “low-cost, high-quality Gary Johnson materials” such as yard signs, bumper stickers and door hangers on its website, has reported making more than $16,000 in independent expenditures.

Another pro-Johnson super PAC, called Freedom and Liberty PAC, has also raised $100,000, though it has yet to make any expenditures touting Johnson or criticizing his rivals. The group was founded by one-time Johnson aide Kelly Casaday, and its sole donor is Chris J. Rufer, the founder of the Morning Star Company, a California-based agribusiness and food processing company.

The super PACs file their campaign finance reports with the FEC on a quarterly basis, so it’s unknown how much money they have raised since the end of the second quarter in June. A few wealthy donors could easily make them more flush with cash. At least one million-dollar contribution has been given to a pro-Johnson super PAC, according to Jim Gray, the Libertarian Party’s vice presidential nominee.

Not all third-party activists, though, think embracing super PACs is a good thing.

“(Super PACs) are squashing competition,” said David Cobb, who was the Green Party’s presidential nominee in 2004. “When the wealthy elite can buy microphones and amplifiers and drown out the rest of us, it is supremely ridiculous to say that that somehow increases the competition of ideas.”

Good things or dirty tricks?
One person with the potential to make a large super PAC splash for a third-party candidate is longtime Republican operative Roger Stone.

Stone was the youngest staffer on Nixon’s infamous Committee for the Re-Election of the President, the group that financed the Watergate break-in. He later went on to work with the late Lee Atwater, the strategist who managed Republican George H.W. Bush’s 1988 presidential campaign against Democrat Michael Dukakis. And during the contentious Florida recount between Republican George W. Bush and Democrat Al Gore, Stone was dispatched to supervise the process.

Yet, in February, Stone, who did not respond to requests for an interview, said goodbye to the GOP and registered as a Libertarian after casting a vote for Ron Paul in the Florida GOP presidential primary.

In June, the Huffington Post reported Stone was constructing a pro-Johnson super PAC.

“The American people have never been offered a candidate who is fiscally and economically conservative but socially tolerant,” Stone has said. “With Gary Johnson, you can have the best of both.”

In his writings online, Stone stresses that Johnson has the potential to perform well in many battleground states, particularly in the West — and that Johnson has the potential to win over both supporters of Obama and Romney.

Stone’s name has not yet appeared in any FEC super PAC filings and, so far, his new Libertarian Party allies are cautiously optimistic about his planned endeavors.

“Hopefully he’s up to good things and not dirty tricks,” said Benedict, the former Libertarian Party executive director.

Most political observers argue that outside groups are unlikely to change the fundamental calculus that makes a third-party presidential bid an uphill battle.

Americans Elect is a prime example, according to political science professor Larry Sabato, the director of the Center for Politics at the University of Virginia. The organization launched in 2010 with the hope of getting a centrist political candidate onto the ballot in all 50 states. The group raised more than $35 million — including $5.5 million from billionaire hedge fund investor Peter Ackerman — but it failed to find a willing candidate and has since retreated from the limelight.

“A super PAC can only sell a candidate if there's a market for him or her,” Sabato said. “I don't think there is one in this highly polarized year.”

But as Democrats learned in 2000, a third-party candidate need not be a threat to win to have an impact.

The Center for Public Integrity is a non-profit, independent investigative news outlet.  For more CPI stories on this topic go tohttp://www.publicintegrity.org.

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Political contributions by text – seen as the ultimate grassroots fundraising mechanism – have been endorsed by the campaigns of President Barack Obama and Republican Mitt Romney and approved by the Federal Election Commission. But wireless carriers, who would be responsible for overseeing the donations, are concerned that they could be held responsible for monitoring donor eligibility.

Here are some key excerpts from Reuters reporter Alina Selyukh’s story:

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The wireless carriers who would oversee the donations-by-text service - including the four U.S. giants Sprint Nextel Corp, Verizon Wireless, AT&T Inc. and T-Mobile USA - have yet to get on board with the plan. 

... 
One sticking point is that the carriers want to make sure they will not be held liable for determining donors' eligibility to contribute to a campaign, industry sources said. 
That means ruling out that a donor is a corporation, foreign citizen or underaged American who is not allowed to contribute, or whether the donor has met various limits for donations to a campaign. 
...
Text donations, capped at $10 per text and $50 a month, according to the FEC ruling, would allow givers to remain anonymous, although campaigns would have access to the donors' phone numbers. Donations by text messages also would be limited to a total of $200 per phone number to avoid triggering a federal requirement for disclosure of that donor's identity and address. 
Donating to political campaigns by text would be similar to giving to charity: A donor would send a message to a text code and then confirm his or her intention and eligibility. But in this case, carriers and aggregators processing the payment would take a significant cut from each transaction, as they do with other non-charitable transactions, such as purchases of ring tones. 
That cut appears to be part of the reason for tension that carriers are feeling over text donations to campaigns. The fee could reach 30 percent to 50 percent of each donation, according to FEC documents, putting wireless carriers in a potentially uncomfortable position of doing business with campaigns and their fundraising efforts. 

Click here to read the rest of the story.

A prominent tax attorney has accused an organization of state lawmakers and corporations officials with improperly claiming nonprofit status, alleging the group’s role is to benefit businesses, the Republican Party, and legislators and not the public.

The American Legislative Exchange Council (ALEC) “elevates commercial gain for a few over the well-being of society’s less fortunate,” says a complaint penned by Marcus Owens, the former chief of the Internal Revenue Service’s nonprofit corporations division, on behalf of Clergy VOICE, a group of ministers from progressive churches in Ohio.

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ALEC has attracted attention recently for its model “stand your ground” and voter ID laws which led major corporate backers like Coca Cola and Kraft Foods Inc. to drop their membership in the face of a threatened boycott by activists. The Florida gun law became a hot topic following the slaying of Trayvon Martin, an unarmed teen, by a neighborhood watch volunteer in February.

Until recently, ALEC has enjoyed a low profile, despite its substantial influence over legislation in the nation’s statehouses. The group claims on its website that it has helped craft close to 1,000 bills introduced by state lawmakers and that “an average of 20 percent become law.”

In its complaint, Clergy VOICE says ALEC has “deliberately and repeatedly failed to comply with some of the most fundamental federal tax requirements applicable to public charities” and that evidence “quite strongly” suggests that the group is violating civil and criminal tax laws.

The clergy’s complaint goes beyond allegations of improper lobbying, claiming that ALEC exists for the “private benefit” of its members rather than for charitable, educational or other exempt purposes that serve the public interest and deserve special tax treatment.

The Center forwarded the complaint to ALEC’s media relations representative Tuesday via email but a call was not returned. The Center forwarded the complaint and questions Wednesday morning to the organization and was told it had been passed along to “appropriate parties” but did not receive a response.

The 30-page letter sent to the IRS on June 18 was inspired by a separate, whistleblower claim lodged by consumer group Common Cause in April, which alleged ALEC is a corporate-funded lobbying group, which violates IRS rules that govern 501(c)(3) nonprofit corporations. The complaint was based, in part, on information about ALEC obtained by the Center for Media and Democracy, a nonprofit research group opposed to ALEC's legislative ambitions.

ALEC, formed in 1973, has consistently argued it is bipartisan and educational in nature, because it provides research and analysis for legislators. It pays no income tax and donors to the organization, including its corporate members, can deduct their contributions from their taxable income, just as they would for a charity.

The Internal Revenue Code says a 501(c)(3) organization “may not attempt to influence legislation as a substantial part of its activities and it may not participate in any campaign activity for or against political candidates.” ALEC reports no lobbying on its annual filings with the IRS, according to the complaint, but state records in North Dakota show two lobbyists registered to represent the organization in 2008 and 2009: Mark Behrens and Cory Shaecher.

ALEC was formed in Chicago by a group of state legislators and the late Paul Weyrich, a pioneering conservative activist and co-founder of the Heritage Foundation. Based in Washington, D.C., the group says its mission is to advance “free-market enterprise, limited government and federalism at the state level through a nonpartisan public-private partnership of America’s state legislators, members of the private sector and the general public.”

Its 23-member board of directors is made up of entirely of state legislators. But it also has a “private enterprise board” consisting of corporate representatives, including GlaxoSmithKline, PhRMA, Pfizer Inc. AT&T Inc., Koch Companies Public Sector, LLC, Altria (formerly Philip Morris) Client Services, ExxonMobil Corp. and State Farm Insurance Co. Legislators join for $50 per year while private sector members join for $7,000, $12,000 or $25,000 for the top-tier “Jefferson Club.”

The criticism of the group is focused mainly on its “task forces,” which bring legislators and corporate members together to create model bills.

The complaint alleges that industry representatives have “effective veto power” over the recommendations of the task forces.

While ALEC describes the output of its task forces as bipartisan analysis and research, the complaint said the task force proposals “do not appear to contain ‘a sufficiently full and fair exposition’ of the public policy issue underlying the legislative proposal. To the contrary, they promote the ideological views and business interests of ALEC’s Private Sector members — the corporate funders.”
Clergy VOICE consists of 18 religious leaders who have come together in the past to challenge nonprofits. In 2004 and 2006, they filed complaints against two large Ohio churches alleging they were promoting Republican candidates.

They also challenged the tax-exempt status of a Christian organization and its $1.8 million Washington, D.C., townhouse that housed conservative Christian members of Congress. The “C Street Center” made the news as a refuge for three Republican politicians tarnished by scandal.

The religious leaders do not represent their congregations. Half are members of the United Church of Christ, a Protestant denomination that has been historically liberal on social issues. In a cover letter to IRS Commissioner Douglas Shulman, they accuse ALEC of compromising free and fair elections, weakening union rights, degrading the environment and a host of other offenses.

The organization singled out a handful of corporate-influenced model bills, including a cap on damages for asbestos claims, the “stand your ground” legislation pushed by the National Rifle Association and an immigration bill which reportedly served as the basis for Arizona’s law and was drafted with help from a private prison company. The immigration law was partially knocked down by the U.S. Supreme Court on June 25.

The complaint also said ALEC had improperly provided a benefit to lawmakers by creating “scholarships” under the control of the national headquarters that paid for the lawmakers’ attendance at meetings ”held in luxury hotels, frequently in vacation-worthy destinations like San Diego, New Orleans and Scottsdale.” These include “perks such as meals, recreational activities, and subsidized childcare for legislators and their families” that are often not reported by the lawmakers on their state ethics disclosure forms, the complaint said.

“Meeting agendas include events like golf tournaments, open bar parties and baseball games — all subsidized directly or indirectly by ALEC’s corporate members,” the letter said, citing an estimate by ALEC that these benefits cost $1 million to $2 million each year.
ALEC claims to be bipartisan, but all 23 legislative members of its board listed on ALEC’s 2010 tax return are Republicans, according to a Center review. The clergy complaint claims 72 of ALEC’s 74 filled state chairman seats are held by Republican legislators.

The group states ALEC faces potential civil penalties for “a pattern of filing multiple inaccurate” tax returns with the IRS, such as not reporting lobbying activities and providing incorrect information about its payments to legislators for travel and entertainment.
It also says the group may face criminal tax penalties if the misstatements or omissions were made “knowingly or willfully.”

Whether the IRS will pursue any action is difficult to say. Complaints are typically answered with a “thank you” letter acknowledging their receipt and the agency does not release details about investigations or audits.

Owens, who was director of the Exempt Organizations Division of the IRS from 1990 to 2000, said he expects a reaction.
“The legal analysis is done for them. They just have to read it,” he said. “I would be surprised if the IRS took no action in response to this letter.”

The Center for Public Integrity is a nonprofit, independent investigative news outlet.  To read more of CPI’s stories go to iwatchnews.org.

Rick Santorum is coming under much closer — and more skeptical — scrutiny since he jumped to the top of Republican presidential polls this month, according to a computer-assisted analysis of social media data.

For the first time, politically engaged users of Twitter and Facebook are buzzing about Santorum more than about any other Republican candidate.

Santorum, a former senator from Pennsylvania, swept Republican voting in Minnesota, Missouri and Colorado on Feb. 7. Although all three contests were essentially beauty contests, with little official impact on the delegate count, Santorum's victories revived his campaign.

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Before Feb. 7, Santorum was generally running third behind former Massachusetts Gov. Mitt Romney and former House Speaker Newt Gingrich of Georgia in most major national polls. Following those contests, he soared to the top of the major national polls, and he has remained there since.

Santorum's rise has been mirrored on social media, according to msnbc.com's analysis of nearly 2.2 million posts on Twitter and Facebook this month. And as the spotlight has focused on him, it has drawn opponents of his sharp-edged positions out of the shadows.  

The analysis examined posts through Thursday about the four remaining major Republican candidates, filtering out straight news reports and neutral posts, such as tweets noting that a candidate would be making a campaign appearance. The resulting sample was 1.2 million tweets and Facebook posts that expressed clear support for or opposition to one of them.

In the week leading up to the Feb. 7 contests, those Facebook and Twitter users preferred to talk about Romney by a ratio of more than 6 to 1 over Santorum. 

Beginning Feb. 8, however, Santorum has been the No. 1 topic of conversation. This week, more than two-fifths of every post expressing an opinion — 41 percent — were about Santorum, compared to 32 percent for Romney, 15 percent for Gingrich and 12 percent for Rep. Ron Paul of Texas.

Follow the campaign on NBCPolitics.com

(The analysis uses a tool called ForSight, a data platform developed by Crimson Hexagon Inc., which is used by many media and research organizations to gauge public opinion in new media, among them the Pew Research Center and ESPN. The results aren't a scientific reflection of national opinion. Instead, they're a broad look at what is being said by Americans who follow politics and are active on Facebook, Twitter or both.) 

Nonpartisan research indicates that Republicans and Democrats use social networking sites in roughly equal proportions. The demographics have gradually been trending older and more conservative as the sites are adopted by a larger proportion of the American public, studies indicate.

Pew Research Center Internet and American Life Project: Social Media and the 2010 Election (.pdf)

The msnbc.com analysis suggests that while people are much more enthusiastic about talking about Santorum, they're not any more enthusiastic about the man himself. On Feb. 7, before results of the three contests were known, 42 percent of Santorum's comments were positive to 58 percent negative; Thursday, after a debate Wednesday night in Mesa, Ariz., where Santorum came under sustained attack from Romney and Paul, the breakdown was 38 percent to 62 percent.

Consistently, the largest driver of sentiment about Santorum is his strong stance against same-sex marriage, making up 18 percent of all opinions expressed about him and 28 percent of all negative sentiment this week — proportions that have remained remarkably consistent since June, when msnbc.com began collecting data.

In a Facebook post typical of the anti-Santorum commentary, Jay A. Small of Vancouver, Wash., wrote this week:

From Rick Santorum's website: "Marriage is, and has always been through human history, a union of a man and woman – and for a reason. These unions are special because they are the ones we all depend on to make new life and to connect those new lives to their mom and dad." 

So, Mr. Santorum, your religion's typical intolerance must then also stand for banning marriage between couples who do not choose, or are not able to procreate.

First Read: Santorum hits on religious tones in speech

But other issues are now emerging around which significant opposition is crystallizing. The sentiment that Santorum is "too conservative," particularly in the prominence of his religious views — previously just one of several scattered notions — has broken into double digits this month, rising to 13 percent of all commentary and 20 percent of all negative opinion, such as this tweet by an Alaskan woman who describes herself as a Christian "pro-life supporter":

The picture is different for Romney, who (at least according to msnbc.com's analysis) has yet to give voters a clear reason to vote for or against him. That suggests his supporters could be swayed by other candidates — or that he still could galvanize support with clearly articulated positions.

'Most electable'?
In fact, the No. 1 reason social media commentators give for supporting Romney — both this week and going all the way back to June — is their belief that he is the "most electable" Republican in the race, a sentiment that has driven 36 percent of all positive opinions this week:

A quarter cite Romney's competence or leadership; no other issue even makes it into double digits.

Likewise, opposition to Romney is widely scattered. A quarter of those expressing negative opinions this week cited his wealth, with many suggesting that he is out of touch with the majority of Americans, as in this tweet from Michaele Swiderski, a Tennessee woman who describes herself as a Jesus-loving conservative:

But 15 percent also expressed concern over his Mormon faith, another 15 percent thought he was too closely tied to corporate interests, and 14 percent pinned the RINO label on him — that is, "Republican In Name Only," or not truly conservative.

Even in Michigan — his native state, which holds an important primary Tuesday — the single most mentioned word in social media posts about Romney this week (after his own name) isn't any political issue or position.

It's "Santorum."

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