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Karl Rove group spends big in Election 2010, but is it legal?

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Under IRS rules, 501(c)(4) groups are considered tax-exempt “social welfare” groups, that are allowed to spend on campaigns as long as they limit it to less than half of their total spending and their primary purpose is “the promotion of social welfare” – a distinction that is anything but clear.

In their letter to the IRS, Democracy 21 and the Campaign Legal Center – both nonpartisan, nonprofit groups based in Washington – asserted that Rove’s group has crossed over that line into too much campaign work.

"While the abuses of 501(c)(4) tax designation for no-fingerprint political attack ads seems rampant in this election cycle, the most blatant certainly appears to be Crossroads GPS," said J. Gerald Hebert, executive director of the Campaign Legal Center, in a statement. "The group makes almost no effort at all to hide the fact that it was created principally to impact the 2010 elections, and to take money from those interested in contributing to their efforts but doing so anonymously."

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