Form 13909 (August 2007)

Department of the Treasury — Internal Revenue Service

Tax-Exempt Organization Complaint (Referral) Form

1. NAME OF REFERRED ORGANIZATION:

Street Address:

City/State/Zip Code:

Date of Referral:

2. ORGANIZATION’S EMPLOYER IDENTIFICATION NUMBER (EIN):

3. NATURE OF VIOLATION:

Directors/officers/persons are using income/assets for personal gain

Organization is engaged in commercial, for-profit business activities

Income/assets are being used to support illegal or terrorist activities

Organization is involved in a political campaign

Organization is engaged in excessive lobbying activities

Organization refused to disclose or provide a copy of Form 990

Organization failed to report employment, income, or excise tax liability properly

Organization failed to file required federal tax returns and forms

Organization engaged in deceptive or improper fundraising practices

Other (describe):

4. DETAILS OF VIOLATION:

Name(s) of Person(s) Involved:

Organizational Title(s):

Date(s):

Dollar Amount(s) (if known):

Description of activities:

5. SUBMITTER INFORMATION:

Name:

Occupation or Business:

Street Address:

City/State/Zip Code:

Telephone:

I am concerned that I might face retaliation or retribution if my identity is disclosed.

6. SUBMISSION AND DOCUMENTATION: The completed form, along with any supporting documentation, may be mailed to IRS EO Classification, Mail Code 4910DAL, 1100 Commerce Street Dallas, TX 75242-1198, faxed to 214-413-5415 or emailed to eoclass@irs.gov.

Catalog Number 50614A www.irs.gov Form 13909 (08-2007)

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TAX EXEMPT ORGANIZATION COMPLAINT (REFERRAL) INSTRUCTIONS

General Information

The information provided on this form will help the Internal Revenue Service (IRS) determine if there has been a violation of federal tax law. Submission of this form is voluntary.

Upon receipt of this form, the IRS will send you a letter acknowledging receipt of the information you submitted. If at a later date you wish to submit additional information regarding the organization, please attach a copy of the form initially submitted, and send it to the address shown above.

Specific Instructions

1. ORGANIZATION NAME AND ADDRESS: Provide the current name and address of the organization. If the organization has used prior or multiple name(s) or address(es), also provide that information.

2. EMPLOYER IDENTIFICATION NUMBER: Provide the organization’s employer identification number (EIN). The EIN is a nine-digit number, issued by the IRS, that the organization uses for tax purposes (like a Social Security Number (SSN) for an individual). If the EIN is unavailable, include a state nonprofit corporation registration number, if available.

3. NATURE OF VIOLATION: Mark the description that describes the organization’s alleged violation. More than one line may apply. If none of the descriptions appear to apply, briefly state the issue on the Other line.

4. DETAILS OF THE VIOLATION: Provide specific details of the alleged violation including names, actions, places, amounts, dates, and the nature of any evidence or documentation (who, what, where, when, how). Include the names of other organizations, entities, or persons that may be involved with the organization, providing EINs or SSNs, if available.

5. YOUR INFORMATION: Provide your name, address, and business or occupation. Include your daytime telephone number, in case we wish to contact you. The acknowledgement letter will be sent to the address you provide.

If you are concerned that you may face retribution if your identity is disclosed, check the appropriate box. You may enter “Anonymous” for Submitter’s Name if you do not want to be identified.

6. SUBMISSION AND DOCUMENTATION: Mail the completed form, including any supporting documentation that you would like for us to review, to the address provided on the form. You may also fax or email the completed form and any supporting documentation to the fax number and email address provided on the form. Include a cover letter describing the documentation or evidence you are providing. If you have already received an acknowledgment letter, include a copy of that letter. If possible, please try to submit all documentation at the same time.

If your referral relates to a church please be aware that Congress has imposed special limitations, found in IRC section 7611, on how and when the IRS may conduct civil tax inquiries and examinations of churches. You can find out more about these special limitations in Pub. 1828, Tax Guide for Churches and Religious Organizations, in the section on Special Rules Limiting IRS Authority to Audit a Church.

7. CLAIM FOR REWARD: To claim a reward for providing this information to the IRS, file Form 211, Application for Reward for Original Information.

8. NOTE: Federal law prohibits the IRS from providing you with status updates or information about specific actions taken in response to the information you submit.

Catalog Number 50614A www.irs.gov Form 13909 (08-2007)

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REQUEST FOR AN IRS INVESTIGATION OF BLUEPRINT NC

This complaint seeks an Internal Revenue Service investigation into the activities

of Blueprint NC, a 501(c)(3) organization in North Carolina. Despite Blueprint NC’s

purportedly “non-partisan” mission, a recently leaked political memo, and public

statements by Blueprint NC executives, demonstrate that the organization is an arm of the

Democratic party that has actively engaged in partisan political activities to further the

goals of its preferred political party and political candidates.

The Blueprint NC memo discusses strategies covering virtually every aspect of

the political campaign and election process—from helping Blueprint NC’s “elected

allies” in the Democratic party, to improving voter turnout for Democrats, to affecting

“the redistricting process in 2020.” The memo also outlines plans to “cripple” and

“eviscerate” Republican candidates and elected officials for the benefit of the Democratic

party.

Simply put, the political memo demonstrates that Blueprint NC not only lied

about its “non-partisan” mission but also violated federal law and cheated the United

States government and the American taxpayer. The IRS should investigate the activities

of this blatantly political organization masquerading as a “non-partisan” charity.

FACTUAL BACKGROUND

I. The Leaked “North Carolina 2013 Legislative Strategy: DRAFT”

On February 21, 2013, news media in North Carolina began reporting on a leaked

political memo obtained from an attendee at a Blueprint NC event. Blueprint NC is a

tax-exempt 501(c)(3) organization that purports to be “non-partisan.” The Blueprint NC

website informs the public that “Blueprint activities will not be coordinated with any

candidate, political party, or partisan entity.” See www.blueprintnc.org.

The Blueprint NC memo, entitled “North Carolina 2013 Legislative Strategy:

DRAFT,” is viciously partisan and political. It outlines plans to “weaken our opponents’

ability to govern by crippling their leaders,” expressly referencing the Governor, the

Speaker of the House, and the President Pro Tempore of the Senate, all of whom are

Republicans. (Exhibit A at 1.) The memo further discusses “opportunities” to create

“tension in Republican ranks,” to “eviscerate the leadership and weaken their ability to

govern,” and to build a stronger political “base” to oppose Republican elected officials.

(Id. at 1-3.)

The memo repeatedly references efforts to affect the election and political

campaign process, including means to “influence the redistricting process in 2020,” to

increase “progressive” voter participation, and to assist Blueprint NC’s “elected allies” in

the political “minority” in the state, i.e., the Democratic party. (Exhibit A at 1-3.) In

short, virtually every portion of the lengthy memo contains deeply partisan political

strategies for opposing elected Republican officials in North Carolina.

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II. Blueprint NC’s public admissions concerning the political memo.

The copy of the leaked political memo obtained by the news media was attached

to an e-mail from a Blueprint NC employee. That e-mail, sent to Blueprint NC’s

“partner” organizations, emphasizes that the attachments (including the political memo)

are “CONFIDENTIAL to Blueprint, so please be careful—share with your boards and

appropriate staff, but not the whole world.” (Exhibit A at 4.)

Responding to media inquiries, Blueprint NC’s executive director initially

admitted that Blueprint circulated the political memo together with that e-mail,

explaining that “we were just forwarding it on.” See, e.g., Liberal groups lay out

blueprint for attack on state leaders, WRAL News, available at http://www.wral.com/

liberal-group-lays-out-blueprint-for-attack-on-state-leaders/12136669.

After questions arose concerning the tax-exempt status of Blueprint NC, Blueprint

NC changed its story and asserted that it did not e-mail the document to its members. But

Blueprint NC’s executive director publicly admitted that the political memo “was

distributed at a meeting organized by Blueprint NC” and that he believed it was

appropriate for memos like this one to be circulated at Blueprint NC meetings because

501(c)(3) organizations are permitted to “exploit weaknesses of lawmakers.” Id.

LEGAL ANALYSIS

I. Prohibited Activities under 26 U.S.C. § 501(c)(3)

To qualify as an exempt organization under § 501(c)(3), “an organization must be

both organized and operated exclusively” for an exempt purpose. 26 C.F.R. 1.501(c)(3)-

1(a). “Action organizations” are not operated exclusively for an exempt purpose, and are

not exempt under § 501(c)(3). Under IRS regulation 26 C.F.R. 1.501(c)(3)-1(c)(3)(iii),

“an organization is an action organization if it participates or intervenes, directly or

indirectly, in any political campaign on behalf of or in opposition to any candidate for

public office.” “The phrase ‘on behalf of or in opposition to’ refers not to the motive of

the participant but the reasonable consequences of his or her activities.” Id. As the IRS

has instructed, any message that could be construed as favoring or opposing a particular

political candidate (including statements favoring or opposing the reelection of sitting

elected officials) violates the prohibition on political activities. See IRS Rev. Rul. 2007-

41; see also, 26 C.F.R. 1.501(c)(3)-1(c)(3)(iii).

To determine whether particular statements or activities by an exempt

organization are impermissible political activities, the IRS considers a series of factors

including whether the organization has expressed approval or disapproval of particular

political candidates and whether the statement or activity references voting, campaigning,

or election issues. See IRS Rev. Rul. 2007-41.

II. Blueprint NC has engaged in impermissible partisan political activity.

Applying these legal standards, it is clear that Blueprint NC has engaged in

impermissible partisan political activity. The organization admits that it either distributed

the political memo described above or hosted a meeting where that memo was distributed

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to its “partner” organizations. As explained above, the memo included express references

to influencing political campaigns, voting, and election redistricting. The memo also

includes deeply partisan political strategies and advice, mentions high-ranking

Republican office holder by name, and describes strategies to “cripple” and “eviscerate”

Republican public officials’ good faith efforts to govern the State. All of these partisan

political strategies are expressly intended to advance “progressive” political candidates

and their policies.

Blueprint NC violated federal law by engaging in this partisan political activity.

Congress imposed restrictions on the political activities of tax exempt organizations

because it concluded that partisan political activities should not be subsidized with public

funds. See Regan v. Taxation with Representation, 461 U.S. 540, 544 (1983). The

contents of the political memo, and public statements by Blueprint NC executives,

demonstrate that Blueprint NC’s purportedly “non-partisan” mission is a sham; the

organization is an arm of the Democratic party and it should not be permitted to advance

its partisan political agenda while maintaining its 501(c)(3) status.

CONCLUSION

Blueprint NC’s memo is a blatantly political roadmap for Democratic party

activists to undermine Republican officeholders, influence upcoming elections, and

manipulate future election redistricting efforts. It is well-settled that this sort of political

activity by “charitable” organizations with privileged tax status is an inappropriate use of

taxpayer dollars. As the political memo and the accompanying public statements of

Blueprint NC executives demonstrate, the organization is deliberately (and

unapologetically) engaged in deeply partisan political activity. Additionally, the sender

laid out each part of the email in 3 parts: 1) talking points memo 2) slide deck

presentation 3) polling data, all of which are exclusively contained in the email

document. (Exhibit A at 4.) The previously mentioned are then described as

“Confidential to Blueprint NC” The IRS should conduct a full investigation of the

allegations set forth in this complaint and take swift action to ensure that Blueprint NC is

held responsible for any violations of its 501(c)(3) status.

Liberal groups lay out blueprint for attack on state leaders By Mark Binker

Posted: 7:14 p.m. Thursday

Updated: 12:51 p.m. today

Tags: Larry Hall, Blueprint NC, Progress NC

RALEIGH, N.C. — A strategy memo circulated recently among liberal-leaning

groups prescribes "crippling" legislative leaders and Gov. Pat McCrory with

bad press and pressure tactics.

The memo, which was first reported by The Charlotte Observer , details

communications strategy, political tactics and polling data

that progressive groups can use to push the policy agenda in Raleigh, where

Republicans control both the governor's mansion and the legislature.

According to documents included with the memo and interviews, the strategy

outline was produced by Myers Research and Strategic Services for Project

New America. It was originally provided to Progress North Carolina, a liberal

nonprofit that has aggressively attacked McCrory during the 2012 campaign

and his early term in office. Progress North Carolina shared the memo with

Blueprint NC, a nonprofit that coordinates the activities of liberal-leaning

nonprofits. In turn, Blueprint NC distributed it to its member organizations.

An electronic version of the memo appears to contain at least three separate

documents. One is an email from outgoing Blueprint NC Communications

Director Stephanie Bass describing the material and emphasizing that it is

"CONFIDENTIAL to Blueprint, so please be careful – share with your boards

and appropriate staff, but not the whole world."

Sean Kosofsky, Blueprint NC's director, said his group did not pay for or

commission the research. "We were just forwarding it on," he said.

On Saturday, two days after this post originally published, Kosofsky distanced

his group from most inflammatory parts of the document, although

acknowledged it was distributed at a meeting organized by Blueprint NC. Click

here to read more about what Kosofsky says about the controversial memo.

The second document is a "talking points memo" that outlines strategies for

progressive groups. Policy wins for the political left, the memo said, would

likely be defined as "mitigating" legislation, rather than pushing their own

agenda items.

"The most effective way to mitigate the worst legislation is to weaken our

opponents' ability to govern by crippling their leaders (McCrory, Tillis, Berger,

etc...)" the memo reads, referring to the governor, House Speaker Thom Tillis

and Senate President Pro Tem Phil Berger.

The memo goes on to describe a "potential two-year vision" during which the

groups would "eviscerate the leadership and weaken their ability to govern."

The bulk of the document is a poll memo that talks about how to frame

opposition to conservative tax and education policies. The survey was

conducted between Jan. 29 and Feb. 2.

It's worth noting that there are both conservative and liberal nonprofit groups

that provide similar strategy and research. The conservative Civitas Institute,

for example, commissioned a tax plan that tracks closely with ideas offered by

Republican legislative leaders in December and January. And they have been

part of a drumbeat of criticism against Democratic officials and bureaucrats

who served them, most recently focusing on the State Board of Elections.

Francis X. De Luca, president of the Civitas Institute, objects to the

comparison.

"We have always stuck to policy and legislative disagreements. We try and

leave the personal attacks to the left," De Luca said.

Republican strategists and operatives, some of who talked to WRAL News on

background, said the memo puts the lie to liberal criticism of groups like

Civitas, which are in large part funded by foundations tied to Art Pope, a

former legislator who now serves as McCrory's budget director. Several said it

showed Democrats didn't want to cooperate with Republicans leaders.

"I think it's shameful," said Ray Martin, caucus director for state Senate

Republicans. "This is who is in control of the Democratic Party in North

Carolina, radical left-wing zealots."

Paul Shumaker, a longtime Republican strategist based in Raleigh, said the

document is far from shocking.

"It comes as no great surprise that, now that Republicans are in control, you

are going to have those stationed on the left attacking conservatives,"

Shumaker said. "I'm sure they feel like this is just what was done to them

when they were in control."

Shumaker pointed out that conservative nonprofits regularly questioned the

ethics and conflicts of interest of former House Speaker Jim Black and former

Govs. Mike Easley and Bev Perdue.

The memo indicates there are close ties between the liberal groups and the

Democratic Party itself.

For example, a response to McCrory's State of the State address earlier this

week delivered by Rep. Larry Hall, D-Durham, tracked closely with slides from

the poll shared by the liberal groups.

Hall's prepared remarks included this sentence: "Cutting funding for public

education is wrong because it hurts our children's ability to succeed and

compete for the jobs of the future." A slide from the polling memo includes the

phrase, "Cutting funding for public education is wrong because it hurts our

children's ability to succeed and compete for the jobs of the future."

Hall could not be reached for comment Thursday evening.

Casey Wilkinson, chief of staff for the House Democratic Caucus, said the

similarities aren't surprising. It is likely, he said, that the polling provided to the

left-leaning groups was provided by the same company, or one similar, that

the party uses for its research.

Copyright 2013 by Capitol Broadcasting Company. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

Head of Blueprint North Carolina denies his group sent memo plotting attacks on Republicans

Read more here: http://www.newsobserver.com/2013/02/22/2700064/nonprofit-head-denies-his-group.html#storylink=cpy

By Jim Morrill — jmorrill@charlotteobserver.com

The head of a Raleigh nonprofit group on Friday sought to distance his group from a memo laying out ways

liberals could attack Gov. Pat McCrory and other Republican leaders.

Sean Kosofsky, executive director of Blueprint North Carolina, said he misunderstood a reporter’s questions

on Thursday about documents emailed by Blueprint’s former communications director to the group’s partners.

The documents, obtained by the Observer from another source, included talking points for progressive policy

positions and an issues poll. It also appeared to include three pages of a draft strategy that called for weakening

Republican legislators by “crippling their leaders” and working to “weaken their ability to govern.”

Kosofsky said on Thursday that the documents, some from other groups, were emailed to supporters by

Blueprint.

On Friday, however, he said Blueprint did not pass on the controversial three-page draft. He suggested it was

appended to the other documents by someone hoping to tarnish his organization.

“I misunderstood,” he said Friday. “This is just a bunch of confusion. I think someone has an agenda to

deceive people about the connection between these things. … There are things said in there that I might even

agree with, but it’s just not us.”

He said the three-page draft was circulated in December at a meeting of more than 50 progressive groups. He’s

not sure who drafted it.

His comments came after the head of one of his group’s major financial backers said Blueprint had exercised

“bad judgment” that could jeopardize its funding.

Leslie Winner, executive director of the Z. Smith Reynolds Foundation, said she was “surprised and

disappointed” by the draft memo.

Z. Smith Reynolds “believes in robust debate on issues of public importance; (it) does not support attacking

people,” Winner said.

According to tax forms, the foundation provided $425,000 of Blueprint’s nearly $1 million budget last year.

Blueprint is a 501(c)(3) nonprofit group that is prohibited under federal tax law from engaging in partisan

political activity.

The draft strategy memo said that with Republicans controlling North Carolina’s state government,

progressives should:

• “Eviscerate the leadership and weaken their ability to govern.”

• “Pressure McCrory at every public event.”

• “Slam him when he contradicts his promises.”

It also urged activists to rely on “private investigators and investigative reporting, especially in the executive

branch…”

“If you want to impact the effectiveness of a lawmaker,” Kosofsky said Thursday, “one way to do that is to

find out where they’re weak and use that to your advantage.”

Read more here: http://www.newsobserver.com/2013/02/22/2700064/nonprofit-head-denies-his-group.html#storylink=cpy