Chamber ads against McGraw raise tax issues

The Chamber of Commerce and Business Industry Council have aired ads criticizing West Virginia Attorney general McGraw for spending a $10 million settlement with Purdue Pharma L.P. without first consulting the legislature.

From Paul Nyden:

Managing Deputy Attorney General Fran Hughes said business groups often deduct the costs of such advertising campaigns when reporting their federal income taxes if those costs can be classified as "business expenses" under the federal Tariff Act passed in 1913.

Section 501(c)(6) of the Internal Revenue Code, created by that law, states chambers of commerce and business leagues may "work for the enactment of laws to advance the common business interests of the organization's members."

But such expenses are not tax-deductible if they are specifically designed to help or hinder the election of any candidate for public office. "Businesses donating to these campaigns do not have to identify themselves," Hughes added.

Roberts said members who fund the Chamber of Commerce cannot deduct any money they give that "is directly associated with lobbying."